Withdrawals and Taxes

[mpeirce]

Those are some real low hc premiums. We (me 58, dw 55 and ds) pay 950 per month of which 150 if for dental.

They are real. Right off my expense spreadsheet (rounded). The deductible is $11,000, which is why we pay OOP for most things. So it could be much more if something bad happens. Oddly, the deductible for the ACA plan is even higher.

Dental is extra. Twice a year cleaning for the three of us is about $700. I replaced a filling two years ago, that was about $500.

 

[Hermit]

Even folks with lots and lots of income probably pay an effective income tax rate of under 10%. Retirees probably should be able to work it so that they don't pay any income taxes at all until their annual spending goes above $100,000.

So if you are paying any income taxes, you should be asking yourself, "How come I am paying income taxes and nobody else is?"

I don't get it. Single, standard deduction, $50K pension income. TaxCaster says 12% taxes and in 25% bracket. Not looking at any state taxes. Unless you are paying a bucket of money for health insurance, it would be hard to get above the standard deduction if you are single and have everything paid for.

 

[pb4uski]

I don't get it. Single, standard deduction, $50K pension income. TaxCaster says 12% taxes and in 25% bracket. Not looking at any state taxes. Unless you are paying a bucket of money for health insurance, it would be hard to get above the standard deduction if you are single and have everything paid for.

True, but many ERs are essentially living off taxable savings from ER to when they take SS. So income is principally qualified dividends and LTCG, both of which are 0% if you stay within the 15% tax bracket.

I was 0% in my first year of ER and 5% in the second because I decided to prioritize Roth conversions over 0% LTCGs. Those are federal only, and state adds another 3% or so.

If you have significant pension income and/or SS, then your tax rate may be lower than when you were working, but it would be hard to get below 10%.

 

[pb4uski]

....One thing struck me when talked to accountant; there's a lot of gray in what gets filed based on accountant's experience and knowledge. ...

What do you have in mind? My return is pretty black and white fill-in the blanks.

 

[pb4uski]

Planning to ER in about 5 years (I'll be 55 and wife 51) and wondering what early retirees are doing for health insurance prior to Medicare at 65...

I created a LLC so I could buy a "small group" policy through the local Chamber of Commerce. BCBS HDHI HSA-eligible coverage for two was ~$550/month in 2011 and ~$630/month in 2012. While the 2012 plan has been extended for the first 3 months of 2013 it goes away effective April 1.

Will be ~$680/month for the rest of 2013 but I'm trying to get qualified for a catastrophic plan that only costs ~$425/month.