35 y/o, targeting RE at 46

[REIJM]

Hi All,

Excited to join and read/learn from those with a similar mindset/goal. My wife and I will both turn 35 this year, just had our first child earlier this year, and we're targeting a retirement in about 11-12 years when we hit ~46 (that's the target, but I'd say anything before 50 is a success, since we don't really know exactly how having a child will affect our RE estimates long-term, and may push it back a year or two).

We currently have about $1.1M in investments between our 401k's, Roth IRA's, Taxable Brokerage, and HYSA. My target for retirement is $5.5M, with $2.5M of that being in the taxable brokerage (the goal would be to live off of the taxable account while doing Roth conversions to fill up the lower income brackets).

I think the biggest question I have regarding RE is asset allocation, particularly bonds. I've read how a bond ladder can be helpful to establish defined income for those early years of RE, but in order to access it I would need to have it set up in the taxable brokerage account a couple years ahead of retirement, which will limit the growth potential of that account. So any good threads or articles people can share around that would be appreciated.

The biggest unknown is healthcare costs. It'd be quite a long time before we'd be able to take Medicare, and that's definitely not an expense I want to overlook/under-plan for.

I'm also curious about any RE podcasts that people recommend listening to. TIA!

 

[NgineER]

Welcome to the forum.

You have set yourself up well for the future by planning ahead, lightyears ahead of most Americans.
You should think about asset allocation and the tax implications the bond funds have vs alternatives. You would likely want to put those bond assets in your tax deferred accounts vs your taxable for that reason.

While there is a general belief that your retirement accounts are off-limits until age 59.5 or 55, this is not true. There are many ways to tap into your tax deferred money way before the age of 59.5.

You are planning well though by planning for a substantial amount in your brokerage account, this will give you plenty of flexibility, but you should not underestimate the benefit of saving tax deferred now as you have plenty of time to plan ahead. If I were in your shoes, I would try to contribute enough into my Roth IRA (or Roth 401k) to have enough in the Roth account to be able to live off them for five years while setting up a Roth conversion ladder.

I looked a bit at madfientist when starting my journey a little more than a decade ago. My plan at this point is to do a roth conversion ladder when I retire. We are currnetly slightly higher in our taxfree accounts than in tax deferred, so we can start the conversion ladder when I retire. Our brokerage account is tiny due to the purchase of rental properties, but it is starting to finally grow more.

You'll get plenty of good advice if you hang around here.

 

[NgineER]

I forgot to mention, but one of the reasons for our Roth's being larger than our tax deferred is that we have done after-tax 401k contributions and rolled them over into Roth IRAs on a monthly basis. Not every employer allows for this, so check if yours does. Mine allows me to contribute 9% of my salary into the after-tax 401k account. I do this before contributing to the brokerage account. This money will never be taxed as opposed to brokerage account money. It has hampered us when buying rental properties as we haven't had enough money available to do purchases and hold reserves. Other than that, I don't see any downside to it as the contributions are always available to you without any penalties.

 

[REIJM]

Welcome to the forum.

You have set yourself up well for the future by planning ahead, lightyears ahead of most Americans.
You should think about asset allocation and the tax implications the bond funds have vs alternatives. You would likely want to put those bond assets in your tax deferred accounts vs your taxable for that reason.

While there is a general belief that your retirement accounts are off-limits until age 59.5 or 55, this is not true. There are many ways to tap into your tax deferred money way before the age of 59.5.

You are planning well though by planning for a substantial amount in your brokerage account, this will give you plenty of flexibility, but you should not underestimate the benefit of saving tax deferred now as you have plenty of time to plan ahead. If I were in your shoes, I would try to contribute enough into my Roth IRA (or Roth 401k) to have enough in the Roth account to be able to live off them for five years while setting up a Roth conversion ladder.

I looked a bit at madfientist when starting my journey a little more than a decade ago. My plan at this point is to do a roth conversion ladder when I retire. We are currnetly slightly higher in our taxfree accounts than in tax deferred, so we can start the conversion ladder when I retire. Our brokerage account is tiny due to the purchase of rental properties, but it is starting to finally grow more.

You'll get plenty of good advice if you hang around here.

Regarding a bond ladder in the taxable brokerage, that's exactly why I'm avoiding putting them in there (both my taxable brokerage and Roth IRA's are 75:25 VTI: VXUS), as they're taxed as ordinary income and not as a qualified dividend.

But retiring so early (well before 55), I don't know of a different/better place to put them to where they can help protect my money just before RE, and for the first few years of RE (to protect against SORR). In theory I could put them in my Roth IRA, but the problem is that there won't be that much in there when we retire (about $350k).

Up to this point, since about 2020, we've been maxing out both of our traditional 401k's, maxing out both of our backdoor Roth IRA's, and recently starting contributions to a taxable brokerage account (a mixture of bi-weekly contributions from our pay checks, as well as DCA'ing some HYSA funds into it). I'm wondering if we should cut back on maxing out our traditional 401k, and either put the difference in a Roth 401k, or even putting it in the taxable brokerage account to ensure we have a healthy balance there for when we pull the trigger.

The way I have my plan currently built out is we'll live off of our taxable brokerage account, do Roth conversions from our 401k's into the Roth IRA's to fill up the (current) 10 & 12% tax brackets (plus the standard deduction), every year that we can. Yes, we won't get a ACA subsidy, but being able to move ~120k a year into a Roth account while paying minimal taxes seems like the better long-term strategy.

 

[NgineER]

It is a question about tax arbitrage - what is your marginal rate now vs. in retirement?

 

[REIJM]

It is a question about tax arbitrage - what is your marginal rate now vs. in retirement?

Right now, we're in the upper part of the 24% bracket (HHI is about $350k including bonuses, so about ~$325k accounting for the standard deduction). I'd say that in 2 years, we'll likely be pushed up in to the next bracket between raises and promotions. We're also in PA, so we have a 3.07% state income tax as well.

In retirement, I'd plan on filling up the lower two tax brackets with Roth conversions each year (so currently, that'd be ~$122k a year including the standard deduction), and we'd live off of our brokerage, paying 15% on any gains we have.

I know we can access those conversions after 5 years (so starting at 51, assuming a retirement age of 46), but the plan would really be to live solely off of the brokerage until we hit 60, then start working Roth IRA money in to our annual withdrawals, all while continuing to do annual Roth conversions until RMD's hit (with the goal of minimizing RMD's as much as possible).

If we were to continue to max out our traditional 401k's until we hit 46, including our employer matches we'd be at $2.5M using a conservative CAGR of 5.5%. If we shift more of that to bonds, that CAGR goes down, but it still might be excessive even with the Roth conversions. IDK.

Have you come across any tool that allows you to play around with the numbers to see the benefit of maxing a traditional 401k vs a Roth 401k, vs a lower amount in the traditional 401k and the difference in a taxable brokerage? While saving for retirement is important, saving in the right funds is also important (even moreso if you're planning on RE).

 

[kgtest]

Hi All,

Excited to join and read/learn from those with a similar mindset/goal. My wife and I will both turn 35 this year, just had our first child earlier this year, and we're targeting a retirement in about 11-12 years when we hit ~46 (that's the target, but I'd say anything before 50 is a success, since we don't really know exactly how having a child will affect our RE estimates long-term, and may push it back a year or two).

We currently have about $1.1M in investments between our 401k's, Roth IRA's, Taxable Brokerage, and HYSA. My target for retirement is $5.5M, with $2.5M of that being in the taxable brokerage (the goal would be to live off of the taxable account while doing Roth conversions to fill up the lower income brackets).

I think the biggest question I have regarding RE is asset allocation, particularly bonds. I've read how a bond ladder can be helpful to establish defined income for those early years of RE, but in order to access it I would need to have it set up in the taxable brokerage account a couple years ahead of retirement, which will limit the growth potential of that account. So any good threads or articles people can share around that would be appreciated.

The biggest unknown is healthcare costs. It'd be quite a long time before we'd be able to take Medicare, and that's definitely not an expense I want to overlook/under-plan for.

I'm also curious about any RE podcasts that people recommend listening to. TIA!

Doable. Keep the taxes low, but maximize and leverage that Roth as best you can!

We may be retiring around the same time. You never know what kind of curve balls life may throw though.

Edit to ask, how much is currently in taxable % wise. We have about ~37% of our money in taxable accounts...
Would like to reduce that as much as possible without getting into too high of a bracket. So far we've been fortunate to stay below the 24% income tax bracket, all things considered.

My problem will be taxable dividends. Their have been worse problems to have I guess.

 

[kgtest]

I know we can access those conversions after 5 years (so starting at 51, assuming a retirement age of 46), but the plan would really be to live solely off of the brokerage until we hit 60, then start working Roth IRA money in to our annual withdrawals, all while continuing to do annual Roth conversions until RMD's hit (with the goal of minimizing RMD's as much as possible).

As far as tools, build a google sheet with what-if calculations bond vs no bond. I am 100% equities, until I die. Unless something better comes along. But SORR is a thing, so if you don't have bonds you need cash in down markets to avoid selling low...
Anywho, back to your RMD.

If you contributions in roth, plus your contributions to your broker, plus your HSA cash, and your kids 529 (if you have kids) covers all your expenses...then you will have a pretty low tax bracket (Provided you don't have a bunch of ordinary and qualified dividends (15% tax rate). Then you would have some room to do decent roth conversions, but.. you still need the dough to pay the tax.

Health is another x factor here, or maybe THE x factor. If your filing status changes god forbid, through death or divorce then tax brackets become a no brainer for roth conversions.

Literally treat that roth like the family heirloom, it basically is!

You can withdraw contributions you made to your Roth IRA anytime, tax- and penalty-free. However, you may have to pay taxes and penalties on earnings in your Roth IRA.

 

[REIJM]

Doable. Keep the taxes low, but maximize and leverage that Roth as best you can!

We may be retiring around the same time. You never know what kind of curve balls life may throw though.

Edit to ask, how much is currently in taxable % wise. We have about ~37% of our money in taxable accounts...
Would like to reduce that as much as possible without getting into too high of a bracket. So far we've been fortunate to stay below the 24% income tax bracket, all things considered.

My problem will be taxable dividends. Their have been worse problems to have I guess.

I think the issue is, do we leverage the Roth 401k now, locking in our $46k in annual contributions at our top marginal rate (24%), versus deferring those taxes via a traditional 401k, and then converting $122k a year and only paying the tax of the lowest two brackets (10 & 12% currently, accounting for the standard deduction for MFJ)?

As for how much we have in the brokerage currently, almost nothing (about $15k). I was an idiot last year and locked up $250k in a couple HYSA's paying about 5.5%, which on paper sounds good, except the market grew at 23% last year. So yeah, that's my personal "don't try to time the market" mistake that I'm learning from. I opened the account at the end of last month, because I realized that if we wanted to RE, a brokerage account was pretty much a necessity. But, we plan on putting about $4,800 a month in the brokerage from our income, along with any bonuses we get, plus $5k a month from the HYSA that'll be DCA'd in to the account over the next 3 years (we have some bigger home maintenance items coming up that I want to have the money available for on-hand if we can get a cash discount on the work).

As for the curveball comment, you're 100% correct. A whole lot can (and likely will) change in the next decade, but the key is to be adaptable with your plan and not lose sight of the end goal. We'd love to be able to retire in our late 40's when our child is still relatively young, and still have plenty of years ahead of us with good health (fingers crossed no curveballs on that front).

 

[NgineER]

I don't follow any podcasts and pick up most of my financial tidbits on this forum.
Your goal looks like it will be a stretch to reach in 11 years at 5.5% returns. But it depends on how much you can stash away for sure.

Make sure you also enjoy the journey, and not focus entirely on the destination, I tend to focus too much on the end goal myself but are trying to encourage my wife and myself to loosen the purse strings a bit, it is hard to change habits, however.

With the goal of $5.5M in 11 years from $1.1M you will have to put a lot away each year. I'd max out the tax deferred, then do after-tax 401k contributions if you can, back door Roth contributions and then fill the brokerage account.

As far as living off of your taxable and doing Roth conversions vs. living off traditional 401k through 72T or Roth ladder is up to you, either way you are going to have to whittle that tax deferred pile away. If you are counting on 5.5% returns in your traditional 401k, if you do $122k conversions, the traditional will never shrink, even over the three decades before RMD. You will have to at a minimum draw down 5.5% to maintain the $2.5M. $122k is less than 5%. You'd have to roll over $158k annually to draw the traditional account down to $1M over the three decades and your $350k initial Roth IRA will be about $9M provided you start spending the $158k at age 60 instead of rolling it over.

Lots of things can happen over the next four decades however...

We are at 43% Roth, 40% tax-deferred and the rest in brokerage. My 7% return is having me at $1.7M in tax deferred in 6 years, if I start $150k Roth conversions at that point, the 7% allows me to draw that down to $500k over the next two decades when RMDs start.

 

[REIJM]

Your goal looks like it will be a stretch to reach in 11 years at 5.5% returns. But it depends on how much you can stash away for sure.

Because I (stupidly) have so much in an HYSA, the vast majority of that is going to be put in the taxable brokerage over the next 3 years. Between those funds, regular income, and any bonuses we get from work, my spreadsheet has us putting away a bit over $100k this year, about $170k per year for the 3 years after that, and then anywhere from $100k to $150k a year after that, depending on the year and the expenses that year.

So we definitely have a slow start in the taxable account, but at 5.5% growth a year it's saying we should be at about $2.4MM at the end of 2045.

With the goal of $5.5M in 11 years from $1.1M you will have to put a lot away each year. I'd max out the tax deferred, then do after-tax 401k contributions if you can, back door Roth contributions and then fill the brokerage account.

I ask the question because I'm not sure of the reason why, but why would you recommend doing after-tax 401k contributions with the extra money rather than investing after-tax dollars in a brokerage account?

If we retire at 46-50, there's no good way to get access to those after-tax 401k dollars without paying a penalty on the gains, correct? That's not the case with the brokerage account, where I can have access to all of it, and just pay the LTCG on the earnings.

If you are counting on 5.5% returns in your traditional 401k, if you do $122k conversions, the traditional will never shrink, even over the three decades before RMD. You will have to at a minimum draw down 5.5% to maintain the $2.5M. $122k is less than 5%. You'd have to roll over $158k annually to draw the traditional account down to $1M over the three decades and your $350k initial Roth IRA will be about $9M provided you start spending the $158k at age 60 instead of rolling it over.

That's why I'm thinking about converting a larger portion of my traditional 401k to bonds as I get closer to RE. Yes, returns will be lower (let's say 2.5-3.5%), but the purpose of bonds is more to preserve wealth, which would be the case here: preserving the ~$2.5M in the traditional 401k so that I can convert it in to a Roth IRA over a number of years, and having more exposure to equities in the Roth account where it can grow.

 

[REIJM]

I am 100% equities, until I die. Unless something better comes along. But SORR is a thing, so if you don't have bonds you need cash in down markets to avoid selling low...

So instead of bonds, do you just have a treasury or CD ladder that you build out x number of years in the future to cover your expenses, and that allows you to weather any market downturns so you're not selling your equities at a loss?

If that is the case, how many years of spending are you carrying in cash/cash equivalents?

 

[NgineER]

I ask the question because I'm not sure of the reason why, but why would you recommend doing after-tax 401k contributions with the extra money rather than investing after-tax dollars in a brokerage account?

If we retire at 46-50, there's no good way to get access to those after-tax 401k dollars without paying a penalty on the gains, correct? That's not the case with the brokerage account, where I can have access to all of it, and just pay the LTCG on the earnings.

You can access the contributions at any time penalty free (not the gains however). This would allow you to boost your tax-free portion of your nest egg to better manage taxes. At the high level of savings that you have it is also likely that you would never need to access the Roth contributions since you'd be putting away money in your brokerage account as well which can be accessed penalty free.

If you are putting away $100,000 a year, 22.5%+matches goes into traditional.
You can only put away a total of $66k into the 401k account including matches, so it is unlikely that you could consume the $100k into after-tax contributions. My company caps it at 9% of salary, this would likely allow you to then also contribute to a brokerage account better balancing your taxes later in life.

 

[REIJM]

You can access the contributions at any time penalty free (not the gains however). This would allow you to boost your tax-free portion of your nest egg to better manage taxes. At the high level of savings that you have it is also likely that you would never need to access the Roth contributions since you'd be putting away money in your brokerage account as well which can be accessed penalty free.

If you are putting away $100,000 a year, 22.5%+matches goes into traditional.
You can only put away a total of $66k into the 401k account including matches, so it is unlikely that you could consume the $100k into after-tax contributions. My company caps it at 9% of salary, this would likely allow you to then also contribute to a brokerage account better balancing your taxes later in life.

Ah ok, so similar to Roth contributions, Post-Tax 401k contributions can be accessed without taxes or penalties, just not any of the gains (although the downside here is that due to inflation, $10k of contributions today won't have the same buying power in 10 or 15 years).

Both of us are currently maxing out our traditional 401k (23k each), and each of us are currently getting about $13k of employer contributions as well, so if we did choose to go down this path of a Post-Tax 401k, we'd be able to each put in a max of another ~$30k to get to that $66k per-person annual max (possibly less if a scenario like what you described exists at our employers).

A question for you and your Post-Tax 401k contributions. Is there a reason you're not converting those Post-Tax 401k contributions in to a Roth 401k? I've heard that some companies allow for in-plan conversion, which seems like is where the real value would be. Is that just something that your employer doesn't have/offer? I'd have to look in to seeing if my employer offers it.

 

[NgineER]

I roll the after-tax contributions into a Roth IRA at another institution on a monthly basis. Very smooth and quick process. I prefer that to the Roth 401k just for flexibility and investment choices.

 

[Eastfolk]

Have you actually done the math on how much in ACA subsidies you are forgoing by doing the Roth conversions and filling up the 10 and 12% tax brackets? I ask because I’m in just about the same position as you in terms of age, net worth, and desired retirement age, and my original plan was similar to yours - spend from the taxable brokerage in early retirement while converting all of my traditional accounts into Roths before social security and RMDs kick me into a higher bracket. However, I briefly looked into pricing out private health insurance plans and for a family of 4, it looks like we’d be losing over $12k in ACA subsidies IIRC. So using your assumed $120k of yearly contributions, you’re probably saving $12k of taxes by doing the conversion each year (next marginal tax bracket up from 12% is 22%, so $120k at 10%), but you may also be losing $12k in subsidies.

 

[Closet_Gamer]

Hi and welcome to the forum. You’re in a great spot.

Your target of $5.5M, is that today dollars or “then” dollars? Remember that inflation will take its toll. At a 3.0% SWR the $5.5M will get you $165K in pre-tax, “then” dollars.

Does that work for your aspirations?

If you haven’t done it, perhaps give your plan a spin through FireCalc. All of your questions re allocations and placement are very smart. May want to step back a check the macro view as well.

And … don’t forget that life is to be lived. It’s all well and good to pound away money for the future. We sure did and I punched out at 52. But along the way make sure you’re collecting great life experiences. Given where you are right now, I have no doubt you will pull off a great ER. Just make sure that your arrive at that day with a good money balance sheet and a good experience balance sheet.

 

[street]

You and your wife have one very well!!! With your mindset and goaling setting plan you will easily make ER a reality. Great job!

 

[REIJM]

Have you actually done the math on how much in ACA subsidies you are forgoing by doing the Roth conversions and filling up the 10 and 12% tax brackets? I ask because I’m in just about the same position as you in terms of age, net worth, and desired retirement age, and my original plan was similar to yours - spend from the taxable brokerage in early retirement while converting all of my traditional accounts into Roths before social security and RMDs kick me into a higher bracket. However, I briefly looked into pricing out private health insurance plans and for a family of 4, it looks like we’d be losing over $12k in ACA subsidies IIRC. So using your assumed $120k of yearly contributions, you’re probably saving $12k of taxes by doing the conversion each year (next marginal tax bracket up from 12% is 22%, so $120k at 10%), but you may also be losing $12k in subsidies.

I've not, just because we're still 10+ years away from our target RE date.

My smooth-brain thinking is that doing max contributions to the (current) 10 & 12% tax brackets would cost us ~$11k a year in taxes, but we'd be transferring $122k a year from our traditional 401k/rollover IRA to our Roth IRA's ($94,300 limit of the 12% bracket + the $27,700 standard deduction for MFJ), and that $122k will continue to grow, but completely tax free.

We stand to have $2.25M in our traditional 401k's when we reach our target RE age of 46, and if we did no Roth conversions from 46-65 to keep our MAGI low, the 401k balance at 65 would be $4.7M. Even if we started maxing out the Roth conversions for the two lowest tax brackets from 66-75, our 401k balance at 75 would be $6.5M, and we'd be getting slammed by RMD's at that point.

My current thinking is, I'd rather start converting immediately upon retirement to get as much money out of the t401k and into the Roth IRA, even if that means forgoing an ACA subsidy, because I'd be transferring a significant portion more money than I'd be receiving in the form of a subsidy, and those Roth conversions would start becoming available to access starting at age 51 (5 years after the initial conversion), if we needed it (the plan is not to touch the Roth funds for quite a while).

Granted, I'm not a finance professional, which is why I plan on finding a fee-based CFP to discuss my plan once we hit ~40-41, about 5 years before the planned RE age.

 

[REIJM]

Hi and welcome to the forum. You’re in a great spot.

Your target of $5.5M, is that today dollars or “then” dollars? Remember that inflation will take its toll. At a 3.0% SWR the $5.5M will get you $165K in pre-tax, “then” dollars.

Does that work for your aspirations?

If you haven’t done it, perhaps give your plan a spin through FireCalc. All of your questions re allocations and placement are very smart. May want to step back a check the macro view as well.

And … don’t forget that life is to be lived. It’s all well and good to pound away money for the future. We sure did and I punched out at 52. But along the way make sure you’re collecting great life experiences. Given where you are right now, I have no doubt you will pull off a great ER. Just make sure that your arrive at that day with a good money balance sheet and a good experience balance sheet.

I appreciate the message, thank you.

All my numbers are accounting for a 3% annual inflation, so that amount is in "today dollars" (portfolio growth values I'm using range from 3% for equity/bond mixes, to 6% for pure equity allocations). When I run through FireCalc, I get a success rate of 97.4% (and there is definitely room to cut back on spending in our budget for years where it may be needed).

 

[Eastfolk]

I've not, just because we're still 10+ years away from our target RE date.

My smooth-brain thinking is that doing max contributions to the (current) 10 & 12% tax brackets would cost us ~$11k a year in taxes, but we'd be transferring $122k a year from our traditional 401k/rollover IRA to our Roth IRA's ($94,300 limit of the 12% bracket + the $27,700 standard deduction for MFJ), and that $122k will continue to grow, but completely tax free.

We stand to have $2.25M in our traditional 401k's when we reach our target RE age of 46, and if we did no Roth conversions from 46-65 to keep our MAGI low, the 401k balance at 65 would be $4.7M. Even if we started maxing out the Roth conversions for the two lowest tax brackets from 66-75, our 401k balance at 75 would be $6.5M, and we'd be getting slammed by RMD's at that point.

My current thinking is, I'd rather start converting immediately upon retirement to get as much money out of the t401k and into the Roth IRA, even if that means forgoing an ACA subsidy, because I'd be transferring a significant portion more money than I'd be receiving in the form of a subsidy, and those Roth conversions would start becoming available to access starting at age 51 (5 years after the initial conversion), if we needed it (the plan is not to touch the Roth funds for quite a while).

Granted, I'm not a finance professional, which is why I plan on finding a fee-based CFP to discuss my plan once we hit ~40-41, about 5 years before the planned RE age.

Sounds like you have it well thought out so that’s good. My point was to make sure you know in ballpark numbers how much you’d actually be losing in ACA subsidies. It may be more than you think unless you’ve already went onto healthcare.gov and priced it out. Also, I believe the analysis isn’t so much that your $122k of annual conversions easily exceed the ACA subsidies as you noted, but rather what are the incremental tax savings on that $122k conversion vs the foregone ACA subsidies. Ie You’re going to be paying 10-12% tax on the $122k regardless of whether you convert now or at age 65. But when you’re 65, you may be in the 22-24% bracket, so I think it’s more appropriate to compare the incremental taxes (~12%) on the $122k, so roughly $14k in tax savings vs whatever your ACA subsides would be.

 

[REIJM]

Sounds like you have it well thought out so that’s good. My point was to make sure you know in ballpark numbers how much you’d actually be losing in ACA subsidies. It may be more than you think unless you’ve already went onto healthcare.gov and priced it out. Also, I believe the analysis isn’t so much that your $122k of annual conversions easily exceed the ACA subsidies as you noted, but rather what are the incremental tax savings on that $122k conversion vs the foregone ACA subsidies. Ie You’re going to be paying 10-12% tax on the $122k regardless of whether you convert now or at age 65. But when you’re 65, you may be in the 22-24% bracket, so I think it’s more appropriate to compare the incremental taxes (~12%) on the $122k, so roughly $14k in tax savings vs whatever your ACA subsides would be.

Your earlier comment made me go see what healthcare costs are on the marketplace. Checking my state's marketplace website, at full price, it looks like plans range from $800-1,300 a month for our family (why there are bronze plans that cost more than gold plans, idk, and I'm not at a point where it makes sense to dedicate time to figure out why), which would put our annual cost for the plans at $10-16k a year (just for the plan cost).

If I say our income is $100k a year (I just picked a number), it estimates that our monthly subsidy would be $450, saving us ~$5,500 a year.

It's something worth looking in to as we get closer to retirement, but at this point in time I'm still of the mindset that if you can cover the tax bill and healthcare costs, getting money out of tax-advantaged account and into a Roth earlier can be good for the long-term, tax-free growth, as well as being able to access it if needed before 59.5

 

[Eastfolk]

Your earlier comment made me go see what healthcare costs are on the marketplace. Checking my state's marketplace website, at full price, it looks like plans range from $800-1,300 a month for our family (why there are bronze plans that cost more than gold plans, idk, and I'm not at a point where it makes sense to dedicate time to figure out why), which would put our annual cost for the plans at $10-16k a year (just for the plan cost).

If I say our income is $100k a year (I just picked a number), it estimates that our monthly subsidy would be $450, saving us ~$5,500 a year.

It's something worth looking in to as we get closer to retirement, but at this point in time I'm still of the mindset that if you can cover the tax bill and healthcare costs, getting money out of tax-advantaged account and into a Roth earlier can be good for the long-term, tax-free growth, as well as being able to access it if needed before 59.5

Sounds about right. I’m in PA as well and when I looked a while back, for a family of 4, it was a bit higher than that for the annual premiums. Now if you were able to lower your income (generated through roth conversions) to say $35-40k (below the family poverty line) I think it would significantly increase your subsidies and even likely completely wipe out your premiums altogether. Now we’re talking about ~$15k/year in subsidies and the answer is not so straightforward. Of course, you would need tax free or low tax income to live on which is why I’m investing heavily into my brokerage account to help bridge.