The “I want to retire soon” thread (1 Viewer)

[NutterButter]

Yup, RMDs are why the traditional advice of burn through taxable accounts first, then traditional 401k/IRAs, then Roth isn't always best. Sometimes it's better to spend down the traditional accounts in your 60s or convert to Roth in your early retirement years so that you don't end up with RMDs much bigger than you need to fund your life, and the taxes that come with that.

Was just thinking about this. For me as it stands now, I'm gonna chew through most of my roth pre-65 to get obamacare subsidies. So come 65 and up until rmd time, I'm looking at mostly taxable income. This will certainly put me into the 22% bracket. I'll need to revisit what would be the rmd amount, but unless it puts me in the 24% bracket, I see no reason not just to wait until rmd time to do that conversion. You see a flaw in my thought process?

I don't believe you can use RMDs as the source for Roth conversions, if that's what you're asking. So you'd have to take out your RMD AND whatever you'd be converting, so that's definitely going to bump up your taxes.

The time to do conversions is when taxable income is lowest. Stuff the 12/22/24% bracket to the top, depending on where you are sitting. Ideally before you start taking SS.

Do you have already taxed/brokerage funds to use early on, at least in conjunction with Roth to keep you in the ACA sweet spot? I know a lot of people, and I'd still put myself in this category but I've been trying to address it, have most of their funds tied up in Trad/Roth accounts and not much in taxable.

You ever play around with one of these RMD calculators? According to one on the schwab site, if I was 73 now with a 2M trad balance, I'm only looking at an rmd of 75k. That's less than a 4% withdrawal rate. So filing as married, that's just in the 12% bracket. I know that balance is arbitrary but that doesn't seem like something to be too concerned about.

It goes up exponentially from there, though.

Ok, but even 2M at 83, its 112k.

Yeah, but when you're 102 it really starts to sting.

I think i'd start doing meth in my late 90's to ensure i didn't make it that long

 

[SFBayDuck]

Do you think a 10% return rate is something you'd be seeking in your 80's in beyond? I'd think something considerably more conservative as long as I can make it to that 100 mark comfortably.

If you take the reverse equity glidepath approach, very possibly? Totally depends on your funding level and the sequence of returns you experience from retirement through then. If you have just normal returns but in a good sequence, your accounts will continue to grow throughout that decade even as you're withdrawing and you probably end up well over funded. So you could take more risk if you wanted to as you'd essentially be investing for your heirs, and their time frame, at that point.

Academically it make sense. I'm wondering how many people actually have the stomach to do that, though. I guess if you have good sequence fortune and retire at 60 with say $2M and at 80 are sitting on $10M, you can kind of do whatever you want.

 

[NutterButter]

Do you think a 10% return rate is something you'd be seeking in your 80's in beyond? I'd think something considerably more conservative as long as I can make it to that 100 mark comfortably.

If you take the reverse equity glidepath approach, very possibly? Totally depends on your funding level and the sequence of returns you experience from retirement through then. If you have just normal returns but in a good sequence, your accounts will continue to grow throughout that decade even as you're withdrawing and you probably end up well over funded. So you could take more risk if you wanted to as you'd essentially be investing for your heirs, and their time frame, at that point.

Academically it make sense. I'm wondering how many people actually have the stomach to do that, though. I guess if you have good sequence fortune and retire at 60 with say $2M and at 80 are sitting on $10M, you can kind of do whatever you want.

True. If I'm shooting for that 100, I'm playing it pretty conservative unless like you said you just have a lot of money to play with b/c events unfolded prior to that considerably in your favor. In that case, I'd like to think I'd really enjoy spending a lot of that money on other people and local causes and seeing them benefit from it while I'm still alive. At a stage in my life where opportunities for enjoyment would be diminishing, I could really see myself going in that direction. I think that would be a great way to go out. Maybe this changes, but I'm currently not the type that has this desire to leave a lot of money to others when I'm dead. If I still have it, then of course, but I'd like to give away a large percentage of that money while I'm still living.

 

[SFBayDuck]

Maybe this changes, but I'm currently not the type that has this desire to leave a lot of money to others when I'm dead. If I still have it, then of course, but I'd like to give away a large percentage of that money while I'm still living.

Agreed. Give to others when it's most useful, if you can. And while you can enjoy the act.

Hope to have that "problem" of having too much in my late 80s-90s!

 

[Judge Smails]

I’m contemplating giving my kids $100K each now for help getting homes. Not sure if that’s wise for my own retirement. But I know it would be more helpful for them now vs when they are 60

 

[IvanKaramazov]

I’m contemplating giving my kids $100K each now for help getting homes. Not sure if that’s wise for my own retirement. But I know it would be more helpful for them now vs when they are 60

We're hoping to do something similar, but I'm not 100% sure that it will work out. We need to make sure that our own oxygen mask is properly fitted before assisting other passengers. Regardless, I strongly agree with the way you're looking at this. Help with a down payment can make a big difference for a young couple, much more so than inheriting that money in 30-40 years.

We have the additional minor problem that I wouldn't trust my daughter with any kind significant money/assets, but she's still got plenty of time to grown up (she's a senior in college). No similar concerns about my son (three years out of school).

 

[Instinctive]

I’m contemplating giving my kids $100K each now for help getting homes. Not sure if that’s wise for my own retirement. But I know it would be more helpful for them now vs when they are 60

You sound like my dad. He gave us a low interest loan for down payment help when I was talking to my folks and told them I'd take our firms down payment loan (prime rate). My dad was like screw that I'll do it for half prime and you don't have to have monthly payments just pay it back out of year end bonuses.

It was greatly appreciated, kept us from selling some stock and realizing some gains.

 

[-OZ-]

I’m contemplating giving my kids $100K each now for help getting homes. Not sure if that’s wise for my own retirement. But I know it would be more helpful for them now vs when they are 60

we’ll do similar but less $. I figure a wedding gift of $25-50k might be appreciated. (Many years away probably, none have dated seriously)

 

[SFBayDuck]

I’m contemplating giving my kids $100K each now for help getting homes. Not sure if that’s wise for my own retirement. But I know it would be more helpful for them now vs when they are 60

we’ll do similar but less $. I figure a wedding gift of $25-50k might be appreciated. (Many years away probably, none have dated seriously)

My daughter is going to come out of college in 6 months with $0-$3,000 in student loans. Over the past year or so I've set aside the money to pay off most, and might just wipe it all. They're all subsidized so no interest due until after graduation, so we took out a bit each year to maintain flexibility and give us some cushion (one year we just stuck it in a HYSA, it's still there). So between her working hard to get and maintain grants and her mom and I covering most of the rest, she's already going to be financially ahead of a lot of her peers. I've also worked with her on building her credit score, funding a Roth, and general savings that she's built up into 5 figures. I, on the other hand, came out of college with maxed out credit cards, 5 figure loans, and about $100 in my checking account. So I've been making sure she gets to benefit from my many mistakes!

The ability to be able to provide her continued help like a down payment in 5-10 years is one of the only checks in the "keep working for longer" column for me. I've tested a big withdrawal in 2033 a couple of times in my early-retirement modeling, and with a decent sequence of returns I could still likely do it. But it's not guaranteed by any means and sure tightens things up quite a bit. Any inheritance I might get (which I don't typically don't include in modeling) could also end up just getting passed directly to her.

 

[Desert_Power]

Can anyone explain what the safe harbor rule is in a situation where I'm going to have large capital gains in 2025? To avoid under payment penalty?

Is all I have to do is make one early payment to equal over 100% of the tax I paid in 2024 and then keep the rest invested until April 15th 2026?

Essentially yes.

In order to have a protective estimate, you will need to pay in either 100% of your 2024 tax liability, or 110% of your 2024 tax liability (depending on your AGI and your marital filing status), in equal installments. You need to pay at least 25% of that projected liability by each of the 4 quarterly estimate dates. You can pay more than the 25% if you'd like, but you need to make sure you have 25/50/75/100 paid-in by the 4 quarterly estimate due dates.

If you want to do a one-shot payment to cover the full protective 100%, you'd need to make the full payment before April 15, 2025.

Hope this helps.

What do you do if such an event happens later in the year? I was trying to look at something like this a few months ago, but was confused.

 

[Steve Tasker]

Can anyone explain what the safe harbor rule is in a situation where I'm going to have large capital gains in 2025? To avoid under payment penalty?

Is all I have to do is make one early payment to equal over 100% of the tax I paid in 2024 and then keep the rest invested until April 15th 2026?

Essentially yes.

In order to have a protective estimate, you will need to pay in either 100% of your 2024 tax liability, or 110% of your 2024 tax liability (depending on your AGI and your marital filing status), in equal installments. You need to pay at least 25% of that projected liability by each of the 4 quarterly estimate dates. You can pay more than the 25% if you'd like, but you need to make sure you have 25/50/75/100 paid-in by the 4 quarterly estimate due dates.

If you want to do a one-shot payment to cover the full protective 100%, you'd need to make the full payment before April 15, 2025.

Hope this helps.

What do you do if such an event happens later in the year? I was trying to look at something like this a few months ago, but was confused.

So, the rules are the same for the protective estimate. You can't have a truly protective estimate unless you meet those 25/50/75/100 benchmarks.

That said, if you have a large income event, you can "annualize" your estimates. So when you have the large income event, you can project out your income tax at that point in time and pay it in to the IRS. It's difficult to explain in layman's terms but long story short, if you properly estimate the tax on that large income event, and fill out form 2210 when you do your taxes, you'll end up with no estimated tax penalty. The annualizing schedule is on page 3 of the form.

 

[matttyl]

So, some additional RMD things to bear in mind. 20 years ago the standard deduction for a married couple was under $10k. Next year it’s $30k (more if you or spouse are 65+). 20 years ago a 25% federal tax kicked in at $58,100 - this year you’re at $94,300 as a married couple before you’re even out of the 12% bracket.

So my “rule of thumb” for all this pre tax stuff was that I’ll always contribute pretax if my tax “savings” will be over 25% - and I’d always pull from pre tax if the tax burden will be under 20%. Projecting out 20+ years in the future for how much income you can draw and still be under 20% (unless tax rates change drastically) may be huge.

 

[NutterButter]

Can anyone explain what the safe harbor rule is in a situation where I'm going to have large capital gains in 2025? To avoid under payment penalty?

Is all I have to do is make one early payment to equal over 100% of the tax I paid in 2024 and then keep the rest invested until April 15th 2026?

Essentially yes.

In order to have a protective estimate, you will need to pay in either 100% of your 2024 tax liability, or 110% of your 2024 tax liability (depending on your AGI and your marital filing status), in equal installments. You need to pay at least 25% of that projected liability by each of the 4 quarterly estimate dates. You can pay more than the 25% if you'd like, but you need to make sure you have 25/50/75/100 paid-in by the 4 quarterly estimate due dates.

If you want to do a one-shot payment to cover the full protective 100%, you'd need to make the full payment before April 15, 2025.

Hope this helps.

What do you do if such an event happens later in the year? I was trying to look at something like this a few months ago, but was confused.

So, the rules are the same for the protective estimate. You can't have a truly protective estimate unless you meet those 25/50/75/100 benchmarks.

That said, if you have a large income event, you can "annualize" your estimates. So when you have the large income event, you can project out your income tax at that point in time and pay it in to the IRS. It's difficult to explain in layman's terms but long story short, if you properly estimate the tax on that large income event, and fill out form 2210 when you do your taxes, you'll end up with no estimated tax penalty. The annualizing schedule is on page 3 of the form.

Maybe this is what you're saying but can't you just prepay the taxes at the time of the gain. So if you sell stocks in q3 and you know you have 100k in long term cap gains, can't u just write a check to the irs at the end of q3 for 15k?

 

[-OZ-]

So, some additional RMD things to bear in mind. 20 years ago the standard deduction for a married couple was under $10k. Next year it’s $30k (more if you or spouse are 65+). 20 years ago a 25% federal tax kicked in at $58,100 - this year you’re at $94,300 as a married couple before you’re even out of the 12% bracket.

So my “rule of thumb” for all this pre tax stuff was that I’ll always contribute pretax if my tax “savings” will be over 25% - and I’d always pull from pre tax if the tax burden will be under 20%. Projecting out 20+ years in the future for how much income you can draw and still be under 20% (unless tax rates change drastically) may be huge.

That’s a good rule of thumb, but isn’t this just inflation?

 

[Steve Tasker]

Maybe this is what you're saying but can't you just prepay the taxes at the time of the gain. So if you sell stocks in q3 and you know you have 100k in long term cap gains, can't u just write a check to the irs at the end of q3 for 15k?

Yes that's essentially what I am saying.

 

[matttyl]

So, some additional RMD things to bear in mind. 20 years ago the standard deduction for a married couple was under $10k. Next year it’s $30k (more if you or spouse are 65+). 20 years ago a 25% federal tax kicked in at $58,100 - this year you’re at $94,300 as a married couple before you’re even out of the 12% bracket.

So my “rule of thumb” for all this pre tax stuff was that I’ll always contribute pretax if my tax “savings” will be over 25% - and I’d always pull from pre tax if the tax burden will be under 20%. Projecting out 20+ years in the future for how much income you can draw and still be under 20% (unless tax rates change drastically) may be huge.

That’s a good rule of thumb, but isn’t this just inflation?

Inflationary increases on the tax brackets and the standard deduction you mean? Yes, it is. People are projecting what they think they’ll have in their pre-tax bucket in the future, but computing it (with an RMD) against today’s tax brackets. My point is that you also need to project out tax brackets. Of course we have no idea what the exact tax brackets will be, or at what tax levels - but we need to project something.

 

[NutterButter]

Has anyone looked at these ACA plans for pre-medicare purposes? I was bored at work on Friday so I started poking around the NJ website. So if I put in 30k total income as a couple, we'd get 26k credit in NJ. Nice. So I upped that income up to 120k which is right where I'd want to be and I was surprised to see we'd still get 16k in credits. So great I think, maybe I can just fund with trad IRA worst case. But then I go to the actual plans and I see there's also a huge difference in deductibles and max OOP as well. I don't know if apples to apples comparison but the cheapest United silver plan with a 30k income has a deductible of 350 , max OOP of 3k and 5% coninsurance while for the 120k scenario its 5k, 18.4k and 40% respectively. I thought the subsidy you got was just for the premium and the same plans were offered to everyone with the same specifics but it sure don't look that way. If I'm understanding this correctly, then gut says gonna be mostly Roth to get us down to that 30k.

 

[matttyl]

Has anyone looked at these ACA plans for pre-medicare purposes? I was bored at work on Friday so I started poking around the NJ website. So if I put in 30k total income as a couple, we'd get 26k credit in NJ. Nice. So I upped that income up to 120k which is right where I'd want to be and I was surprised to see we'd still get 16k in credits. So great I think, maybe I can just fund with trad IRA worst case. But then I go to the actual plans and I see there's also a huge difference in deductibles and max OOP as well. I don't know if apples to apples comparison but the cheapest United silver plan with a 30k income has a deductible of 350 , max OOP of 3k and 5% coninsurance while for the 120k scenario its 5k, 18.4k and 40% respectively. I thought the subsidy you got was just for the premium and the same plans were offered to everyone with the same specifics but it sure don't look that way. If I'm understanding this correctly, then gut says gonna be mostly Roth to get us down to that 30k.

This is what I do for a living. If your income is low enough (under 250% of the poverty line I think), you can get a second kind of subsidy that lowers your deductible and OOP (as well as a larger subsidy for your premium). Be sure to also look at the type of plan (HMO vs PPO), and be sure your providers participate in whatever policy you’re looking at.

 

[Peggy]

Has anyone looked at these ACA plans for pre-medicare purposes? I was bored at work on Friday so I started poking around the NJ website. So if I put in 30k total income as a couple, we'd get 26k credit in NJ. Nice. So I upped that income up to 120k which is right where I'd want to be and I was surprised to see we'd still get 16k in credits. So great I think, maybe I can just fund with trad IRA worst case. But then I go to the actual plans and I see there's also a huge difference in deductibles and max OOP as well. I don't know if apples to apples comparison but the cheapest United silver plan with a 30k income has a deductible of 350 , max OOP of 3k and 5% coninsurance while for the 120k scenario its 5k, 18.4k and 40% respectively. I thought the subsidy you got was just for the premium and the same plans were offered to everyone with the same specifics but it sure don't look that way. If I'm understanding this correctly, then gut says gonna be mostly Roth to get us down to that 30k.

Pretty sure getting credits over the max (~80k) expire this year. The "cliff" is back and if you exceed that amount you'll pay back all the credits at tax time.
The way I understand it is that you get the credit based on estimated income, and can choose your plan from the suite of plans on the marketplace. But like I mentioned, you'll pay back some credit if you go over your estimate, and pay it all back if you go over the max, at tax time.

ETA: And it's figured on MAGI, not just income. Need to be super careful.

 

[Peggy]

Not even officially retired yet and they sent me a consultant agreement offer for $160/hr plus expenses.

 

[NutterButter]

Has anyone looked at these ACA plans for pre-medicare purposes? I was bored at work on Friday so I started poking around the NJ website. So if I put in 30k total income as a couple, we'd get 26k credit in NJ. Nice. So I upped that income up to 120k which is right where I'd want to be and I was surprised to see we'd still get 16k in credits. So great I think, maybe I can just fund with trad IRA worst case. But then I go to the actual plans and I see there's also a huge difference in deductibles and max OOP as well. I don't know if apples to apples comparison but the cheapest United silver plan with a 30k income has a deductible of 350 , max OOP of 3k and 5% coninsurance while for the 120k scenario its 5k, 18.4k and 40% respectively. I thought the subsidy you got was just for the premium and the same plans were offered to everyone with the same specifics but it sure don't look that way. If I'm understanding this correctly, then gut says gonna be mostly Roth to get us down to that 30k.

Pretty sure getting credits over the max (~80k) expire this year. The "cliff" is back and if you exceed that amount you'll pay back all the credits at tax time.
The way I understand it is that you get the credit based on estimated income, and can choose your plan from the suite of plans on the marketplace. But like I mentioned, you'll pay back some credit if you go over your estimate, and pay it all back if you go over the max, at tax time.

ETA: And it's figured on MAGI, not just income. Need to be super careful.

good to know. looking at those deductibles and max OOP, i'd certainly just go the Roth route and just lower my magi to maximize those subsidies; 30k from tax deferred and the rest Roth. I was originally just looking at credits not realizing there's such a significant difference between the plans themselves.

 

[NutterButter]

Has anyone looked at these ACA plans for pre-medicare purposes? I was bored at work on Friday so I started poking around the NJ website. So if I put in 30k total income as a couple, we'd get 26k credit in NJ. Nice. So I upped that income up to 120k which is right where I'd want to be and I was surprised to see we'd still get 16k in credits. So great I think, maybe I can just fund with trad IRA worst case. But then I go to the actual plans and I see there's also a huge difference in deductibles and max OOP as well. I don't know if apples to apples comparison but the cheapest United silver plan with a 30k income has a deductible of 350 , max OOP of 3k and 5% coninsurance while for the 120k scenario its 5k, 18.4k and 40% respectively. I thought the subsidy you got was just for the premium and the same plans were offered to everyone with the same specifics but it sure don't look that way. If I'm understanding this correctly, then gut says gonna be mostly Roth to get us down to that 30k.

This is what I do for a living. If your income is low enough (under 250% of the poverty line I think), you can get a second kind of subsidy that lowers your deductible and OOP (as well as a larger subsidy for your premium). Be sure to also look at the type of plan (HMO vs PPO), and be sure your providers participate in whatever policy you’re looking at.

Other than 1 hmo, its all epo. I see what's called a cost sharing reduction that you're referring to that really knocks a lot off the deductible and OOP of the normal silver plan.

 

[Peggy]

Has anyone looked at these ACA plans for pre-medicare purposes? I was bored at work on Friday so I started poking around the NJ website. So if I put in 30k total income as a couple, we'd get 26k credit in NJ. Nice. So I upped that income up to 120k which is right where I'd want to be and I was surprised to see we'd still get 16k in credits. So great I think, maybe I can just fund with trad IRA worst case. But then I go to the actual plans and I see there's also a huge difference in deductibles and max OOP as well. I don't know if apples to apples comparison but the cheapest United silver plan with a 30k income has a deductible of 350 , max OOP of 3k and 5% coninsurance while for the 120k scenario its 5k, 18.4k and 40% respectively. I thought the subsidy you got was just for the premium and the same plans were offered to everyone with the same specifics but it sure don't look that way. If I'm understanding this correctly, then gut says gonna be mostly Roth to get us down to that 30k.

Pretty sure getting credits over the max (~80k) expire this year. The "cliff" is back and if you exceed that amount you'll pay back all the credits at tax time.
The way I understand it is that you get the credit based on estimated income, and can choose your plan from the suite of plans on the marketplace. But like I mentioned, you'll pay back some credit if you go over your estimate, and pay it all back if you go over the max, at tax time.

ETA: And it's figured on MAGI, not just income. Need to be super careful.

good to know. looking at those deductibles and max OOP, i'd certainly just go the Roth route and just lower my magi to maximize those subsidies; 30k from tax deferred and the rest Roth. I was originally just looking at credits not realizing there's such a significant difference between the plans themselves.

I think the websites/marketplace is different for each state how they have it set up. Here in VA you plug in your estimate and it calculates the cost of each plan available per month. At just over Medicaid level (~25k) we'd pay $5 ish for two of us for the plan we were looking at. Near the max (~80k) we'd pay $550 ish. Still way better than Cobra or self insured at $1,300 ish.

I think they fixed the "cliff" in one of the covid bills, but it expires this year. I wish they'd fix it permanently.

 

[NutterButter]

Has anyone looked at these ACA plans for pre-medicare purposes? I was bored at work on Friday so I started poking around the NJ website. So if I put in 30k total income as a couple, we'd get 26k credit in NJ. Nice. So I upped that income up to 120k which is right where I'd want to be and I was surprised to see we'd still get 16k in credits. So great I think, maybe I can just fund with trad IRA worst case. But then I go to the actual plans and I see there's also a huge difference in deductibles and max OOP as well. I don't know if apples to apples comparison but the cheapest United silver plan with a 30k income has a deductible of 350 , max OOP of 3k and 5% coninsurance while for the 120k scenario its 5k, 18.4k and 40% respectively. I thought the subsidy you got was just for the premium and the same plans were offered to everyone with the same specifics but it sure don't look that way. If I'm understanding this correctly, then gut says gonna be mostly Roth to get us down to that 30k.

Pretty sure getting credits over the max (~80k) expire this year. The "cliff" is back and if you exceed that amount you'll pay back all the credits at tax time.
The way I understand it is that you get the credit based on estimated income, and can choose your plan from the suite of plans on the marketplace. But like I mentioned, you'll pay back some credit if you go over your estimate, and pay it all back if you go over the max, at tax time.

ETA: And it's figured on MAGI, not just income. Need to be super careful.

good to know. looking at those deductibles and max OOP, i'd certainly just go the Roth route and just lower my magi to maximize those subsidies; 30k from tax deferred and the rest Roth. I was originally just looking at credits not realizing there's such a significant difference between the plans themselves.

I think the websites/marketplace is different for each state how they have it set up. Here in VA you plug in your estimate and it calculates the cost of each plan available per month. At just over Medicaid level (~25k) we'd pay $5 ish for two of us for the plan we were looking at. Near the max (~80k) we'd pay $550 ish. Still way better than Cobra or self insured at $1,300 ish.

I think they fixed the "cliff" in one of the covid bills, but it expires this year. I wish they'd fix it permanently.

In NJ, you put in your "tax household income" and they list the plans along with your cost. Anything less than 30k income and you qualify for Medicaid. As long as you max out those subsidies, its great. Better OOP, deductible, copays and coinsurance than a similar plan that my company offers now. I haven't looked closely at Medicare but it seems even less than that. Looking at 6k+ max between premiums and max OOP for family. Almost seems too good to be true.

 

[matttyl]

Has anyone looked at these ACA plans for pre-medicare purposes? I was bored at work on Friday so I started poking around the NJ website. So if I put in 30k total income as a couple, we'd get 26k credit in NJ. Nice. So I upped that income up to 120k which is right where I'd want to be and I was surprised to see we'd still get 16k in credits. So great I think, maybe I can just fund with trad IRA worst case. But then I go to the actual plans and I see there's also a huge difference in deductibles and max OOP as well. I don't know if apples to apples comparison but the cheapest United silver plan with a 30k income has a deductible of 350 , max OOP of 3k and 5% coninsurance while for the 120k scenario its 5k, 18.4k and 40% respectively. I thought the subsidy you got was just for the premium and the same plans were offered to everyone with the same specifics but it sure don't look that way. If I'm understanding this correctly, then gut says gonna be mostly Roth to get us down to that 30k.

This is what I do for a living. If your income is low enough (under 250% of the poverty line I think), you can get a second kind of subsidy that lowers your deductible and OOP (as well as a larger subsidy for your premium). Be sure to also look at the type of plan (HMO vs PPO), and be sure your providers participate in whatever policy you’re looking at.

Other than 1 hmo, its all epo. I see what's called a cost sharing reduction that you're referring to that really knocks a lot off the deductible and OOP of the normal silver plan.

All depends on income. Be sure to select a silver plan to get those (and an EPO would be best).

 

[matttyl]

Has anyone looked at these ACA plans for pre-medicare purposes? I was bored at work on Friday so I started poking around the NJ website. So if I put in 30k total income as a couple, we'd get 26k credit in NJ. Nice. So I upped that income up to 120k which is right where I'd want to be and I was surprised to see we'd still get 16k in credits. So great I think, maybe I can just fund with trad IRA worst case. But then I go to the actual plans and I see there's also a huge difference in deductibles and max OOP as well. I don't know if apples to apples comparison but the cheapest United silver plan with a 30k income has a deductible of 350 , max OOP of 3k and 5% coninsurance while for the 120k scenario its 5k, 18.4k and 40% respectively. I thought the subsidy you got was just for the premium and the same plans were offered to everyone with the same specifics but it sure don't look that way. If I'm understanding this correctly, then gut says gonna be mostly Roth to get us down to that 30k.

Pretty sure getting credits over the max (~80k) expire this year. The "cliff" is back and if you exceed that amount you'll pay back all the credits at tax time.
The way I understand it is that you get the credit based on estimated income, and can choose your plan from the suite of plans on the marketplace. But like I mentioned, you'll pay back some credit if you go over your estimate, and pay it all back if you go over the max, at tax time.

ETA: And it's figured on MAGI, not just income. Need to be super careful.

good to know. looking at those deductibles and max OOP, i'd certainly just go the Roth route and just lower my magi to maximize those subsidies; 30k from tax deferred and the rest Roth. I was originally just looking at credits not realizing there's such a significant difference between the plans themselves.

I think the websites/marketplace is different for each state how they have it set up. Here in VA you plug in your estimate and it calculates the cost of each plan available per month. At just over Medicaid level (~25k) we'd pay $5 ish for two of us for the plan we were looking at. Near the max (~80k) we'd pay $550 ish. Still way better than Cobra or self insured at $1,300 ish.

I think they fixed the "cliff" in one of the covid bills, but it expires this year. I wish they'd fix it permanently.

In NJ, you put in your "tax household income" and they list the plans along with your cost. Anything less than 30k income and you qualify for Medicaid. As long as you max out those subsidies, its great. Better OOP, deductible, copays and coinsurance than a similar plan that my company offers now. I haven't looked closely at Medicare but it seems even less than that. Looking at 6k+ max between premiums and max OOP for family. Almost seems too good to be true.

So long as your actual AGI is low enough, you could get legit free coverage. Not sure it was the intent of the law for people to manipulate their AGI to get tens of thousands in subsidies and retire early.

 

[NutterButter]

Has anyone looked at these ACA plans for pre-medicare purposes? I was bored at work on Friday so I started poking around the NJ website. So if I put in 30k total income as a couple, we'd get 26k credit in NJ. Nice. So I upped that income up to 120k which is right where I'd want to be and I was surprised to see we'd still get 16k in credits. So great I think, maybe I can just fund with trad IRA worst case. But then I go to the actual plans and I see there's also a huge difference in deductibles and max OOP as well. I don't know if apples to apples comparison but the cheapest United silver plan with a 30k income has a deductible of 350 , max OOP of 3k and 5% coninsurance while for the 120k scenario its 5k, 18.4k and 40% respectively. I thought the subsidy you got was just for the premium and the same plans were offered to everyone with the same specifics but it sure don't look that way. If I'm understanding this correctly, then gut says gonna be mostly Roth to get us down to that 30k.

Pretty sure getting credits over the max (~80k) expire this year. The "cliff" is back and if you exceed that amount you'll pay back all the credits at tax time.
The way I understand it is that you get the credit based on estimated income, and can choose your plan from the suite of plans on the marketplace. But like I mentioned, you'll pay back some credit if you go over your estimate, and pay it all back if you go over the max, at tax time.

ETA: And it's figured on MAGI, not just income. Need to be super careful.

good to know. looking at those deductibles and max OOP, i'd certainly just go the Roth route and just lower my magi to maximize those subsidies; 30k from tax deferred and the rest Roth. I was originally just looking at credits not realizing there's such a significant difference between the plans themselves.

I think the websites/marketplace is different for each state how they have it set up. Here in VA you plug in your estimate and it calculates the cost of each plan available per month. At just over Medicaid level (~25k) we'd pay $5 ish for two of us for the plan we were looking at. Near the max (~80k) we'd pay $550 ish. Still way better than Cobra or self insured at $1,300 ish.

I think they fixed the "cliff" in one of the covid bills, but it expires this year. I wish they'd fix it permanently.

In NJ, you put in your "tax household income" and they list the plans along with your cost. Anything less than 30k income and you qualify for Medicaid. As long as you max out those subsidies, its great. Better OOP, deductible, copays and coinsurance than a similar plan that my company offers now. I haven't looked closely at Medicare but it seems even less than that. Looking at 6k+ max between premiums and max OOP for family. Almost seems too good to be true.

So long as your actual AGI is low enough, you could get legit free coverage. Not sure it was the intent of the law for people to manipulate their AGI to get tens of thousands in subsidies and retire early.

Yeah, probably not . I see there's a silver plan with no premiums but the OOP and deductible are naturally a lot higher. At that stage of life, I'd probably just pay some premium so I can just get all the care I'll probably start needing without having to deliberate about whether the treatment is worth getting. It would be pretty amazing to know that I can cover all mine and my spouse's medical needs for at mot $6k. I was always under the impression that such an avenue existed, but the cost savings didn't really resonate until now when I started looking into it in earnest. Just needed to make sure I wasn't misunderstanding something which does happen so I had to consult the experts here.

 

[matttyl]

Has anyone looked at these ACA plans for pre-medicare purposes? I was bored at work on Friday so I started poking around the NJ website. So if I put in 30k total income as a couple, we'd get 26k credit in NJ. Nice. So I upped that income up to 120k which is right where I'd want to be and I was surprised to see we'd still get 16k in credits. So great I think, maybe I can just fund with trad IRA worst case. But then I go to the actual plans and I see there's also a huge difference in deductibles and max OOP as well. I don't know if apples to apples comparison but the cheapest United silver plan with a 30k income has a deductible of 350 , max OOP of 3k and 5% coninsurance while for the 120k scenario its 5k, 18.4k and 40% respectively. I thought the subsidy you got was just for the premium and the same plans were offered to everyone with the same specifics but it sure don't look that way. If I'm understanding this correctly, then gut says gonna be mostly Roth to get us down to that 30k.

Pretty sure getting credits over the max (~80k) expire this year. The "cliff" is back and if you exceed that amount you'll pay back all the credits at tax time.
The way I understand it is that you get the credit based on estimated income, and can choose your plan from the suite of plans on the marketplace. But like I mentioned, you'll pay back some credit if you go over your estimate, and pay it all back if you go over the max, at tax time.

ETA: And it's figured on MAGI, not just income. Need to be super careful.

good to know. looking at those deductibles and max OOP, i'd certainly just go the Roth route and just lower my magi to maximize those subsidies; 30k from tax deferred and the rest Roth. I was originally just looking at credits not realizing there's such a significant difference between the plans themselves.

I think the websites/marketplace is different for each state how they have it set up. Here in VA you plug in your estimate and it calculates the cost of each plan available per month. At just over Medicaid level (~25k) we'd pay $5 ish for two of us for the plan we were looking at. Near the max (~80k) we'd pay $550 ish. Still way better than Cobra or self insured at $1,300 ish.

I think they fixed the "cliff" in one of the covid bills, but it expires this year. I wish they'd fix it permanently.

In NJ, you put in your "tax household income" and they list the plans along with your cost. Anything less than 30k income and you qualify for Medicaid. As long as you max out those subsidies, its great. Better OOP, deductible, copays and coinsurance than a similar plan that my company offers now. I haven't looked closely at Medicare but it seems even less than that. Looking at 6k+ max between premiums and max OOP for family. Almost seems too good to be true.

So long as your actual AGI is low enough, you could get legit free coverage. Not sure it was the intent of the law for people to manipulate their AGI to get tens of thousands in subsidies and retire early.

Yeah, probably not . I see there's a silver plan with no premiums but the OOP and deductible are naturally a lot higher. At that stage of life, I'd probably just pay some premium so I can just get all the care I'll probably start needing without having to deliberate about whether the treatment is worth getting. It would be pretty amazing to know that I can cover all mine and my spouse's medical needs for at mot $6k. I was always under the impression that such an avenue existed, but the cost savings didn't really resonate until now when I started looking into it in earnest. Just needed to make sure I wasn't misunderstanding something which does happen so I had to consult the experts here.

Yeah, it’s legit. Just be careful about your income sources. Had some clients “earn” more than they had projected and owed a lot of those subsidies back with their taxes.

 

[NutterButter]

Has anyone looked at these ACA plans for pre-medicare purposes? I was bored at work on Friday so I started poking around the NJ website. So if I put in 30k total income as a couple, we'd get 26k credit in NJ. Nice. So I upped that income up to 120k which is right where I'd want to be and I was surprised to see we'd still get 16k in credits. So great I think, maybe I can just fund with trad IRA worst case. But then I go to the actual plans and I see there's also a huge difference in deductibles and max OOP as well. I don't know if apples to apples comparison but the cheapest United silver plan with a 30k income has a deductible of 350 , max OOP of 3k and 5% coninsurance while for the 120k scenario its 5k, 18.4k and 40% respectively. I thought the subsidy you got was just for the premium and the same plans were offered to everyone with the same specifics but it sure don't look that way. If I'm understanding this correctly, then gut says gonna be mostly Roth to get us down to that 30k.

Pretty sure getting credits over the max (~80k) expire this year. The "cliff" is back and if you exceed that amount you'll pay back all the credits at tax time.
The way I understand it is that you get the credit based on estimated income, and can choose your plan from the suite of plans on the marketplace. But like I mentioned, you'll pay back some credit if you go over your estimate, and pay it all back if you go over the max, at tax time.

ETA: And it's figured on MAGI, not just income. Need to be super careful.

good to know. looking at those deductibles and max OOP, i'd certainly just go the Roth route and just lower my magi to maximize those subsidies; 30k from tax deferred and the rest Roth. I was originally just looking at credits not realizing there's such a significant difference between the plans themselves.

I think the websites/marketplace is different for each state how they have it set up. Here in VA you plug in your estimate and it calculates the cost of each plan available per month. At just over Medicaid level (~25k) we'd pay $5 ish for two of us for the plan we were looking at. Near the max (~80k) we'd pay $550 ish. Still way better than Cobra or self insured at $1,300 ish.

I think they fixed the "cliff" in one of the covid bills, but it expires this year. I wish they'd fix it permanently.

In NJ, you put in your "tax household income" and they list the plans along with your cost. Anything less than 30k income and you qualify for Medicaid. As long as you max out those subsidies, its great. Better OOP, deductible, copays and coinsurance than a similar plan that my company offers now. I haven't looked closely at Medicare but it seems even less than that. Looking at 6k+ max between premiums and max OOP for family. Almost seems too good to be true.

So long as your actual AGI is low enough, you could get legit free coverage. Not sure it was the intent of the law for people to manipulate their AGI to get tens of thousands in subsidies and retire early.

Yeah, probably not . I see there's a silver plan with no premiums but the OOP and deductible are naturally a lot higher. At that stage of life, I'd probably just pay some premium so I can just get all the care I'll probably start needing without having to deliberate about whether the treatment is worth getting. It would be pretty amazing to know that I can cover all mine and my spouse's medical needs for at mot $6k. I was always under the impression that such an avenue existed, but the cost savings didn't really resonate until now when I started looking into it in earnest. Just needed to make sure I wasn't misunderstanding something which does happen so I had to consult the experts here.

Yeah, it’s legit. Just be careful about your income sources. Had some clients “earn” more than they had projected and owed a lot of those subsidies back with their taxes.

I think simplest thing would be 30k trad ira and the rest roth. Nice and simple. That would also leave me with no tax after the standard deduction. Might not be the best approach long term with rmds looming, but that determination gets complicated.

 

[matttyl]

Has anyone looked at these ACA plans for pre-medicare purposes? I was bored at work on Friday so I started poking around the NJ website. So if I put in 30k total income as a couple, we'd get 26k credit in NJ. Nice. So I upped that income up to 120k which is right where I'd want to be and I was surprised to see we'd still get 16k in credits. So great I think, maybe I can just fund with trad IRA worst case. But then I go to the actual plans and I see there's also a huge difference in deductibles and max OOP as well. I don't know if apples to apples comparison but the cheapest United silver plan with a 30k income has a deductible of 350 , max OOP of 3k and 5% coninsurance while for the 120k scenario its 5k, 18.4k and 40% respectively. I thought the subsidy you got was just for the premium and the same plans were offered to everyone with the same specifics but it sure don't look that way. If I'm understanding this correctly, then gut says gonna be mostly Roth to get us down to that 30k.

Pretty sure getting credits over the max (~80k) expire this year. The "cliff" is back and if you exceed that amount you'll pay back all the credits at tax time.
The way I understand it is that you get the credit based on estimated income, and can choose your plan from the suite of plans on the marketplace. But like I mentioned, you'll pay back some credit if you go over your estimate, and pay it all back if you go over the max, at tax time.

ETA: And it's figured on MAGI, not just income. Need to be super careful.

good to know. looking at those deductibles and max OOP, i'd certainly just go the Roth route and just lower my magi to maximize those subsidies; 30k from tax deferred and the rest Roth. I was originally just looking at credits not realizing there's such a significant difference between the plans themselves.

I think the websites/marketplace is different for each state how they have it set up. Here in VA you plug in your estimate and it calculates the cost of each plan available per month. At just over Medicaid level (~25k) we'd pay $5 ish for two of us for the plan we were looking at. Near the max (~80k) we'd pay $550 ish. Still way better than Cobra or self insured at $1,300 ish.

I think they fixed the "cliff" in one of the covid bills, but it expires this year. I wish they'd fix it permanently.

In NJ, you put in your "tax household income" and they list the plans along with your cost. Anything less than 30k income and you qualify for Medicaid. As long as you max out those subsidies, its great. Better OOP, deductible, copays and coinsurance than a similar plan that my company offers now. I haven't looked closely at Medicare but it seems even less than that. Looking at 6k+ max between premiums and max OOP for family. Almost seems too good to be true.

So long as your actual AGI is low enough, you could get legit free coverage. Not sure it was the intent of the law for people to manipulate their AGI to get tens of thousands in subsidies and retire early.

Yeah, probably not . I see there's a silver plan with no premiums but the OOP and deductible are naturally a lot higher. At that stage of life, I'd probably just pay some premium so I can just get all the care I'll probably start needing without having to deliberate about whether the treatment is worth getting. It would be pretty amazing to know that I can cover all mine and my spouse's medical needs for at mot $6k. I was always under the impression that such an avenue existed, but the cost savings didn't really resonate until now when I started looking into it in earnest. Just needed to make sure I wasn't misunderstanding something which does happen so I had to consult the experts here.

Yeah, it’s legit. Just be careful about your income sources. Had some clients “earn” more than they had projected and owed a lot of those subsidies back with their taxes.

I think simplest thing would be 30k trad ira and the rest roth. Nice and simple. That would also leave me with no tax after the standard deduction. Might not be the best approach long term with rmds looming, but that determination gets complicated.

No cash?

 

[NutterButter]

Has anyone looked at these ACA plans for pre-medicare purposes? I was bored at work on Friday so I started poking around the NJ website. So if I put in 30k total income as a couple, we'd get 26k credit in NJ. Nice. So I upped that income up to 120k which is right where I'd want to be and I was surprised to see we'd still get 16k in credits. So great I think, maybe I can just fund with trad IRA worst case. But then I go to the actual plans and I see there's also a huge difference in deductibles and max OOP as well. I don't know if apples to apples comparison but the cheapest United silver plan with a 30k income has a deductible of 350 , max OOP of 3k and 5% coninsurance while for the 120k scenario its 5k, 18.4k and 40% respectively. I thought the subsidy you got was just for the premium and the same plans were offered to everyone with the same specifics but it sure don't look that way. If I'm understanding this correctly, then gut says gonna be mostly Roth to get us down to that 30k.

Pretty sure getting credits over the max (~80k) expire this year. The "cliff" is back and if you exceed that amount you'll pay back all the credits at tax time.
The way I understand it is that you get the credit based on estimated income, and can choose your plan from the suite of plans on the marketplace. But like I mentioned, you'll pay back some credit if you go over your estimate, and pay it all back if you go over the max, at tax time.

ETA: And it's figured on MAGI, not just income. Need to be super careful.

good to know. looking at those deductibles and max OOP, i'd certainly just go the Roth route and just lower my magi to maximize those subsidies; 30k from tax deferred and the rest Roth. I was originally just looking at credits not realizing there's such a significant difference between the plans themselves.

I think the websites/marketplace is different for each state how they have it set up. Here in VA you plug in your estimate and it calculates the cost of each plan available per month. At just over Medicaid level (~25k) we'd pay $5 ish for two of us for the plan we were looking at. Near the max (~80k) we'd pay $550 ish. Still way better than Cobra or self insured at $1,300 ish.

I think they fixed the "cliff" in one of the covid bills, but it expires this year. I wish they'd fix it permanently.

In NJ, you put in your "tax household income" and they list the plans along with your cost. Anything less than 30k income and you qualify for Medicaid. As long as you max out those subsidies, its great. Better OOP, deductible, copays and coinsurance than a similar plan that my company offers now. I haven't looked closely at Medicare but it seems even less than that. Looking at 6k+ max between premiums and max OOP for family. Almost seems too good to be true.

So long as your actual AGI is low enough, you could get legit free coverage. Not sure it was the intent of the law for people to manipulate their AGI to get tens of thousands in subsidies and retire early.

Yeah, probably not . I see there's a silver plan with no premiums but the OOP and deductible are naturally a lot higher. At that stage of life, I'd probably just pay some premium so I can just get all the care I'll probably start needing without having to deliberate about whether the treatment is worth getting. It would be pretty amazing to know that I can cover all mine and my spouse's medical needs for at mot $6k. I was always under the impression that such an avenue existed, but the cost savings didn't really resonate until now when I started looking into it in earnest. Just needed to make sure I wasn't misunderstanding something which does happen so I had to consult the experts here.

Yeah, it’s legit. Just be careful about your income sources. Had some clients “earn” more than they had projected and owed a lot of those subsidies back with their taxes.

I think simplest thing would be 30k trad ira and the rest roth. Nice and simple. That would also leave me with no tax after the standard deduction. Might not be the best approach long term with rmds looming, but that determination gets complicated.

No cash?

- YouTube

Auf YouTube findest du die angesagtesten Videos und Tracks. Außerdem kannst du eigene Inhalte hochladen und mit Freunden oder gleich der ganzen Welt teilen.

www.youtube.com

Maybe. I guess it depends on market conditions. As far as aca, I think the idea is not to go over 30k taxable income.

 

[NutterButter]

Just did a little more digging, and you're right - capital gains are included in MAGI, which is what Medicaid and the ACA subsidies are each based on. So it's a little simpler than I was thinking. Sell some stock to live on, pay the LTCG (but not income) tax, but your LTCG do count as part of your MAGI.

Say you have a scenario where you wanted to live off of ltcg but you also wanted to maximize aca subsidies. You could in theory just withdraw all the ltcg's in one shot the year prior to starting the aca plan, pay the 15% tax and then for those aca years, those gains wouldn't affect magi right? Obviously you lose out on the gains on that tax you paid by withdrawing earlier than you needed it but my top of the old noggin math tells me its worth not having to pay all those extra healthcare premiums by qualifying for aca subsidies. Now that I've come up with a solid aca plan for those 60-65 years, I've moved onto pre-60 just in case I decide pull the old ripcord a little sooner.

 

[SFBayDuck]

Just did a little more digging, and you're right - capital gains are included in MAGI, which is what Medicaid and the ACA subsidies are each based on. So it's a little simpler than I was thinking. Sell some stock to live on, pay the LTCG (but not income) tax, but your LTCG do count as part of your MAGI.

Say you have a scenario where you wanted to live off of ltcg but you also wanted to maximize aca subsidies. You could in theory just withdraw all the ltcg's in one shot the year prior to starting the aca plan, pay the 15% tax and then for those aca years, those gains wouldn't affect magi right? Obviously you lose out on the gains on that tax you paid by withdrawing earlier than you needed it but my top of the old noggin math tells me its worth not having to pay all those extra healthcare premiums by qualifying for aca subsidies. Now that I've come up with a solid aca plan for those 60-65 years, I've moved onto pre-60 just in case I decide pull the old ripcord a little sooner.

I mean that sounds potentially reasonable, but you'd want to model it out over the entire period to see how you would net out. For example if you were recognizing under $97K LTCG every year as a MFJ during the period, you'd be paying 0% LTCG tax. But if you front loaded a whole bunch you could be paying 15% (or even 20%) on that, which might offset the ACA tax credits you receive downstream.

It's one of the things I've picked up here early in my education on all of this stuff, is the need to shift from thinking about how to minimize taxes on a year-by-year basis to thinking about how to minimize taxes over the life of your retirement. Kind of a "no duh" concept, but it's very different than how most people tend to think about taxes during their working years. This essentially falls into that bucket as the subsidies are actually a tax credit. Which now makes me wonder, what happens if you don't owe any federal taxes anyway and qualify for an ACA tax credit? I assume you still receive it?

 

[NutterButter]

Just did a little more digging, and you're right - capital gains are included in MAGI, which is what Medicaid and the ACA subsidies are each based on. So it's a little simpler than I was thinking. Sell some stock to live on, pay the LTCG (but not income) tax, but your LTCG do count as part of your MAGI.

Say you have a scenario where you wanted to live off of ltcg but you also wanted to maximize aca subsidies. You could in theory just withdraw all the ltcg's in one shot the year prior to starting the aca plan, pay the 15% tax and then for those aca years, those gains wouldn't affect magi right? Obviously you lose out on the gains on that tax you paid by withdrawing earlier than you needed it but my top of the old noggin math tells me its worth not having to pay all those extra healthcare premiums by qualifying for aca subsidies. Now that I've come up with a solid aca plan for those 60-65 years, I've moved onto pre-60 just in case I decide pull the old ripcord a little sooner.

I mean that sounds potentially reasonable, but you'd want to model it out over the entire period to see how you would net out. For example if you were recognizing under $97K LTCG every year as a MFJ during the period, you'd be paying 0% LTCG tax. But if you front loaded a whole bunch you could be paying 15% (or even 20%) on that, which might offset the ACA tax credits you receive downstream.

It's one of the things I've picked up here early in my education on all of this stuff, is the need to shift from thinking about how to minimize taxes on a year-by-year basis to thinking about how to minimize taxes over the life of your retirement. Kind of a "no duh" concept, but it's very different than how most people tend to think about taxes during their working years. This essentially falls into that bucket as the subsidies are actually a tax credit. Which now makes me wonder, what happens if you don't owe any federal taxes anyway and qualify for an ACA tax credit? I assume you still receive it?

Fair point about long term modeling. Speaking of the two ltcg approaches, if the "cliff" comes back as Peggy mentioned earlier, the premiums alone will exceed the taxes you'd save on the declaring 97k in gains each year and paying $0 in taxes but losing those subsidies. And if you have some medical issues, that just adds to the additional costs of that approach. If the "cliff" doesn't come back, then its close just looking at premiums and then would depend on how much medical care you incur.

I assume you'd qualify if you didn't have any tax bill. Obviously we're not talking about ltcg's which are included in magi.

 

[New Binky the Doormat]

anyone else in this thread concerned about high level crypto bros looking to devalue the US dollar - especially those of us that are not interested in diving into that hellscape?

 

[NutterButter]

anyone else in this thread concerned about high level crypto bros looking to devalue the US dollar - especially those of us that are not interested in diving into that hellscape?

nope but i don't know what that means and i aim to keep it that way

 

[Desert_Power]

anyone else in this thread concerned about high level crypto bros looking to devalue the US dollar - especially those of us that are not interested in diving into that hellscape?

nope but i don't know what that means and i aim to keep it that way

There are proposals for the US Government to purchase up to 4 million BTC (worth approximately $400B). This really wouldn't do anything to the value of the US Dollar. In fact, the inflationary impact of the increased spending to do this would bias interest rates higher pressuring the USD to appreciate at the margin.

 

[Sand]

anyone else in this thread concerned about high level crypto bros looking to devalue the US dollar - especially those of us that are not interested in diving into that hellscape?

No. Much more worked about quantum computing breaking encryption and making the whole sector moot.

 

[Orange&Blue]

anyone else in this thread concerned about high level crypto bros looking to devalue the US dollar - especially those of us that are not interested in diving into that hellscape?

No. Much more worked about quantum computing breaking encryption and making the whole sector moot.

that's a matter of when not if.

can't remember where i heard this, but there is something like 20% of all Bitcoin that is basically already vulnerable without quantum computing.

 

[brun]

Not a "retire early" thing but may still be of interest to some.

Talked to a woman at work who just turned 70 this month. She has applied for SS and will actually retire in a couple months.
Apparently if you apply at 70 you have an option to retroactively start with your benefit 6 months earlier. She agreed to this option and within a few days she received her retroactive check for 6 months.
My 1st thought was, why bother, but she has just now gotten 6 months of SS in the year when she no longer has FT employment income. This might be favorable tax wise.

 

[Ministry of Pain]

This whole Roth-IRA thing, if you have a household income of around $230-$237k, something like that but not even $250k total household income which these days in more metropolis sections of the country, that's not unbelievable at all that two working adults would be pulling in a 6-figure salary each

Where I'm going and what I'm saying is you can't start one of these or continue to fund one of these if you make over the amounts I just went over
How are people suppose to get ahead? Not everyone starts a Roth when they're 18 yrs old but believe me after reading the fine print, it should be a requirement

A decent chunk of our retirement is going to be in 401k/403b style investments and as you all know they get taxed as you withdraw
My son is 25 and he already has his Roth set up and I had to give him the bad news that at some point in the future I'm expecting him to not be able to fund that any more
He got the joke

My son also tells me that the 6% of his salary which is matched with another 3% from the company, that money is currently split between his 401 and his Roth
I have to believe him but I don't ever remember that being an option or presented to anyone at companies and non profits we have worked at.

1st World Problems and that's perfectly fine

 

[Sand]

Not a "retire early" thing but may still be of interest to some.

Talked to a woman at work who just turned 70 this month. She has applied for SS and will actually retire in a couple months.
Apparently if you apply at 70 you have an option to retroactively start with your benefit 6 months earlier. She agreed to this option and within a few days she received her retroactive check for 6 months.
My 1st thought was, why bother, but she has just now gotten 6 months of SS in the year when she no longer has FT employment income. This might be favorable tax wise.

I've seen this talked about elsewhere. I believe that if you choose this option you get a reduced amount for life. So be sure you know the effects before accepting this.

 

[Instinctive]

This whole Roth-IRA thing, if you have a household income of around $230-$237k, something like that but not even $250k total household income which these days in more metropolis sections of the country, that's not unbelievable at all that two working adults would be pulling in a 6-figure salary each

Where I'm going and what I'm saying is you can't start one of these or continue to fund one of these if you make over the amounts I just went over
How are people suppose to get ahead? Not everyone starts a Roth when they're 18 yrs old but believe me after reading the fine print, it should be a requirement

A decent chunk of our retirement is going to be in 401k/403b style investments and as you all know they get taxed as you withdraw
My son is 25 and he already has his Roth set up and I had to give him the bad news that at some point in the future I'm expecting him to not be able to fund that any more
He got the joke

My son also tells me that the 6% of his salary which is matched with another 3% from the company, that money is currently split between his 401 and his Roth
I have to believe him but I don't ever remember that being an option or presented to anyone at companies and non profits we have worked at.

1st World Problems and that's perfectly fine

Yeah I mean FWIW $230k is the 86th percentile of household income in the U.S. HOUSEHOLD, not individual.

For individuals, $100k puts you at the 82nd percentile.

So ~80% of all people can fund a Roth IRA without issues.


For the rest of us...you make a non-deductible contribution to a Traditional IRA, file your E-85, and immediately convert it to a Roth IRA. No tax consequence since your nondeductible traditional IRA contribution was already post-tax.

 

[Sand]

This whole Roth-IRA thing, if you have a household income of around $230-$237k, something like that but not even $250k total household income which these days in more metropolis sections of the country, that's not unbelievable at all that two working adults would be pulling in a 6-figure salary each

Where I'm going and what I'm saying is you can't start one of these or continue to fund one of these if you make over the amounts I just went over
How are people suppose to get ahead? Not everyone starts a Roth when they're 18 yrs old but believe me after reading the fine print, it should be a requirement

A decent chunk of our retirement is going to be in 401k/403b style investments and as you all know they get taxed as you withdraw
My son is 25 and he already has his Roth set up and I had to give him the bad news that at some point in the future I'm expecting him to not be able to fund that any more
He got the joke

My son also tells me that the 6% of his salary which is matched with another 3% from the company, that money is currently split between his 401 and his Roth
I have to believe him but I don't ever remember that being an option or presented to anyone at companies and non profits we have worked at.

1st World Problems and that's perfectly fine

If you're outside the range to contribute to Roth you still have a 401k, HSA, and taxable you can sock away money in.

These days the options are wider than they were for 401ks. Much of it because starting next year many folks that do catch-up contributions will be forced to do Roth 401k contributions, so that has to be in the plans to be able to comply.

 

[IvanKaramazov]

This whole Roth-IRA thing, if you have a household income of around $230-$237k, something like that but not even $250k total household income which these days in more metropolis sections of the country, that's not unbelievable at all that two working adults would be pulling in a 6-figure salary each

Where I'm going and what I'm saying is you can't start one of these or continue to fund one of these if you make over the amounts I just went over
How are people suppose to get ahead? Not everyone starts a Roth when they're 18 yrs old but believe me after reading the fine print, it should be a requirement

A decent chunk of our retirement is going to be in 401k/403b style investments and as you all know they get taxed as you withdraw
My son is 25 and he already has his Roth set up and I had to give him the bad news that at some point in the future I'm expecting him to not be able to fund that any more
He got the joke

My son also tells me that the 6% of his salary which is matched with another 3% from the company, that money is currently split between his 401 and his Roth
I have to believe him but I don't ever remember that being an option or presented to anyone at companies and non profits we have worked at.

1st World Problems and that's perfectly fine

You kind of answered your own question. People should be saving for retirement in their 20s, and definitely by their 30s. That gives you lots of time to get your Roth going and to let compounding do its thing. If you're earning so much out of college that you can't start a Roth, salud!

For most people in this situation, they'll retire with a Roth and also a traditional IRA. We never bothered with traditional IRAs because we've always been under the Roth phase-out limits. But it's fine. You'll just need to keep an eye on RMDs, and your tax planning might be a little more complicated. But it's not that big a deal.

 

[IvanKaramazov]

I know this is stupid, but when I was younger, I thought you had to choose between a Roth or a traditional IRA. I honestly didn't realize you could do both. We have a bunch of money in our brokerage account that I probably should steered into a tax-deferred account instead, but it's nice having the flexibility of a large brokerage account. That wasn't optimal, obviously.

It's a nice reminder that you can some dumb mistakes and "time in the market" will paper over them.

 

[guru_007]

FWIW, the income limits are MAGI, so really, a married household both maxing out their 401K's, could make well into the $300K/yearly income level before not being able to contribute to a Roth, and even so, there is always the back door roth option available.

 

[brun]

Not a "retire early" thing but may still be of interest to some.

Talked to a woman at work who just turned 70 this month. She has applied for SS and will actually retire in a couple months.
Apparently if you apply at 70 you have an option to retroactively start with your benefit 6 months earlier. She agreed to this option and within a few days she received her retroactive check for 6 months.
My 1st thought was, why bother, but she has just now gotten 6 months of SS in the year when she no longer has FT employment income. This might be favorable tax wise.

I've seen this talked about elsewhere. I believe that if you choose this option you get a reduced amount for life. So be sure you know the effects before accepting this.

Basically your benefit then becomes what it would have been at 69 & a half instead of 70. This makes sense but it needs to be understood.
Personally, for most people, I believe in collecting pretty much as soon as you qualify for the full retirement benefit.

 

[Instinctive]

I know this is stupid, but when I was younger, I thought you had to choose between a Roth or a traditional IRA. I honestly didn't realize you could do both. We have a bunch of money in our brokerage account that I probably should steered into a tax-deferred account instead, but it's nice having the flexibility of a large brokerage account. That wasn't optimal, obviously.

It's a nice reminder that you can some dumb mistakes and "time in the market" will paper over them.

I'll always be on the "have lots of options" train.

We've got ours spread across:

~25% taxable brokerage
~25% her trad 401(k)s
~25% my trad 401(k)
~10% + ~10% each Roth IRA
~5% in checking/savings/a small HSA

Over time as we keep going I think some of that'll change: given a goal of FIRE, we'll probably be tilting more towards the taxable account, keep doing a backdoor Roth to the max for each of us, and then just getting any company matches in 401(k)s and letting them grow for the next 27 years mostly without the extra contributions beyond any necessary for a match.

 

[Ministry of Pain]

This whole Roth-IRA thing, if you have a household income of around $230-$237k, something like that but not even $250k total household income which these days in more metropolis sections of the country, that's not unbelievable at all that two working adults would be pulling in a 6-figure salary each

Where I'm going and what I'm saying is you can't start one of these or continue to fund one of these if you make over the amounts I just went over
How are people suppose to get ahead? Not everyone starts a Roth when they're 18 yrs old but believe me after reading the fine print, it should be a requirement

A decent chunk of our retirement is going to be in 401k/403b style investments and as you all know they get taxed as you withdraw
My son is 25 and he already has his Roth set up and I had to give him the bad news that at some point in the future I'm expecting him to not be able to fund that any more
He got the joke

My son also tells me that the 6% of his salary which is matched with another 3% from the company, that money is currently split between his 401 and his Roth
I have to believe him but I don't ever remember that being an option or presented to anyone at companies and non profits we have worked at.

1st World Problems and that's perfectly fine

Yeah I mean FWIW $230k is the 86th percentile of household income in the U.S. HOUSEHOLD, not individual.

For individuals, $100k puts you at the 82nd percentile.

So ~80% of all people can fund a Roth IRA without issues.


For the rest of us...you make a non-deductible contribution to a Traditional IRA, file your E-85, and immediately convert it to a Roth IRA. No tax consequence since your nondeductible traditional IRA contribution was already post-tax.

The whole 80% thing compared to most folks in the country....the difference between where we are and the top 1%-2%-5% of the country is astronomical so to me the difference between a family making $250k vs the ones that bring in $150k total household income, basically the same people

Half the country retires with $0 in the bank and attempts to live off social security.
Only 1/3 of this country has an advanced degree
Let's not short change the hard work it takes to even approach the number the government wants to impose as the Mason-Dixon on Roth-IRA

Why am I getting so defensive over nothing?
I want to thank you for the instant answer that expands options as we continue this journey
FTR: That number I brought up, we haven't passed that number yet but if you're gonna break that ceiling, it better be by a lot not by an inch

It's making me reconsider some upcoming decisions for '25 and beyond. We both just turned 50 and it feels like the next 5-10 years for us are going to be critical
-I would like to keep jamming the Roth for as long and as much as possible, the difference when we get into our 60s (I didn't seriously just write that, did I?) is gonna be huge

I appreciate the post back and information
I am going to look into that
Thank You!