Liftoff!!!

[retire202052]

Congrats.....Just curious if you include your equity or home value in your NW calculation?

 

[FIREarly]

Just remember that 1.03 million will probably be 600k after you pay the tax man. Maybe more depending on the state you live in. Move to Florida...

GL

If a bunch of his NW is in tax deferred accounts (HSA, IRA, etc...) than, to my understanding, he already paid his taxes or might not have to pay it ever, eg HSA.

$1.03m

 

[FIREarly]

Originally Posted by Almost There 2021 View Post
Just remember that 1.03 million will probably be 600k after you pay the tax man. Maybe more depending on the state you live in. Move to Florida...

GL

If a bunch of his NW is in tax deferred accounts (HSA, IRA, etc...) than, to my understanding, he already paid his taxes or might not have to pay it ever, eg HSA.

$1.03m

PS, if he/she lives in Austin, TX, don't they have similar tax laws to FL around no state income tax... not sure TX laws for investment taxes.

 

[Magus]

We hit $3M in 2012, and now we’re over $8M invested in stocks/bonds and nearly $11M including real estate. This year our stocks alone have increased $1.25M. It can happen.

Strong run! Congrats - I am hoping for similar for myself (closing in on $2M myself right now, expect to retire in ~3.25 years with $3.5-4m with a lot of that increase coming from equity vesting and saving $200k/yr) in the coming years. At anything close to $10M we would be living the high life - we spend around $80-$100k/yr and live extremely well, so generating $350-$500k/yr we could basically be stupid with our money a bit.

 

[Magus]

Just remember that 1.03 million will probably be 600k after you pay the tax man. Maybe more depending on the state you live in. Move to Florida...

GL

Nah - the average effective tax rate is ~10% in the US for people that even pay taxes. Only way you'd lose 40% to taxes is if ALL in tax deferred and you took it all out in one year and even then it would likely be closer to 30-35% for a married couple (because the first $330k would be taxed between 0-24%).

$80k of income for a married couple with 5% state tax after std deduction would be just under 10% effective tax rate.Iif you stopped working and withdrew just $50k your effective tax rate would be around 5%. This is why Roth's are way over-valued for most folks and you're better off getting 22-37%+ state reduction from 401k deduction while peak years of working.

 

[RxMan]

Congrats! That is a very large amount of money. You will appreciate the power of compounding even more going forward as you watch this money grow. Great job!

 

[Almost There 2021]

Did you mention that your decision is annuity or lump sum? If lump sum I would like CPA who thinks he/she can go with a 10% tax rate.

2021 Tax Rate For Single Filers For Married Individuals Filing Joint Returns For Heads of Households
10% Up to $9,950 Up to $19,900
12% $9,951 to $40,525 $19,901 to $81,050
22% $40,526 to $86,375 $81,051 to $172,750
24% $86,376 to $164,925 $172,751 to $329,850
32% $164,926 to $209,425 $329,851 to $418,850
35% $209,426 to $523,600 $418,851 to $628,300
37% $523,601 or more $628,301 or more
Source: Internal Revenue Service

Note- does not include State and local taxes. NYC etc. - another 7%.

 

[BGH1]

That's exactly the point...some people don't think about the erosive costs of inflation over long periods. My statement was to have the OP think about that. Take any item you commonly buy today (or even your entire annual budget), apply a future value formula to it over 30 years, and THEN decide if $1M will be enough. I could be wrong, but I'd venture to say that unless you've been working long enough through periods of inflation to see how it can erode purchasing power, it's hard to fathom it. Many young people have NEVER experienced high inflation such as what we had in the early 1980s.



When I was growing up in Cincinnati, a radio station had a contest where they gave away a $1M prize. The 26 year old woman who won it was someone I went to high school with. The news media swarmed her house and wanted interviews, she was RICH! Today if you win $1M, and pay the taxes, you'll have enough left to buy a nice house and a car, but maybe not much else.

The OP has a 2036 target retirement date so time to grow and add more!

 

[Magus]

Did you mention that your decision is annuity or lump sum? If lump sum I would like CPA who thinks he/she can go with a 10% tax rate.

2021 Tax Rate For Single Filers For Married Individuals Filing Joint Returns For Heads of Households
10% Up to $9,950 Up to $19,900
12% $9,951 to $40,525 $19,901 to $81,050
22% $40,526 to $86,375 $81,051 to $172,750
24% $86,376 to $164,925 $172,751 to $329,850
32% $164,926 to $209,425 $329,851 to $418,850
35% $209,426 to $523,600 $418,851 to $628,300
37% $523,601 or more $628,301 or more
Source: Internal Revenue Service

Note- does not include State and local taxes. NYC etc. - another 7%.

The OP did not state a withdraw amount nor from what sources, simply his net worth. Given most on here would pull 2-5% annually of their NW in retirement, anything higher than 10% based on current NW would be nuts. Average state income tax is much lower than 7%, especially after standard deductions and many large states with zero income tax and most states with > 7% are graduated rates. That of course is average - could be higher or lower.

 

[FireDreamer]

Just had to quickly share with everyone - we became millionaires this week! NW hit $1.03m as of today! Thank you to everyone here for all of the great wisdom, keep sharing!

Congrats!!

As most say, the first million is the hardest, also the most gratifying.

 

[Getyoung]

Congratulations! Well done.