Am I the only one who doesn't fret about taxes too much?

[Jerry1]

I look at it like a coupon. I won't go out of my way to use a coupon, but if it's in my pocket, I'll save my 50 cents and be happy. Taxes are the same way for me. There's not much I can do to reduce them, but I certainly pay attention. I'm not going to leave easy money on the table. Most important to me is the tax brackets. I wouldn't want to be at the top of the 12% tax bracket and not know it and then draw out $10K for something like a roof if I had other options. Why pay 10% more in taxes if I can avoid it. I'd rather it be in my pocket than not.

 

[Just_Steve]

All of my retirement income is taxable and not a darn thing I can do about it.

c'est la vie.

 

[mystang52]

DW and I took advantage of 403b and 401K contributions during our working years, so I am quite stoic about paying taxes on the withdrawals. Currently we are at 0% withdrawal. I'm sort-of looking forward, in 2 1/2 years, when RMD for DW starts. In a sense we'll have to spend even more. Sounds like fun to me!

 

[jazz4cash]

Great thread. I don’t fret in spite of 22% effective rate for state and local, HCOL area, and high property taxes. I’m grateful for what we have leftover. Now I would very much like to keep our tax load from going any higher which is why I started the thread “Help with Property Tax Appeal”.

 

[RobbieB]

Both qualified dividends and long term cap gains are Federal tax favored income streams and are the source of most of my income. Other than 16 grand a year from SS, my income is all from investments.

 

[swakyaby]

For most of my w*rking life, I was in the 36% federal and 9.3% state tax brackets and had mainly tax-deferred contributions as my source of deferred tax relief. Once I retired in 2018, I had one glorious year of near zero taxes. But in 2019, I wised up. I ran my financials through i-ORP, and realized that unless I did significant Roth IRA conversions, my tax brackets would be as high or higher than my working years once RMDs started. So thinking about tax implications now and changing course will make a difference in my total lifetime spending.

 

[Souschef]

DW, wise lady that she is, said to me ,"Taxes are your rent for living in the US". In a sense she is right.
The thing I pay the most tax on now is my RMD, which pushes the taxable part of our SS up to 85%. It also pushed us into the IRMAA area for the first time.
I retired in 2009, and moved my 401K into a fund that is now worth 6 times what it was in 2009
To lessen the bite a little, I use part of my RMD for QCD's to charities I support. It saves me about 30% on taxes.

 

[Nature Lover]

Great thread. I used to be a worrier and complainer about taxes --not because of optimizing...but because I just didn't like paying so much (like everyone else). I recently made a tax estimator spreadsheet to get a better view of the drivers and help with tax planning and estimates, and realized that other than moving out of CA, about 95% of my taxes are outside of my control. So, worrying led me to investigating, which led me to no longer worrying. Can't promise I won't still complain....but I'm not worrying much.

 

[harley]

DW, wise lady that she is, said to me ,"Taxes are your rent for living in the US". In a sense she is right.

I understand that taxes are a necessary evil, but I consider minimizing what I pay to be my responsible and patriotic duty. Giving extra money to the gov't is like giving your 6 y.o. unfettered access to their Halloween candy. They have demonstrated time and again their inability to make wise decisions with it. So I dole it out as little at a time as I can, secure in the knowledge that it's the right thing to do.

Plus, it's fun. Some people do Sudoku, I minimize my taxes. I don't fret about taxes, I enjoy figuring out how to pay as little as I legally can. And not just on a year to year basis, but over my lifetime and into my progeny's lifetimes. It's just plain fun.

 

[audreyh1]

Our AGI is not related to how much we spend, and we don't draw pension or SS or from IRAs at the moment. It's all income from our taxable investments which is way more than we spend. I've just been trying to make our investments more tax efficient. And maybe will do some Roth conversions, but our income is already so high anyway and mostly capital gains/qualified dividends.

 

[gwraigty]

I have an AGI of approx. $150K. I could work that down to $85K and save a couple of grand in taxes or so but why? I like living on $150K and could probably go to $175K.


I don't let the tax tail wag my income dog.


I know Robbie is probably with me, but who else might be??

Agree. No sense in sacrificing a significant amount of income to save a lesser amount in taxes.

 

[rk911]

OK, I don't like paying taxes anymore than the next guy. But I don't have a lot of leeway about it as most of my income is pension, stock and mutual fund dividends and capital gains and IRA distributions.


I have an AGI of approx. $150K. I could work that down to $85K and save a couple of grand in taxes or so but why? I like living on $150K and could probably go to $175K.


I don't let the tax tail wag my income dog.


I know Robbie is probably with me, but who else might be??

move over, i’m in the same boat. we’re living quite comfortably on pensions and SS. RMDs are about a year away and it’s money we don’t really need...at least not at this point in time. so regardless if we convert the trad IRAs to Roth or simply take the RMD taxes will occur. our net worth is substantial as it us and we have few beneficiaries so i see no point in converting. we have more spendable dollars now that we could ever spend...without getting silly.

 

[Gumby]

The majority of our portfolio is in tIRA, 401k, 403b and 457 accounts and will be taxable when withdrawn. I will manage our draws/Roth conversions so that our AGI stays just below the first IRMAA surcharge level (currently $174k AGI)

I don't fret about the taxes. I knew going in that we'd have to pay taxes when we took that money out. And $174k a year is plenty for our needs, even after the taxes. In general, I have always agreed with U.S. Supreme Court Justice Oliver Wendell Holmes, Jr., that taxes make civilization possible, so I don't mind paying them. However, I didn't get to retirement by being inattentive with my money, so I do take some efforts to make sure we don't pay more than we must.

 

[jfn111]

Since I'm self employed in Real Estate I have to write those quarterly tax checks. (Yes, I still write checks). I don't fret it because I'm enjoying making the money.
The new 20% tax deduction for SE income helps take the pain away.

 

[PatrickA5]

I'm a bit of a tax geek. I've already run my 2020 and 2021 taxes through TurboTax. Since we have very little taxable money and it's all in MM funds, it's pretty easy for me to estimate taxes for future years and plan my Roth conversions and IRA withdrawals.

I don't try to figure out the tax ramifications of my heirs. I have no idea of what tax bracket my 3 kids will be in 20-30 years down the line when they inherit what's left of our money.

 

[aaronc879]

I hope that you realize that self-employment tax isn't money down the tubes like income taxes are.... you get disability income, survivor and retirement benefits as a result of having paid that tax.... just like W-2 people who pay SS taxes and their employer's pay on their behalf.

All i'm likely to get out of my self employment tax is minimum SS from age 62(or higher if the law changes) until I die probably in my 70's at best. I wish I got disability income. I am too disabled to reasonably do any full time work but not disabled enough to get SS disability. I long for the day that there is a test to determine the amount of pain someone is in and then if the pain is chronic then you shouldn't be expected to work. That's the shape i'm in but can't prove the pain level and because i'm only 40 they won't give me disability. Oh well, not everyone can have a good life.

 

[calmloki]

Mostly we have income from our rentals (bought and paid for decades ago), interest from loans,contracts and savings, some dividends and a wee dab of SSI. Brings in way more than we live on, so I'm trying to divest a bit, managing to sell a rental house last year. While I'm fairly complacent it does rankle a bit to be paying the fed and states more than four times what we lived on before taxes last year.

Not really seeing much we would choose to do about it, so take what joy there is in writing big numbers on checks.

 

[Offgrid Organic Farmer]

Am I the only one who doesn't fret about taxes too much?

My wife likes itemizing our taxes. Call it her hobby.

Because we itemize and have done so for decades, our AGI [Adjusted Gross Income] is very low.

I have not paid income taxes since 1985.

 

[FANOFJESUS]

I pay under 2k but next year I am going under 1k So I guess I don't worry about it. But I don't thank that is what the OP meant
I do worry about the ACA cliff so that limits your tax bill to under 2k for me.
I think there are a couple of guys on this thread not worried about the ACA cliff. LOL

 

[RenoJay]

I’m with you. I don’t let tax implications determine my investment decisions.

 

[pacergal]

OP, we are in the same boat. I had no idea early in my career how our pensions would maximize our income. We sent as much as we could pre tax while working.
My DD always said" If I pay a lot of tax, that means I made a lot money, and that's not a bad place to be".
I don't mind being in this position. I feel very blessed.

 

[ncbill]

Probably less of a worry if you live in a LCOL/MCOL area so your required spending is low.

That's my situation, so I don't explicitly plan for taxes in any of the retirement calculators.

Also if most of your "retirement" savings are in taxable instead of traditional tax-deferred (i.e. non-Roth) accounts...where you're paying ordinary income tax on any withdrawals from the latter vs. long-term capital gains rates on withdrawals from the former.

 

[Teacher Terry]

We have taxes taken out of our pension checks and have it figured out that we just about break even.

 

[RunningBum]

Not sure what fret means here. My spending is not at all directly related to my AGI. I spend less than my WR, so I'm really not giving up anything to lower my taxes. My main reason to pay attention to AGI and taxes are mainly to keep MAGI low enough for the subsidy (which usually means controlling Roth conversions, not limiting spending), and to try to optimize Roth conversions vs. later RMDs. I may discuss taxes here and spend some of my time managing them, but I've never "fretted" about them. Not sure why the OP thinks so many of us do.

 

[jollystomper]

I have decided to become a member of this club. While I will not complain about paying less taxes, I am now of the mindset that I can waste a lot of time over-analyzing the tax savings strategies available to me. So that analysis in more of an academic than applicable interest. We are still enjoying a very comfortable retirement lifestyle.

The majority of our financial assets are in tax deferred accounts, and even Roth conversions will not make a huge dent in them. But we received the past benefit when we contributed, so no need to wring our hands over this.

The easiest action we can choose if taxes become a "worry" would be to move to another state - but we would need more than just that reason to do so.

I am also moving to the view that "fretting" over when to take SS for us, in our circumstances, is also not worth it.