Poll:Tax advantage % of net worth

[HillCountry]

RetireAge50, you don't have anything in regular checking/saving account?

 

[jabbahop]

30% of investable in tax deferred (wish it was was free!).

 

[MooreBonds]

Still in accumulation mode, about 10 years pre-FIRE:

10% Tax-free (ROTH/HSA)
21% Tax-deferred (SEP IRA/401k rollover/Traditional IRA/Inherited IRA)
31% Total tax-advantage

My soon-to-be-MrsMooreBonds has a future pension at FIRE that will roughly equal the dividend stream from the portfolio at retirement, so future additions to the stash will likely just be reinvestment of taxable/tax-advantage dividends, and a few deposits from my employer into the tax-deferred. So future growth of taxable/tax-advantage as a % of total portfolio will likely be roughly equal until FIRE. Hope to live off just the dividends and pension, so the next 40+ years will likely be roughly consistent for percentages.

However, when we get close to FIRE, I'll lock myself away for a day and pour over the numbers to analyze which withdrawal methods will minimize our projected taxes, in with accounts to draw from, RMD impacts, and SS strategy (she doesn't have any SS given her school district employer).

 

[Beardog]

50% in tax advantaged accounts, with respect to net worth, not just investments.

If considering only investments, 65% of worth is in tax deferred status.

 

[Alan]

Total of 50% tax advantaged of net worth (I currently don't own any property).

Complete breakdown is

24% Tax deferred
26% Tax free (Roth)
50% After tax investments

 

[RetireAge50]

RetireAge50, you don't have anything in regular checking/saving account?

Yes. Less than 1/2%

 

[mickeyd]

The majority of my investable assets are in an IRA. Time, and RMD, will remedy that situation.

 

[stepford]

37% of NW (including house and lump sum value of pension)
59% of investible assets.

Large enough percentage that even with all the Roth conversions I can manage I'll still have quite the RMD hit when it hit 70.5.

 

[GrayHare]

Graphing the survey results yields an interesting two-peak plot. I'd guess one peak represents those who ran their own businesses, while the other reflects people who enjoyed long-term megacorp 401k contribs.

 

[littleb]

Tax Free - ROTH and HSA = 15%

Tax Deferred - IRA's = 39%

TOTAL = 54%

 

[523HRR]

Tax-Deferred 49%
Tax-Free 8%

TOTAL = 57%

 

[DrRoy]

55% of invested assets. About half of NW.

 

[NW-Bound]

It's interesting how people treat Roth and HSA the same as IRA.

I group HSA and Roth with after-tax brokerage accounts, even though dividends and cap gains from the latter may still get taxed. These taxes are still lower than regular income tax, and then may be tax-free if you manage to stay in the 15% tax bracket. And then, the principal has already been taxed, so you can tap it without any taxes.

On the other hand, money from 401k and IRA has never been taxed, so you get hit with full load upon withdrawal.

If you need a large sum, for example several hundred $K's to buy a home, would you take it from Roth/after-tax accounts or from your 401k/IRA? If the latter, between federal and state income taxes, you would lose nearly 1/2 of the withdrawal.

 

[Hermit]

Just over 80% of NW in tax deferred. That is about 100% of investable assets. My uncle, who is always looking for ways to get into my pockets, and I will start reaping the benefits when I turn 70 1/2.

 

[NW-Bound]

The above said, I have come to a chagrin that my after-tax savings are not as high as they used to be. It's not as bad as "over 80% of NW in tax deferred", but I used to have 40+% of investable assets in after-tax accounts. Those are my money, not like 401k/IRA money that is not yet free from Uncle Sam's claim.

I only recently got past 59-1/2 to be able to tap 401k and IRA. And I have to brace myself for higher taxes than I have been enjoying the last 4 years. Oh well, good times have to end at some points.

 

[MooreBonds]

Still in accumulation mode, about 10 years pre-FIRE:

10% Tax-free (ROTH/HSA)
21% Tax-deferred (SEP IRA/401k rollover/Traditional IRA/Inherited IRA)
31% Total tax-advantage

Actually, because of my future wife's pension, I suppose you could say that her pension is about equal to the earning power of my stash in terms of dividends. Also, there is the (much smaller) 'equivalent' effect of your Social Security payments.

Excluding SS effects, you could say my "equivalent" percentages, taking into account her pension, would be:

5% tax-free (ROTH/HSA)
10% tax-deferred
15% Total tax-advantage
35% After-Tax
50% "Pension-equivalent"

She gets zero SS, mine would be enough to splurge once-a-month on perhaps a flight and hotel stay somewhere cheap. Not enough to change our strategy with (or adjust the above percentages), but enough to definitely factor in our spending plans.

 

[bradaz2488]

Looks like 58% of investment assets in tax advantage accounts. I'm 53 and not scheduled to pull money until age 68. May pull money out earlier if markets turn ugly and/or if there are tax advantages to do Roth conversions.

 

[Katsmeow]

I used net worth including home equity and was at about 68%. Not including home equity it would be above 90%. Note that we are the withdrawal phase and deliberately spent down our non-tax advantaged assets a couple of years ago.

 

[pixelville]

Where should one count I-bonds? Probably tax-advantaged?

 

[audreyh1]

Where should one count I-bonds? Probably tax-advantaged?

I didn't. It's not quite like an IRA where you have to pay taxes on the entire withdrawal. Just that the accumulating interest is deferred until you redeem it making it similar to selling a non-dividend paying asset and paying taxes only on any capital gain. Of course, you are paying at ordinary income rates, not capital gains tax rates.

It's a bit of a hybrid, obviously. But I only included IRAs and 401Ks in my tax deferred.

Muni bonds are technically tax-advantaged as well, but I didn't include them either.

 

[sengsational]

95% of investable assets are in tax advantaged accounts.

I'm surprised there are so few people reporting high percentages. But lumping Roth (awesome wrt taxation) with 401k (kill me now wrt taxation) is kind weird.

How about percent between the two? I've got 18% of the 95% in Roth/HSA.

 

[2017ish]

86% of investable. 83% of investable+House

(Roths and HSA only about 4% of investable as of now.)

Very lopsided, but we will never come near our working marginal rates in retirement; thus, a good tradeoff.

 

[kcowan]

Wasn't eligible for the biggest tax deferred account (RSP).

Yes we were limited to $3500 a year most of the working life but still got to over $600K. Thank you Mr Market!

 

[mpeirce]

I personally track this as: Taxable, Tax Deferred and Non-Taxable (ROTH/HSA)

Currently a 68/24/8 split. And am actively working on ROTH conversions and funding HSA.

I also have a section in my tracking spreadsheet where I track our potential pending tax liability: both accumulated capital gains in the taxable accounts and the IRAs.

 

[JohnT]

34% of net worth is in tax deferred investments.

My (and DW) IRAs, 401ks make up 60% of total investable assets.

I have no Roth yet, but plan to begin converting some $$ this year. I have a small HSA.