Gentleman Of Leisure In The Making

[Gumby]

Thanks. Sorry, silly question, I know - but when you say "marginal rate", what would that be based on the fact that you're collecting a pension and also harvesting your investments? I would think that the pension might be taxed at a higher rate than the investments, no? Investments and qualified dividends would be taxed at the federal level at 15%, but the pension, depending on your entire gross income might be taxed at, say, 20%, right? Sorry, I know it's a basic question (the answer to which I should already know) but I'm a bit clueless when it comes to the U.S. tax code. Thanks again for your patience.

Withdrawals from tax sheltered accounts (401k 403b 457) are treated as ordinary income for tax purposes, regardless of the fact that they may have accrued as capital gains in the account. Accordingly, I need to add an extra 25 % (my marginal bracket) to the amount I take, so I can pay the taxes.

 

[Blue Collar Guy]

You know your wife. I know mine.

+1, I discussed packing it in with her. She agreed, However in my mind she allowed me, maybe its semantics, maybe its just how my world is. My old partner retired, his wife was not ok with it. He was home for a few months, she found him a new job with her cousin, he slaved away at that 5 more years .

 

[Zorba]

She's staying until 2022 to get the pension and healthcare (as crappy as it is). She wants RE too, she's just not desperate like I am.

That was our situation but flipping the third person pronouns (he/she). She RE'ed first.

If I had to be 100% honest, I would say that quietly resented it at first. We had both worked hard to get to this point but I was still working full time. It didn't matter that this was a choice that we had made jointly. The green-eyed monster was sitting there in the background. Very quickly though, with her not working, our home life became so much better. Your DW may come to see the many positives of having a spouse at home.

 

[Vincenzo Corleone]

Withdrawals from tax sheltered accounts (401k 403b 457) are treated as ordinary income for tax purposes, regardless of the fact that they may have accrued as capital gains in the account. Accordingly, I need to add an extra 25 % (my marginal bracket) to the amount I take, so I can pay the taxes.

Oh, right! SMH. I was just focusing on the "early" part of RE and thinking of only my taxable accounts.

 

[Vincenzo Corleone]

Someone Pinch Me (was: Gentleman Of Leisure In The Making)

As a follow-up to http://www.early-retirement.org/forums/f28/gentleman-of-leisure-in-the-making-87168.html#post1893180 (which is too old for me to reply to):

It's getting very, very temping. As things stand now with our NW and expenses, I'm looking at a withdrawal rate of 2.97% - but that's assuming DW blows her take-home pay and our usual expenses are covered entirely by our NW (which will never happen).

Forecasting out to 2022 when DW may retire with a pension, assuming a 3% real return on our investments and a big bump in expenses by $45,000 to cover health insurance, we're looking at a withdrawal rate of around 3.13% when taking the pension into account. I would think that would be sustainable.

It seems too good to be true. I keep thinking there's got to be a mistake somewhere. I continue to look for holes in my thinking.

 

[Gumby]

You can still reply to old threads, so long as you check the box indicating that you realize it is old. I can simply add this thread to the earlier one if you wish.

 

[Vincenzo Corleone]

You can still reply to old threads, so long as you check the box indicating that you realize it is old. I can simply add this thread to the earlier one if you wish.

Sure! Thanks.