Since I have started really considering getting my small IRA into a Roth such that I can do a backdoor Roth each year (my wife already has for 2009, 2010, and 2011 since she had no traditional IRA) it got me thinking about how taxes might look when/if we ER in 5 years at age 45ish.
We should have about 1.5M split up as follows:
$300,000 cash from selling house (plan to be rubber tramps for awhile)
$200,000 municipal bond taxable account
$400,000 taxable account individual stocks
$500,000 401K
$100,000 Roths
Now, since we plan to really LBYM for at least 5 to 10 years, I think we could get by living on cash from the house sale + muni bond interest + dividends during that time. Married filing jointly, we probably could withdraw up to $30,000? from the 401K each year (which I guess by then would be a rollover IRA) and convert it to a Roth with very little tax due.
So after 15 years at age 59ish our portfolio might look like this (with a not too terrible market and low SWR):
$50,000 cash
$100,000 municipal bond
$600,000 taxable account individual stocks
$100,000 401K
$850,000 Roths
With a $850K Roth we would be pretty much tax free the rest of our lives, no? We could start pulling from the taxable stock account which probably would have large capital gains and leave the Roth largely untouched invested in bonds or something, where it would grow to over 1 mil by 67 when we collect the $3 of SS that is left in the fund. Kind of exciting to think the days of paying taxes might end in just 5 years!
We should have about 1.5M split up as follows:
$300,000 cash from selling house (plan to be rubber tramps for awhile)
$200,000 municipal bond taxable account
$400,000 taxable account individual stocks
$500,000 401K
$100,000 Roths
Now, since we plan to really LBYM for at least 5 to 10 years, I think we could get by living on cash from the house sale + muni bond interest + dividends during that time. Married filing jointly, we probably could withdraw up to $30,000? from the 401K each year (which I guess by then would be a rollover IRA) and convert it to a Roth with very little tax due.
So after 15 years at age 59ish our portfolio might look like this (with a not too terrible market and low SWR):
$50,000 cash
$100,000 municipal bond
$600,000 taxable account individual stocks
$100,000 401K
$850,000 Roths
With a $850K Roth we would be pretty much tax free the rest of our lives, no? We could start pulling from the taxable stock account which probably would have large capital gains and leave the Roth largely untouched invested in bonds or something, where it would grow to over 1 mil by 67 when we collect the $3 of SS that is left in the fund. Kind of exciting to think the days of paying taxes might end in just 5 years!