Taxable vs. non-taxable ratio

[Bir48die]

75/25 tax deferred to taxable. Oh well

 

[tdv2]

I'm looking at 66% taxable and 34% tax differed. No roth yet. Will start conversion this year.

 

[ESRwannabe]

Roughly $100k in 401k/Roth plus a pension (18 years and counting vested). In taxable around $440k.

Age 43, still working full time and accumulating more years in the pension.

Largest asset is the pension. Not sure what its worth but it'll be enough to retire on by itself. Everything else is gravy.

 

[Koolau]

Haven't checked carefully for quite a while. Roughly 45% in 401(k) - no tIRAs. Don't know my Roth balances that well, but maybe 15%.

I worried about having too much in tIRAs and 401(k) for many years and converted quite a lot to Roths between FIRE and 70 - converted all tIRAs. It's not for everyone, but it does give you more flexibility once you get into RMDs and have actual need to spend from your stash. YMMV

 

[bada bing]

20% taxable, 30% Roth, 50% tax deferred

I'm still w%rking. Tax deferred and Roth are growing much faster than taxable savings because 401K contributions, backdoor and mega-backdoor Roth contributions take most of my available new savings.

 

[statsman]

41% tax deferred, 59% taxable (was 58/42 until we sold our house late last year and purchased a new one in a different state).

 

[ducky911]

I'm 66% taxable with large deferred gains
........34% ira


But if I add rental property equity with very large deferred gains.

taxable......40%
ira..............20%
rental eq......40%

not perfect but as bullet proof as I could get it. In the end it makes about 3 times what we spend annually.

 

[sengsational]

sawtooth

Without looking I know that my after tax is about 3.5% in late December and about 0% in early December. That's presuming I do the task properly and "blow through the dough".


I liked NWB's poll... thats what we call a uniform distribution!

 

[Doc0]

I have 50% in taxable, 38% in tax free after Roth conversion, 12% in tax deferred, and a few hundred K in tax loss harvest, plus SS. My income is from SS plus RMD from the small TIRA which allows me to live in the 12% bracket from an ordinary income point of view. In the 12% bracket cap gains is zero so I supplement from the taxable at 0% extra taxes. If I go over the cap gain limit I use some tax loss to pay my taxes. I don't spend the Roth and llet that grow unmolested. It provides backup in case of bad inflation or increased taxes or medical disaster or end of life care etc. I keep my bonds and some stocks in the TIRA so it's growth is slow and will keep me in the 12% bracket for about 15 years post RMD.

 

[PaddyMac]

Our ratio is currently
Taxable = 20%
Roth IRA, Roth 401k, & HSA (tax free) = 15%
SEP/401k (tax deferred) = 65%

Like the OP mentioned later, this question also very important for getting the ACA subsidy (worth about $11K a year). We managed to get the subsidy last year as we had some inheritance to live off, so didn't have to sell too much from taxable (we are semi-retired).

For many years we were in the 25% bracket, so we stuff'd our extra income into tax deferred to get us into the 15% and free cap gains-land. That was before the ACA, and the O-MAGI really complicates things.

In general I've been selling our Taxable account and moving it into our Roth 401k. Mostly selling the "low hanging fruit" (stuff with little cap gains).

Now we have to raise funds to buy a car this fall, and it's going to be a headache to figure out how to keep our MAGI low enough for the ACA subsidy refund if we sell a lot of stocks from Taxable. Will have to weight into dipping into our Roth IRAs and HSA, or see about financing half of the purchase price. But really, first world problems and all that; feel fortunate that we are where we are.

 

[Canoeboy]

We are 73/25/2 divide between pre tax/post tax/Roth in year 1 of ER. For FireCalc planning purposes we simply budgeted for income tax as if all expenses were pulled from pre-tax accounts (IRA, 401k, etc). Pre-tax % will increase over time as SS and pensions kick in and we spend down post tax accounts first.

 

[Dtail]

We are 73/25/2 divide between pre tax/post tax/Roth in year 1 of ER. For FireCalc planning purposes we simply budgeted for income tax as if all expenses were pulled from pre-tax accounts (IRA, 401k, etc). Pre-tax % will increase over time as SS and pensions kick in and we spend down post tax accounts first.

Why not delay SS, spend down TIRA, perhaps Roth conversions and possibly reduce RMD effect?

 

[lem1955]

We are at 86.4% Traditional IRA, 13.6% ROTH and HSA. We are in the 22% tax bracket due to small work gig, inherited REIT investment proceeds, DW's SS, and necessary Trad IRA withdrawal. So, I've been converting Trad IRA to ROTH the last two years and expect to keep doing that to the top of the 22% tax bracket until age 70, and contribute to my ROTH $7,000 or the upper limit as long as I have earned income. The ROTH accounts are invested in AA 80/20. The Trad IRA at AA 60/40.

 

[big-papa]

I've seen plenty of threads about AA percentages but have not seen any on the ratio of taxable funds vs. non-taxable. Our ratio is 88/12 so most of our "wealth" is tied up in accounts that trigger taxes. We both have been retired for 4+ years and prior to that I ran all the spreadsheets and FireCalc models and pulled the trigger at 100%.

I had a slight panic attack last year as I was running them again when I realized the tool doesn't account for the taxes so if you have $1M in an IRA you really have access to $750K-$800K depending on brackets. I plugged in lower numbers and still no problems but that got me thinking. What kind of ratios do other FIRE folk have?

My DW feels a bit financially insecure because only 12% of our funds are available without thinking about taxes and I have to admit it would be nice to have a larger amount of funds to pull from, especially for travel or remodeling expenses.

Not sure it has much meaning. I've spent an entire career (35+ years) maximizing 401K's at each company where I've worked and then saving into taxable accounts as much as I could from salaries, bonuses, ESPP, Stock Options and RSU's. No ratio was ever targeted, just saving as much as I could.

Yet, I've always tracked it. It's 63% Deferred, 37% Taxable.

 

[Toocold]

I have a similar approach to many others in that I didn't target a specific pre/post taxes - I saved as much as I could. I haven't had much opportunity to invest in a Roth because of income restrictions, and my portfolio goes beyond the traditional 401k and IRA.

Ironically - Looking at my net worth, it's 50% pre-tax (401k, deferred compensation, stock vestments) / 50% post-tax (everything else).

 

[mickeyd]

Tax in general is just another expense that we all must share the burden. Be it income tax, sales tax, gas tax, cable TV taxes, property tax, or XXX tax, you and I gladly fork it over for just the priviledge of living in this great country.


I do not use that ratio anyway...

 

[Canoeboy]

Why not delay SS, spend down TIRA, perhaps Roth conversions and possibly reduce RMD effect?

Will do Roth conversions to max out 10% fed tax rate over next few years to minimize RMD tax cliff effects.

 

[Eucerin]

50/50 here.
the 50% taxable give us some problems for ACA subsidies, but have been moving the $$ around and believe next year will generate less income