Percentage of Taxable Money in Portfolio

[NW-Bound]

In a concurrent thread, a couple of posters said they wished to have more money in taxable accounts. In my case, due to circumstances, I happen to have a bit more than 30% in after-tax money accumulated over the years.

I thought that I could have done better to shelter more money and to pay less taxes. Then, when I started thinking about ER a couple of years ago, and looked into doing 72t distributions, I discovered that I did not have to, as I could live on the money already mostly taxed.

At this point, my taxable accounts are good enough for 8 years of living expenses, ignoring potential gains/losses. That money will tide me over until I can claim SS or withdraw from 401k/IRA at my discretion, which will open up some options. I counted our Roth accounts as taxable, because they are small and I have not had much gain there to make a difference.

 

[audreyh1]

At the moment, 89.4% of our retirement portfolio is in taxable accounts.

We have additional investments in taxable accounts that we don't count as part of our retirement portfolio.

 

[devans0]

Cash and taxable 37%
Tax deferred 37%
Roths 26%

 

[REWahoo]

Since you didn't specify in your poll, I assume you want current percentages.

At the risk of being accused of quibbling (who, me?), my after tax % is considerably lower now after 7+ years of retirement than it was when I pulled the plug. Most of that money was used up funding our living expenses prior to age 59.5 and to allow for some Roth conversions.

 

[Midpack]

I answered but it's somewhat of a misnomer for some of us. We have 2 IRAs built on non-deductible funds so only the gains will be taxed, and 2 Rollover IRAs that will be fully taxed when we start taking distributions. We sheltered all we could, which was less than I would have liked, though it will all work out fine.

 

[bo_knows]

I guess we've got ~20% in taxable accounts and ~80% in 401k's/rothIRA's. We still have a ways to go before FIRE though. Building up our post-tax money now for the potential purchase of a new home in the next few years (may or may not keep the current home as a rental, thus we're not sure if we'd have the equity as a downpayment).

 

[photoguy]

Just over 50%. I think it would be easier with a higher percent in taxable as then i wouldn't need to worry about 72t distributions. But the deferred tax benefit is so great, it wouldn't make any sense not to max out retirement accounts.

 

[karluk]

We currently have only about 2% of our investments in taxable stock mutual funds. The possibility of having long term capital gains from this type of investment be taxed at 0% makes it mandatory for us to move more money into taxable accounts, and I am looking into various options to do so.

 

[Major Tom]

Currently about 60% in taxable accounts. I'm spending the taxable down first, so presumably that percentage will be quite a bit lower in 5 or 10 years from now.

 

[scrabbler1]

I have about 67% of my portfolio in taxable accounts, some of which is in muni bond funds which are partly taxable or not taxable at all. (Some of it is in stock funds whose income is in the 0% federal tax bracket.) As an early retiree, I can't tap into my IRA yet (in an unfettered manner), so I need a lot of money in my taxable accounts to generate the income needed to cover my expenses.

 

[sheehs1]

I have 80% in taxable accounts. It just the way it turned out.

 

[gomo]

Currently our taxable portfolio is 84%.

 

[Lsbcal]

...(snip)...
At this point, my taxable accounts are good enough for 8 years of living expenses, ignoring potential gains/losses. That money will tide me over until I can claim SS or withdraw from 401k/IRA at my discretion, which will open up some options. I counted our Roth accounts as taxable, because they are small and I have not had much gain there to make a difference.

I am guessing that you are doing Roth conversions while spending the after tax money. That's a good tactic.

Running ORP can help a little to show what income streams to draw from. The tax picture is not at all obvious and is difficult to generalize. ORP is not that strong at considering the tax picture.

What I've done is to run TurboTax with various scenarios and created my own tables showing marginal rates. I don't want to let our IRA's grow too much and force large RMD's at the same time as having SS income. So it can be a good thing to pay taxes up to at least the 15% bracket. SS income is not taxed at the state level.

 

[FIREd]

About 80% of our retirement assets are held outside of retirement accounts. When DW retires next year, the plan is to live off the income generated by our taxable assets and leave the tax-deferred stuff alone for now.

 

[Accidental Retiree]

Tax-deferred: ~90%
Taxable: ~8%
Roth: ~2% (We could not contribute for most of our working lives.)

Due to our two-years-earlier-than-expected retirement, we first drew down our after-tax savings for a while, waiting for my pension to kick in at 55.

Because we were a few years away from 59-1/2, later we each started a 72(t) income stream with a portion of our IRAs. We figured that would also help mitigate the RMD/Social Security taxation scenario down the road.

DH turns 59-1/2 early in February, so our plan is to withdraw up to the 15% limit and put it into savings, index funds, psssst Wellesley, whatever.

And I must add, although it has been nearly 34 years, it doesn't seem all that long ago that the two of us were newlyweds, all excited because we had company profit sharing and 401(k) with matching and hey, we could also save money in these cool things called IRAs. Wow! I am so glad we did.

 

[jimnjana]

Roth - 70%
TSP - 29%
Taxable -1%
Pretty much wiped out our taxable investments in year 1 of retirement to use as a down payment for a vacation rental. We do have taxable accounts that we don't consider retirement savings. 2012 opened a vanguard account and have begun making monthly deposits which we will eventually put into a mutual fund or ETF.

 

[Original Wally]

I clicked the wrong button... clickede 10-20, shoulda clicked the next hgher. As of today it is 28.1%

 

[calmloki]

The gal has less than $14,000 in a Roth. Everything else is taxable and taxed. Thankyou and you are welcome America.

 

[Independent]

Fascinating poll response. There are 10 categories. The 54 responses in the first five hours are spread almost uniformly across them. Most polls with even buckets would show some sort of a bell curve.

Like some others here, we burned off most of our taxable assets early in retirement.

 

[jon-nyc]

I noticed that too, interesting.

I'm ~70% taxable, which is convenient considering I'll retire at 44.

 

[mickeyd]

I'm guessing that I have less than 10% in my taxable accounts. I have always understood that I was creating a future taxable event (or should I say, events) but I appreciate that I have had the benefit of deferring taxes on a sh**load of money so far. I'm prepared to pay Uncle Sam his part of my stash when I begin making w/d in a couple of years.

Maybe Obama will have a change of heart by that time and lower the FIT rates .

 

[haha]

I assumed that by "% of money in taxable accounts", you mean $ value of all invested assets in taxable accounts. 2 very different things, but likely if you meant money per se you would have made that clear.

Ha

 

[Original Wally]

I am intentional about building an after tax portfolio so there will be a ready pool of funds for big ticket items... cars, and so on. It is a like a ballet - keeping the pre-tax and after tax portfolios projected out. And a nice, even, steady stream of incoming cash. Imagine doing it without spreadsheets and such.

 

[Shawn]

Taxable 54%
Tax Deferred 29%
Roth 17%

I'm 53 and still working. For the most part, I've maxed out contributions to my retirement accounts throughout my working career. The Roth account has been funded primarily with backdoor contributions, including in-service after-tax 401k to Roth conversions.

 

[Bikerdude]

Since you didn't specify in your poll, I assume you want current percentages.

At the risk of being accused of quibbling (who, me?), my after tax % is considerably lower now after 7+ years of retirement than it was when I pulled the plug. Most of that money was used up funding our living expenses prior to age 59.5 and to allow for some Roth conversions.

+1. After 13 years of retirement my after tax amount is 0%.