Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Planning my last months at work
Old 11-19-2019, 06:50 PM   #1
Recycles dryer sheets
conversationalphrase's Avatar
 
Join Date: Jan 2017
Posts: 64
Planning my last months at work

I had originally planned to FIRE at the end of this year, but due to a merger and a change of numerous mega corp policies I decided to work about 10-12 more weeks into 2020. Here is my situation:

Both of us are 61 years old (married filing jointly)
Roth plus non-cola pension will cover our expenses until 65
Managing MAGI for ACA until 65 when we get Medicare
Social security deferred until 67

My working plan:
Contribute the IRA max 401k standard and catch up contributions in the first quarter of 2020.
Plan for a spousal IRA max contribution
Maximim pro-rated annual HSA contributions while working.
All of the above will keep my MAGI and taxable income very low.
I will work until my remaining year pension benefits plus MAGI from earned income plus dividends/capital gains will equal 2x the Federal Poverty Level, thus maximizing ACA subsidy for the remainder of the year after retirement.

Since I also qualify for a substantial amount of paid time off in the first quarter and we don't have any big plans before summer this seems to be an optimum scenario.

Am I overlooking anything? Other considerations?

I think I will have:

Salary - 401k contributions - Spousal IRA - HSA contributions + Pension + Taxable dividends + Capitals gains = MAGI.

MAGI-$24K = Taxable income.

Extra expenses compared to retiring on 1 January are social security, medicare, corporate health insurance premiums and deductible.

All thoughts are appreciated - Thanks in advance.

For reference: http://laborcenter.berkeley.edu/pdf/2019/magi.pdf
__________________

conversationalphrase is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-26-2019, 10:15 PM   #2
Thinks s/he gets paid by the post
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 3,798
If you're planning on an AGI that is 200% of FPL, you may find that your tax rate now is lower than it will be when you hit RMD age. If that's the case, you may want to shift your savings from pre-tax (401k, IRA) to posttax (Roth, taxable).

Your ACA subsidies will not be "maximized" at 200% FPL. They will be maximized at 133% or less of FPL. You may want to research the breakpoints for the various cost saving reductions associated with Silver plans (IIRC 150%/200%/250% of FPL).
__________________

__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is offline   Reply With Quote
Old 11-27-2019, 06:22 AM   #3
Thinks s/he gets paid by the post
 
Join Date: Jan 2018
Location: Tampa
Posts: 4,701
Yes, the Silver Plan tax subsidies are maximized at =<150% FPL.
Other minor things to consider is to get any medical work like dental care while you are working, as these types of costs are typically covered more thoroughly on employer plans.

Why are you using Roth monies instead of Taxable account monies to manage your MAGI for ACA?
__________________
TGIM
Dtail is offline   Reply With Quote
Old 11-27-2019, 07:45 PM   #4
Recycles dryer sheets
conversationalphrase's Avatar
 
Join Date: Jan 2017
Posts: 64
You are both correct, I am not maximizing ACA subsidy at 200% of FPL.

If I shift my savings to posttax then the income also counts against MAGI for ACA, which would quickly lead me to the conclusion to just retire on Jan 1.

If I had substantial taxable account savings I would use it instead of Roth, unfortunately (?) I don't. The vast majority of our saving is in Roth and traditional IRAs.
conversationalphrase is offline   Reply With Quote
Old 11-27-2019, 08:43 PM   #5
Thinks s/he gets paid by the post
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 3,798
Quote:
Originally Posted by conversationalphrase View Post
You are both correct, I am not maximizing ACA subsidy at 200% of FPL.

If I shift my savings to posttax then the income also counts against MAGI for ACA, which would quickly lead me to the conclusion to just retire on Jan 1.

If I had substantial taxable account savings I would use it instead of Roth, unfortunately (?) I don't. The vast majority of our saving is in Roth and traditional IRAs.
Well, if you do have enough to quit on Jan 1 and don't want to work past then, I think most here would be supportive of that decision (including me).

If you need more or want to work more or want more padding or whatever, then my point is that paying 24% now (i.e., post-tax) might be better than paying 32% later when you hit tax torpedo time.

Also, saving post-tax would increase your taxable savings, which can be useful for lots of things. You probably noticed that, though.
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Hitting the 40s... and planning for the last decade of work SF94111 Hi, I am... 6 09-25-2017 08:20 PM
ER in 4 months...or 11 months...or 24 months... BarbWire Hi, I am... 3 01-05-2012 06:50 AM
Things to do in the last 2 months at work Moscyn Young Dreamers 31 07-19-2010 05:01 PM
See @ Last, See @ Last, Thank God I Can See @ Last Beachbumz Other topics 24 02-18-2005 08:16 PM

» Quick Links

 
All times are GMT -6. The time now is 05:01 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.
×