I know this has been discussed before - and I know no one knows what will happen in 2026, but how does one project taxes in retirement - how conservative do you go?
For example if I retired in 2025 with the following:
Both SS with 25% reduction with all zeros moving forward: $59,928
Pension w/o Cola: 47,484
$700k 401(k) with a 4% WD = $24,000
Total income = $131,412
When I plug it into this year’s Smart Asset Retirement Calculator for the state of PA, I get $11,144.
So the question is - what is a conservative way to project - again knowing that no one knows what will happen in 2026 or beyond? I have read previous responses such as “put it in your tax software” (I don’t have that), use a tax calculator like Smart Asset (but that is just for the current year), or just tax it at 25%, but I would greatly appreciate hearing what you would do with these retirement numbers. Thanks in advance.
Edited to add: Thanks for all your responses. Do any BHs just do a simple % increase based on X assumptions? For example, if my taxes would be $11,144 today, is it reasonable/conservative to simply project a 50% increase ($5,572) = $16,716?
For example if I retired in 2025 with the following:
Both SS with 25% reduction with all zeros moving forward: $59,928
Pension w/o Cola: 47,484
$700k 401(k) with a 4% WD = $24,000
Total income = $131,412
When I plug it into this year’s Smart Asset Retirement Calculator for the state of PA, I get $11,144.
So the question is - what is a conservative way to project - again knowing that no one knows what will happen in 2026 or beyond? I have read previous responses such as “put it in your tax software” (I don’t have that), use a tax calculator like Smart Asset (but that is just for the current year), or just tax it at 25%, but I would greatly appreciate hearing what you would do with these retirement numbers. Thanks in advance.
Edited to add: Thanks for all your responses. Do any BHs just do a simple % increase based on X assumptions? For example, if my taxes would be $11,144 today, is it reasonable/conservative to simply project a 50% increase ($5,572) = $16,716?
Statistics: Posted by ER2023 — Fri Jan 19, 2024 4:02 pm — Replies 9 — Views 395