One thing I think not enough people are considering in future expenses is taxes, particularly for those with 401k's.
Let's say you retire and live off taxable accounts and gains on those taxable accounts for some number of years. During this time your taxes will be low, probably below 1K annually, since most of the dollars you are spending have already been taxed.
At some point things change dramatically if you begin living off 401K - all your spending money is taxed. It seems to me to be best to use all taxable accounts before using any 401K money, but I have no proof. Should some 401K money be used earlier to keep realized income in lower tax brackets? How are people handling this transition and what are some strategies?
Let's say you retire and live off taxable accounts and gains on those taxable accounts for some number of years. During this time your taxes will be low, probably below 1K annually, since most of the dollars you are spending have already been taxed.
At some point things change dramatically if you begin living off 401K - all your spending money is taxed. It seems to me to be best to use all taxable accounts before using any 401K money, but I have no proof. Should some 401K money be used earlier to keep realized income in lower tax brackets? How are people handling this transition and what are some strategies?