CardsFan
Thinks s/he gets paid by the post
We retired early this year, and have been living off of cash on hand. We are both 61 and plan to take SS at FRA (66.2). We plan to start pulling from investments soon, and want some advice on the pro's and con's of the different ways this can be done. In round numbers, we have 60 % in Tax deferred, 30 % in after tax investments and 10 % in cash. Roth IRA's have minimal amounts, as they have just been set up. Spend rate is about 3%.
A couple of options, at least until FRA:
1. Maximize Roth conversions to 15 % bracket. Fed and state Taxes would be about 10k. Spend from cash and/or after tax account.
2. Lower taxes by living off of cash plus after tax dividends and gains, selling a little to make up the difference. taxes would be minimal, according to TurboTax.
3. Live off of dividend, gains and tax deferred accounts. let the after tax account ride.
We originally planned to do #1, but the idea of paying almost no taxes is extremely appealing.
Any thoughts?
A couple of options, at least until FRA:
1. Maximize Roth conversions to 15 % bracket. Fed and state Taxes would be about 10k. Spend from cash and/or after tax account.
2. Lower taxes by living off of cash plus after tax dividends and gains, selling a little to make up the difference. taxes would be minimal, according to TurboTax.
3. Live off of dividend, gains and tax deferred accounts. let the after tax account ride.
We originally planned to do #1, but the idea of paying almost no taxes is extremely appealing.
Any thoughts?