Hi All
I am 62 and plan to retire in two years and I am in high tax bracket (until retirement). I have all that I need for retirement in Profit Sharing (tax deferred), HSA, Roth 401k and Cash Balance Plan. In addition I have a taxable account which we could live off of for about three years if needed. No pension and wife and I will wait until age 70 for SS. I always max out the Profit Sharing, 401k, HSA and Roth 401k. Annually, I offset the tax hit of the Roth 401k by investing at least the same amount in the Cash Balance Plan. Because of all the great tax breaks and lower tax bracket in retirement I have focused on these accounts rather than the taxable account. Thinking about pushing Cash Balance contributions in next 2 years so high that I will largely live off the taxable account while still contributing max amount in Profit Sharing, Roth 401k and HSA.
Net result of this strategy is:
1. Much lower taxes in 2025, 2026 because so much money put in tax deferred accounts (including 200k/year in Cash Balance) and mostly using taxable accounts (subject to lower rates of the capital gains) for much of the monthly expenses
2. Putting $$$ in Cash Balance which I believe reduces sequence of returns risk, as this can be used if big market crash before SS kicks in. I don't do Bonds
3. Taxable account balance by retirement will be insignificant
4. Will still have about 15% of portfolio in Roth 401k and HSA funds by retirement
5. Can keep Cash Balance funds in account growing protected until I move it into 401k at age 70 years
I haven not heard of anyone essentially pushing Cash Balance to the point of largely using Taxable Account for living expenses late in career as I have described. Thoughts? Thanks!
I am 62 and plan to retire in two years and I am in high tax bracket (until retirement). I have all that I need for retirement in Profit Sharing (tax deferred), HSA, Roth 401k and Cash Balance Plan. In addition I have a taxable account which we could live off of for about three years if needed. No pension and wife and I will wait until age 70 for SS. I always max out the Profit Sharing, 401k, HSA and Roth 401k. Annually, I offset the tax hit of the Roth 401k by investing at least the same amount in the Cash Balance Plan. Because of all the great tax breaks and lower tax bracket in retirement I have focused on these accounts rather than the taxable account. Thinking about pushing Cash Balance contributions in next 2 years so high that I will largely live off the taxable account while still contributing max amount in Profit Sharing, Roth 401k and HSA.
Net result of this strategy is:
1. Much lower taxes in 2025, 2026 because so much money put in tax deferred accounts (including 200k/year in Cash Balance) and mostly using taxable accounts (subject to lower rates of the capital gains) for much of the monthly expenses
2. Putting $$$ in Cash Balance which I believe reduces sequence of returns risk, as this can be used if big market crash before SS kicks in. I don't do Bonds
3. Taxable account balance by retirement will be insignificant
4. Will still have about 15% of portfolio in Roth 401k and HSA funds by retirement
5. Can keep Cash Balance funds in account growing protected until I move it into 401k at age 70 years
I haven not heard of anyone essentially pushing Cash Balance to the point of largely using Taxable Account for living expenses late in career as I have described. Thoughts? Thanks!
Statistics: Posted by MWWK — Sat May 04, 2024 3:57 pm — Replies 4 — Views 422