In my last thread, viewtopic.php?t=423936 , I asked about whether to Roth or not. I came to find out that there are limits in how much you can contribute to a Roth - $8,000 each person/$16,000 per couple; I was thinking that I could put quite a bit more, somewhere about $30,000 total for us. We can spend down some of our savings by not taking any SS until 70 or have my wife take hers and spend down the difference. We are talking about $83,000 or $62,000 per year withdrawing to live on and also take the extra money and put it into our Roths and our investment account. My concern, which I never thought about until very recently is the taxes we may have to pay when RMDs start getting relatively high withdrawal rates. Of course we may not be around.
The maximum income for 2024 to stay in the 12% tax bracket (taking out the SS tax) is $126,400; after the standard deduction and 65 YO deduction (x2) it is $94,100. I have planned on us living on $96,000 so theoretically we could take another $30,000 from the IRA/401K to add to our Roths ($16,000) and taxable investment account ($14,000) to help draw down our traditional IRAs/401K. I'm looking at these 2 scenarios - withdrawing $83,000 to live + $30,000 to invest or with my wife's SS $62,000 to live + $30,000 to invest. One has us drawing down about $415,000 to live, the other about $310,000 to live; the investment amount, Roth + taxable is another $150,000 but should go back into investing. Once my SS starts at 70 YO my projection is our withdrawal to live will go down to less than $20,000/year. If both of us wait until 70, it goes down even to less.
With our investments in the TIRAs/401K being $1.2M assuming a 5%, total return will generate about $60,000 (average, could be less or more) - taking $83,000/year or $62,000/year to live over the 5 years may keep our portfolio almost the same or within $150,000 lower.
How does a couple lower money to keep the RMDs manageable without paying high taxes to do so? I expect us to be in the 12% (soon to be 15%) tax bracket until RMDs get high enough to push us up to the next bracket.
The maximum income for 2024 to stay in the 12% tax bracket (taking out the SS tax) is $126,400; after the standard deduction and 65 YO deduction (x2) it is $94,100. I have planned on us living on $96,000 so theoretically we could take another $30,000 from the IRA/401K to add to our Roths ($16,000) and taxable investment account ($14,000) to help draw down our traditional IRAs/401K. I'm looking at these 2 scenarios - withdrawing $83,000 to live + $30,000 to invest or with my wife's SS $62,000 to live + $30,000 to invest. One has us drawing down about $415,000 to live, the other about $310,000 to live; the investment amount, Roth + taxable is another $150,000 but should go back into investing. Once my SS starts at 70 YO my projection is our withdrawal to live will go down to less than $20,000/year. If both of us wait until 70, it goes down even to less.
With our investments in the TIRAs/401K being $1.2M assuming a 5%, total return will generate about $60,000 (average, could be less or more) - taking $83,000/year or $62,000/year to live over the 5 years may keep our portfolio almost the same or within $150,000 lower.
How does a couple lower money to keep the RMDs manageable without paying high taxes to do so? I expect us to be in the 12% (soon to be 15%) tax bracket until RMDs get high enough to push us up to the next bracket.
Statistics: Posted by Vinny_in_NJ — Wed Feb 14, 2024 6:43 pm — Replies 20 — Views 1453
