Well, $700,000 might sound like a lot of money to a lot of families, but once you break that down, it would produce, with Social Security, about $67,000 a year. However, most of their retirement assets are in taxable accounts. So any money they pull out they're going to be paying ordinary income taxes. So that $67,000 then becomes, according to our financial planner, about $50,000.
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No. If the money is in taxable accounts it is NOT taxed on withdrawal at ordinary rates. You pay taxes on dividends (at ordinary rates) and capital gains - but only if you sell and have no tax losses to offset. Your return of (your already taxed) capital is tax free.
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