Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 05-12-2013, 06:02 PM   #221
Moderator Emeritus
 
Join Date: Oct 2007
Posts: 4,929
Quote:
Originally Posted by bubblehead View Post
I've been reading these posts.

Money from deferred accounts is going to be taxed.most of the people on this site have substantial deferred income.

should not the goal be not to reduce the 'dollar figure of taxes" but to make sure you never pay more than the 15 percent rate.

one reason to take ss early is obviously to be able to control one's income in the future.

once my wife and i hit 70-we both have retirement accounts. our goal is to not be taxed at more than that 15 percent tax rate.
There are two paths for minimizing taxes for folks who can receive Social Security and also have deferred accounts.

1) Take SS early to reduce the annual SS income, and withdraw from deferred accounts later, when required minimum withdrawals start at age 70.

2) Withdraw from deferred accounts early, spending down the accounts to the point where they won't make the higher SS payments (too) taxable when one starts those later, at age 70 for example.

Additional considerations here include other taxable income outside SS and IRA withdrawals, and whether you consider SS to be longevity insurance, that is, your ultimate fallback income stream much later in life should you outlive your portfolio. The idea is to minimize overlapping taxable income streams.

In my personal evaluation, I want to use SS payments as longevity insurance, so I'd prefer to start SS later with a higher monthly payment. As an additional consideration, if I left my IRA untouched, the required minimum withdrawals at age 70 from my IRA would make most of the SS payments taxable. The best plan in my case is to use a combination of investment returns (at the low capital gains & dividend rates, with capital gains offset by losses carried forward from 2009), and IRA withdrawals starting at 59 1/2. The goal is to run the IRA balance down to the point where the required minimum distributions won't push my Modified Adjusted Gross Income too far above the baseline where Social Security becomes taxable.

Note that in no way will I let the tax tail wag my lifestyle dog. I'd rather pay the modest tax bill than sit around shivering in the dark while cackling over how I foxed the The Man!


http://www.irs.gov/uac/Are-Your-Soci...its-Taxable%3F
__________________

__________________
M Paquette 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 05-12-2013, 06:50 PM   #222
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Location: Kerrville,Tx
Posts: 2,718
Note in addition the income limits for increased medicare part B premiums, all be it that the single limits start at 85k (not indexed for inflation) and at 107k go to $100 more per month, at 160k 170 more and at 214k go to 235 a month, married limits are double these. All be it at these income levels the Taxation of SS is no longer an issue, but its the next income based increase up the chain (also applied to part D as well) (ranging from an additional 29 above 107 k to 66 at 214k, again single rates)
__________________

__________________
meierlde is offline   Reply With Quote
Old 05-12-2013, 06:53 PM   #223
gone traveling
 
Join Date: May 2013
Posts: 9
Quote:
Originally Posted by meierlde View Post
Note in addition the income limits for increased medicare part B premiums, all be it that the single limits start at 85k (not indexed for inflation) and at 107k go to $100 more per month, at 160k 170 more and at 214k go to 235 a month, married limits are double these. All be it at these income levels the Taxation of SS is no longer an issue, but its the next income based increase up the chain (also applied to part D as well) (ranging from an additional 29 above 107 k to 66 at 214k, again single rates)
the brackets for social security taxability are not inflation adjusted
__________________
bubblehead is offline   Reply With Quote
Old 05-12-2013, 07:38 PM   #224
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 5,182
Quote:
Originally Posted by M Paquette View Post

2) Withdraw from deferred accounts early, spending down the accounts to the point where they won't make the higher SS payments (too) taxable when one starts those later, at age 70 for example.
or similarly,

2b) Convert some tIRA money to a Roth IRA up to the top of the 15% bracket (or higher for someone who has really socked it away). Deferring SS can give you 8 more years to do this.
__________________

__________________
RunningBum 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


 

 
All times are GMT -6. The time now is 02:03 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.