How the hell are we supposed to retire?

[dvaidya]

This is true for people that didn't or just couldn't save and plan well for their retirement. Those that did, will still be paying the same or higher tax rates unless they have lots of tax free income. I'm still very new to this, but it sure looks like we'll still have a substantial tax bill if we want to live like we have (plus a few extra vacations a year.)

This is what I am afraid off that regardless what are we do I think we are going to end up paying taxes 🙁

 

[shrpshtr325]

This is what I am afraid off that regardless what are we do I think we are going to end up paying taxes 🙁

its almost like they are one of two certainties in life,

 

[Ian F]

The general idea isn't to not pay taxes at all, but to find a way to not pay any more than you have to.

 

[Ian F]

Somewhat of a simplified example, but this video explains the strategy behind doing Roth conversions fairly well:

 

[Bike N Gear]

Somewhat of a simplified example, but this video explains the strategy behind doing Roth conversions fairly well:

Only watched about 1/2 of this but does she ever mention how these hypothetical people are paying to live for the 14 years she is talking about? If they do large taxable Roth conversions every year and are not taking SS and only have $1.5 million dollars total, how do they pay to live and still stay in the lower tax bracket?

 

[Ian F]

Only watched about 1/2 of this but does she ever mention how these hypothetical people are paying to live for the 14 years she is talking about? If they do large taxable Roth conversions every year and are not taking SS and only have $1.5 million dollars total, how do they pay to live and still stay in the lower tax bracket?

Like I said - simplified. The main point is more about the when and how much you're paying in taxes and being in control. I $X is the amount you can withdraw and stay within a chosen tax bracket and one can live on some amount below $X, the idea is to withdraw an amount to get closer to that bracket level and move it to a Roth where it can continue to grow tax-free and reduce the tax deferred accounts to the point when RMDs are required, the amount won't be very much and thus the tax bill should be lower.

 

[Norm]

Only watched about 1/2 of this but does she ever mention how these hypothetical people are paying to live for the 14 years she is talking about? If they do large taxable Roth conversions every year and are not taking SS and only have $1.5 million dollars total, how do they pay to live and still stay in the lower tax bracket?

The vast majority of these videos fail to account for one major piece of the puzzle.

Just random thought for those of us not ready to retire but not too far out. Convert some nominal amount to a Roth IRA sooner than later as there’s a 5 year waiting period on when you can take money out. The 59.5 thing kicks in for me but you can’t just start pulling out the minute you turn 59.5 unless you’ve had the Roth for 5 years.

I’m talking like $1000. This is of importance to those of us looking to retire in their 50s then start converting.

Also you’ll want that taxable brokerage pile of money to get you to 59.5 or 62 or 65 or whatever which I think is the gap in the video above.

But then you need 1-2 years of non variable (HYSA?) in the event the taxable brokerage eats shit with a market decline. Layers. Like an onion. Like Shrek.

By RMD age if I am crying wolf about taxes being too much then shit is probably going pretty well.