What was your magic Number? Was : Survey finds $880,000 is magic number

I have several "magic" numbers for my wife and I:
50: the age we want to be retired no later than (both currently 48 and on track).
0: the amount of debt we want to have (currently 0 and no new debt will be created).
33: the multiplication factor of our investable assets (taxable and deferred) to our projected retirement expenses (currently at 26 with 2 years to go, no pension or SS included).
 
33x annual expenses, to keep WR under 3%.
 
My safe number was 1.4 mil when I first seriously thought about retirement a couple of years ago (age 49), which included a padding of approx. 33% loss if we had another 50% S&P 500 drop (using a 60/40 port). In other words my worst-case number was to have enough to be able to drop to around 1 mil with approx. $36k per year expenses.

Now I'm retired at 51, am way over safe number and haven't even started WDs yet, might not be until sometime next year since we're living off of severance, savings and wife's PT work for now.
 
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My number was 600K in my retirement accounts, plus a non-cola'd pension. I will have SS starting at some point down the line, I'm not sure when that will be. I'm not eligible for 2.5 years at the earliest.

I took my first WD this year of 3.88%. My retirement accounts have increased to 683K.

I think it's interesting to hear everyone talk about their millions in the bank, and I wonder if these are the same folks who claim to be in the 10 or 15% tax bracket?
 
Trix55 said:
I think it's interesting to hear everyone talk about their millions in the bank, and I wonder if these are the same folks who claim to be in the 10 or 15% tax bracket?
Click to expand...

Actually it is quite possible to have millions in the bank and be in the 10 or 15% tax bracket. Keep in mind what is taxed. It's not your assets, it is your income! Just because you have millions doesn't mean that you are incurring large cap gains or even significant dividend income. Plus, if you have significant itemized deductions that income can come down even more.
 
Trix55 said:
I think it's interesting to hear everyone talk about their millions in the bank, and I wonder if these are the same folks who claim to be in the 10 or 15% tax bracket?
Click to expand...
Since tax brackets are based on income and not net worth, it's entirely possible. Of course, if the millions are in a 401k or traditional IRA, that might mean significant tax bills once RMDs hit.

Another things, couple have a higher income range for the 15% bracket vs single. As has been mentioned, there are also itemized deductions, etc.
 
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Trix55 said:
I think it's interesting to hear everyone talk about their millions in the bank, and I wonder if these are the same folks who claim to be in the 10 or 15% tax bracket?
Click to expand...

Here are a couple of examples of millions in net worth and no or very small federal income tax bills:

How Retirees Pay Zero Taxes

"To illustrate, let’s invent a retired couple who live outside Boston. They own a $2 million home, have $7 million stashed away at their broker and haul in $200,000 a year in dividends, interest, Social Security and distributions from publicly traded partnerships. They have $30,000 in deductions, including $20,000 for property tax and $5,000 for a donation.

Type this example into Intuit’s TurboTax program and the federal income tax bill that comes out is $17."
 
Trix55 said:
I think it's interesting to hear everyone talk about their millions in the bank, and I wonder if these are the same folks who claim to be in the 10 or 15% tax bracket?
Click to expand...

Many are (including me). Once retired, in effect, I really have a choice what tax bracket I will be in until I'm over 70. While in our 60's, many of us choose to withdraw just enough from our IRA's and/or 401k's each year to stay at the top of a lower tax bracket so when we do hit 70.5, and RMD's kick-in, we won't be forced to withdraw as much at higher tax rates. It's a common theme on this board.
 
Thanks. I'll download a copy of the Power of Zero and get to reading!

Sent from my SM-G900V using Early Retirement Forum mobile app
 
Our magic number is whatever number we have at the end of 2016. Hopefully will be $8 million or a bit more, but that will depend on the equity markets not tanking between now and then. 7/8 is in taxable and we have a lot of basis (as have accumulated mainly over past 10 years from very high compensation I've received during those years), so we likely are among those who will pay very little tax in early years of retirement. We have paid a TON of taxes over the past ten years, so I don't feel badly about that.
 
I don't understand how they can have $200k in dividends and pay $17, unless they count tax free interest as dividends.


Sent from my iPad using Early Retirement Forum
 
gcgang said:
I don't understand how they can have $200k in dividends and pay $17, unless they count tax free interest as dividends.


Sent from my iPad using Early Retirement Forum
Click to expand...

Make that couple's 7000000 investment split between equities and Municipal bonds with equities generating 90k and Bonds generating 110k and they have 0% federal taxes.... and do not need any deductions to get to 0%.
 
gcgang said:
I don't understand how they can have $200k in dividends and pay $17, unless they count tax free interest as dividends.
Click to expand...
Did you read it?

How is that possible? The main reason is the government’s gentle treatment of most stock dividends. The usual rate is 15%, but a couple enjoys a 0% rate up to the point where their taxable income hits $70,700.


Another reason is that, in our hypothetical case, three-fourths of the couple’s $3 million bond portfolio is invested in municipal bonds. Also contributing: a foreign tax credit, untaxed distributions from energy partnerships and a $3,000 capital loss writeoff.
Click to expand...
Not sure how it is these days, but I used to find that muni bonds only made sense when I was in a higher tax bracket. This mythical couple may be paying minimal taxes, but they probably could be doing better after taxes with higher yielding bonds.
 
The article did not mention whether the couple had any IRAs, which would trigger RMDs and SS income.
 
I would like to see the utilities, insurance, upkeep etc on a 2 million dollar home outside Boston.
 
Trix55 said:
I think it's interesting to hear everyone talk about their millions in the bank, and I wonder if these are the same folks who claim to be in the 10 or 15% tax bracket?
Click to expand...
Sure - you can easily be in the 15% tax bracket with millions in the bank. A large net worth does not necessarily translate into a large annual income. And in such cases income can often be managed to mostly come from qualified dividends, long-term capital gains, and tax-exempt interest.
 
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audreyh1 said:
Sure - you can easily be in the 15% tax bracket with millions in the bank. A large net worth does not necessarily translate into a large annual income. And in such cases income can often be managed to mostly come from qualified dividends, long-term capital gains, and tax-exempt interest.
Click to expand...
And even where interest is not tax-exempt, in this era of sub-1% yields on savings, even a $2 million bank balance might get you just $10-15K a year.

Of course, I think people who have that much in regular savings accounts (as opposed to laddered CDs, bonds and such) are probably doing it wrong.
 
Here is another zero income tax scenario, this one from the Wall Street Journal geared towards a consultant or small business owner:

"You can also write off all legitimate business expenses. Mr. Charney emphasizes that this only applies to legitimate expenses.

He didn't say, but everyone seems to understand, that this can be quite a flexible term. Even if you buy a computer, a cellphone and a car primarily for business use, you can use them for personal purposes as well. If you happen to take a business trip to Florida in, say, January, no one is going to stop you from enjoying the sunshine or taking a dip in the pool."


ROI: How to Avoid Paying Income Taxes - WSJ
 
I gave up on magic numbers and just said F&*k|t... RE... make it work!

It's a balancing act... how much you have... and how much you can spend... just a pushmepullyou.
 
daylatedollarshort said:
Here is another zero income tax scenario, this one from the Wall Street Journal geared towards a consultant or small business owner:

"You can also write off all legitimate business expenses. Mr. Charney emphasizes that this only applies to legitimate expenses.

He didn't say, but everyone seems to understand, that this can be quite a flexible term. Even if you buy a computer, a cellphone and a car primarily for business use, you can use them for personal purposes as well. If you happen to take a business trip to Florida in, say, January, no one is going to stop you from enjoying the sunshine or taking a dip in the pool."


ROI: How to Avoid Paying Income Taxes - WSJ
Click to expand...

I have been operating like this article since 1998. Plus, I have a solo 401k. I put almost $50K in it this March for 2014. ;)
 
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