Taxes in retirement

[dtlister]

Hi! Mother of five from SC. There are plenty of retirement calculators out there. Has anyone seen one that will help maximize tax strategy with consideration for social security RMDs, Roth conversion ladders and ACA subsidies in early retirement?

 

[pb4uski]

No.

 

[SnowballCamper]

https://www.i-orp.com/Spend/extended.html

Comes close, but does have some limitations. I'm new to it, and have used linear programming (the underlying mathematics ORP uses) in other applications. So I'll let others chime in on the limitations, but the online documentation I find to be fairly robust.

 

[SevenUp]

Nothing that does both a multi-year look and rigorous tax and other (e.g., ACA and IRMAA) income-related calculations.

I-orp can be very good at multi-year looks - check its tax calculations to see if they are adequate for your situation.

The personal finance toolbox Excel spreadsheet is very good at one year's worth of rigorous tax and other (e.g., ACA and IRMAA) income-related calculations.

 

[HI Bill]

Has anyone seen one that will help maximize tax strategy with consideration for social security RMDs, Roth conversion ladders and ACA subsidies in early retirement?

Welcome! Most folks here work to devise a withdrawal plan that evens out taxes over the duration of one's retirement rather than just early retirement, especially accounting for the time when RMDs and SS kick in, often moving folks to higher tax brackets. I-ORP can help you plan distributions from and ER age to RMD age 70. But whether this is a valid concern for you depends on the length of time from your retirement to other income and RMDs, and what % of your income will come from what sources.

Many try to take as much out of tax-deferred accounts between 59.5 to 70 as possible to minimize the tax burden later, and many do ROTH conversions with these $.

One concern is that current tax rates may be likely much lower than future tax rates. So it may be beneficial to pay more in taxes now than later...or not.

 

[Senator]

I changed my residence to FL. That will help me with my tax strategy.

 

[Bir48die]

Many folks just had certain options to save more before tax money along with after taxed money. We had an aggressive deferred comp program. So I socked a ton away in that with my other retirement options. After I hit a number then I started looking at withdrawal strategies. Since I’m in a mandatory withdrawal on my def comp I expect to have “x” in taxes plus my wife’s pension and SS. So there’s only about 35% that I can effectively strategize on tax structure. It’s not all cut in stone

 

[Dtail]

I changed my residence to FL. That will help me with my tax strategy.

Here here....

 

[Senator]

Here here....

I can now homestead two properties, a large property tax exemption on one, and a property tax refund on the other. We both get 100% free healthcare this way. When I travel back to MN to work on my rentals, it's a write-off. Mileage, food and lodging.

I have already given the Government a signed blank check to fill out for any amount, up to and including my life. That should have been enough.

 

[pb4uski]

To my knowledge, you can legitimately only have one homestead. It is possible for a married couple to have different homesteads, but IIRC in that case you only get 1/2 of an exemption.

 

[Senator]

To my knowledge, you can legitimately only have one homestead. It is possible for a married couple to have different homesteads, but IIRC in that case you only get 1/2 of an exemption.

True. The DGF homesteads one, I homestead another. Prior to this, only I was able to homestead. I put the DGF as owner of the property in MN, via a contract for deed. Now she can homestead and get a large property tax refund and free healthcare due to being low-income.

 

[pb4uski]

Ok, that makes sense. I just want to make sure that people didn't think that a single person or a married couple could have two homesteads.

So to be more precise, you don't homestead two properties... you homestead one and DGF homesteads one.

 

[Senator]

Ok, that makes sense. I just want to make sure that people didn't think that a single person or a married couple could have two homesteads.

So to be more precise, you don't homestead two properties... you homestead one and DGF homesteads one.

True. It was a change that should save 5k in taxes, between property and income taxes.

However a married couple can homestead two. I think they have to file separately.