Confused - Taxes and Inflation?
I've lurked for months on the board. Thanks to everyone for the great information here. I have been playing around with FIRECalc which is super (thank you Dory!) but I'm confused on what to put for my Annual Spend amount. I know that FIRECalc doesn't include taxes but how do I figure the correct taxable amount from my savings into my annual spend?
For example, my plan is to RE with $2,750,000 of which 2,250,000 will be in taxable accounts. I figure my annual spend at $60,000 before taxes.
As I spend down the taxable amount the taxes I owe on it will go down as well. How do I figure that when I figure up my annual spend?
Also, the average inflation rate historically is in the 3% range but for the period between 1967-1985 it averaged 10%. Is anyone else concerned that inflation will jump up that much again? Assuming a 3-3.5% inflation rate my portfolio has a 100% rate of success. Assuming a 6% inflation rate and I need almost 2 million more for my starting point. If I RE with $2.75 as planned and inflation rears its ugly head again my chances of success are not good. Does anyone else worry about inflation like this? Am I silly to worry about it? I just don't want to RE and then wind up eating cat food.