I hate appearing like such a novice in this question, but I am in my serious planning stages, and need to be certain of what I am doing. As I have mentioned in earlier posts, I do not have any tax advantaged accounts. (NO IRA, 401, etc) All my money has been in real estate, which I am liquidating now (including my own home) When I am done, I should have in the neighborhood of $1,500,000 after taxes (IRS bite)
In about 9 more months I will start receiving social security of about $20,000 a year. I am planning on living as conservatively as I can, and figure I need another $20,000 a yr. to cover expences. Now that figure does not include taxes, so here lies my question. I am trying to get a handle on what my taxes might actually be - given the type of portfolio I would like to have. My preferred split would be something like this.
Bucket # 1 (not planning on spending down, but living on interest)
$400,000 at 5% = $20,000 (My needed living expences)
Bucket #2
$500,0000 at 6% using bonds (not bond funds) Reits, maybe MLP's
Income: $30,000 (probably less as Reit div are low now)
Bucket #3,
$600,000 equities though I would like $300,000 in Div. Stocks)
Income $9,000
Social Security $17,000 (taxed at ordinary tax rate) (only 85% of it taxed)
Bucket #1 $20,000 (taxed at ordinary tax rate)
Bucket #2 $30,000 (taxed at ordinary tax rate)
Bucket #3 9,000 (taxed at $15% cap gains)
_______
$76,000 income
My taxes would have to come out of bucket #2 each year, but that should only take away about $10,000 of what it earns, with the remaining amount left to grow for when I need to take additional income. Bucket #3 remains untouched until I die.
Looking at the 2006 tax schedule, if I did it right, it appears my taxes under this scenerio would be about $9,187. Does this appear right to you?
Are there any ways you could cut this tax liabillity. I know if I were to sell a losing stock in my bucket #3, this would lessen it, but the idea there is to leave it alone. Is there anything that I am missing or don't understand?
In about 9 more months I will start receiving social security of about $20,000 a year. I am planning on living as conservatively as I can, and figure I need another $20,000 a yr. to cover expences. Now that figure does not include taxes, so here lies my question. I am trying to get a handle on what my taxes might actually be - given the type of portfolio I would like to have. My preferred split would be something like this.
Bucket # 1 (not planning on spending down, but living on interest)
$400,000 at 5% = $20,000 (My needed living expences)
Bucket #2
$500,0000 at 6% using bonds (not bond funds) Reits, maybe MLP's
Income: $30,000 (probably less as Reit div are low now)
Bucket #3,
$600,000 equities though I would like $300,000 in Div. Stocks)
Income $9,000
Social Security $17,000 (taxed at ordinary tax rate) (only 85% of it taxed)
Bucket #1 $20,000 (taxed at ordinary tax rate)
Bucket #2 $30,000 (taxed at ordinary tax rate)
Bucket #3 9,000 (taxed at $15% cap gains)
_______
$76,000 income
My taxes would have to come out of bucket #2 each year, but that should only take away about $10,000 of what it earns, with the remaining amount left to grow for when I need to take additional income. Bucket #3 remains untouched until I die.
Looking at the 2006 tax schedule, if I did it right, it appears my taxes under this scenerio would be about $9,187. Does this appear right to you?
Are there any ways you could cut this tax liabillity. I know if I were to sell a losing stock in my bucket #3, this would lessen it, but the idea there is to leave it alone. Is there anything that I am missing or don't understand?
