Retireby45ish
Recycles dryer sheets
- Joined
- Dec 8, 2018
- Messages
- 209
I’m planning for retirement in a few years.
I’d love someone to check my general setup and allocation of funds and then to offer some insight into how to manage MAGI to keep ACA subsidies under control.
First, we need about $100k per year to live comfortably. Been keeping track of expenses and that gives us enough cushion on the 90k we have been averaging. This does not include any health insurance, which I’m estimating will be 15k per year (but that depends on question 2, below). DW and I are both 41. She also isn’t working now and we are planning on her not doing so.
We currently have $3M investments and $1M in home equity (no mortgage, or rather I’m planing to take 400k off the equity to pay off mortgage when I retire since that will lower the MAGI I’ll need each year in a few years). I think once I save about $500k in next 2-3 years (which is my expectation) I’m done. That effectively gives $3.5M in investments with no mortgage. So let’s work off this simplified example…
Here is my asset split:
70% in VTI/SPY (simplified, but essentially this)
30% in BND.
All the BND is in IRA accounts, with about 20% of that in a Roth IRA.
This should give me as little dividend or other drag as possible.
Question 1: is there anything I can change here or is there anything I’m missing? I’ve done extensive research and I think I have this as efficient as possible. However, this ties into the next question …
Question 2: I will have about 35k of dividends (~1.5%), with about 66% of that as qualified. Therefore I’ll have to sell some equities to get the ~100k I’d need to live on each year (maybe more for taxes). Doing this will impact the ACA subsidy I’m trying to maximize to help me minimize the healthcare piece. Is there a way to do this effectively?
For example if I sell off 70k then my MAGI will be pretty high and i won’t get much of a subsidy. That means an extra 15-20k per year.
I’ve toyed with taking our 2-3 years at a time into cash to reduce some year MAGI, but I can’t quite figure out if that’s worth it.
This is the part of the retirement piece I just can’t quite figure out!
Thanks all…I’m so close to freedom…
I’d love someone to check my general setup and allocation of funds and then to offer some insight into how to manage MAGI to keep ACA subsidies under control.
First, we need about $100k per year to live comfortably. Been keeping track of expenses and that gives us enough cushion on the 90k we have been averaging. This does not include any health insurance, which I’m estimating will be 15k per year (but that depends on question 2, below). DW and I are both 41. She also isn’t working now and we are planning on her not doing so.
We currently have $3M investments and $1M in home equity (no mortgage, or rather I’m planing to take 400k off the equity to pay off mortgage when I retire since that will lower the MAGI I’ll need each year in a few years). I think once I save about $500k in next 2-3 years (which is my expectation) I’m done. That effectively gives $3.5M in investments with no mortgage. So let’s work off this simplified example…
Here is my asset split:
70% in VTI/SPY (simplified, but essentially this)
30% in BND.
All the BND is in IRA accounts, with about 20% of that in a Roth IRA.
This should give me as little dividend or other drag as possible.
Question 1: is there anything I can change here or is there anything I’m missing? I’ve done extensive research and I think I have this as efficient as possible. However, this ties into the next question …
Question 2: I will have about 35k of dividends (~1.5%), with about 66% of that as qualified. Therefore I’ll have to sell some equities to get the ~100k I’d need to live on each year (maybe more for taxes). Doing this will impact the ACA subsidy I’m trying to maximize to help me minimize the healthcare piece. Is there a way to do this effectively?
For example if I sell off 70k then my MAGI will be pretty high and i won’t get much of a subsidy. That means an extra 15-20k per year.
I’ve toyed with taking our 2-3 years at a time into cash to reduce some year MAGI, but I can’t quite figure out if that’s worth it.
This is the part of the retirement piece I just can’t quite figure out!
Thanks all…I’m so close to freedom…