2020 Planned Spending (nothing like our first 65 years)

[W2R]

I think I have accepted death however I can’t get over paying taxes [...]

Believe me, I understand! The only way I can accept taxes is to just accept that I can do nothing about them, pay them, and then just let it go and think of something else.

I can't seem to do that with death, though. Dylan Thomas (quoted below) would like my attitude although sometimes it seems like raging against the dying of the light, is like tilting at windmills. I keep thinking there must be SOME way to gain immortality SOME how, but of course there isn't. At least not yet.

Do not go gentle into that good night

Do not go gentle into that good night,
Old age should burn and rave at close of day;
Rage, rage against the dying of the light.

Though wise men at their end know dark is right,
Because their words had forked no lightning they
Do not go gentle into that good night.

Good men, the last wave by, crying how bright
Their frail deeds might have danced in a green bay,
Rage, rage against the dying of the light.

Wild men who caught and sang the sun in flight,
And learn, too late, they grieved it on its way,
Do not go gentle into that good night.

Grave men, near death, who see with blinding sight
Blind eyes could blaze like meteors and be gay,
Rage, rage against the dying of the light.

And you, my father, there on the sad height,
Curse, bless, me now with your fierce tears, I pray.
Do not go gentle into that good night.
Rage, rage against the dying of the light.

Dylan Thomas - 1914-1953

Don't let this post alarm anybody. I am not facing any life threatening illnesses. I am just growing old like all of us are.

 

[Lsbcal]

No step up basis on the house? Or have you been holding it for awhile since inheriting it?

Unfortunately I inherited it after the lady who married my Dad decades ago (for money I think) passed. You don't get a stepped up basis in this case according to lawyers.

I sold it immediately as I don't want to be a landlord in a town that had gone down hill in recent decades. And I didn't want to gamble on continued economic good times.

 

[Lsbcal]

...

I can't seem to do that with death, though. Dylan Thomas (quoted below) would like my attitude although sometimes it seems like raging against the dying of the light, is like tilting at windmills. I keep thinking there must be SOME way to gain immortality SOME how, but of course there isn't. At least not yet.
...

Well good health habits will achieve a small percentage of that immortality. Or would it? Hmmm...any number divided by infinity is zero.

Never the less I'm going out for a run now ...

 

[W2R]

Well good health habits will achieve a small percentage of that immortality. Or would it? Hmmm...any number divided by infinity is zero.

Never the less I'm going out for a run now ...

Yeah, and I tend to think that the common belief that the average person can completely control their longevity through healthy habits is based on extremely wishful thinking. Well, yeah, if I was a heroin addict eating nothing but Krispy Kreme and sleeping in gutters, I'd probably have a shorter lifespan than most, but none of us live like that.

We are all control freaks at heart (I do believe that!) and we want to think that our lifespan is completely under our control. Yet we all know people who lived exemplary lives, doing all the healthy things, and still died young. I guess if I was religious instead of agnostic, I'd say that our time of death is up to God to decide. Or maybe I should put this issue on the "maybe religion is correct" side of my internal argument about spiritual matters.

I do like going to the gym, but also I know that being more fit improves my quality of life whether or not it increases my lifespan.

 

[JDARNELL]

That's a very constructive attitude. I'm not sure about setting up a 501(c) as an individual or family. .

Not for the individual and family but more supporting worthy endeavors. I already have a DAF so this would be more specific to things I am interested in supporting. For example Disabled Veterans doing some led down range therapy. I would rather them blow the dough than Uncle sugar.

 

[NW-Bound]

... I do try to remember that, as the saying goes, nothing is certain in life but death and taxes.

Now if I could just accept the inevitability of death, as easily as I have accepted taxes! That's a bit harder to do.

People do not want to think of their death. I think it's built-in to our genes. However, watching older people in my family, I saw that the resignation to their fate came slowly as they aged and could no longer deny their health decline. The ones who accepted it earlier were at peace with themselves and were not tormented in the final days.

 

[Cobra9777]

In December, we did our first LARGE Roth conversion, to the top of the 22% bracket. For several years, we've only converted to the top of the 12%/15% bracket. With the huge tax bill in 2020, our expected percentages are:

Medical 10%
Taxes 30% (21% federal income tax plus 9% local property tax)
Other 60%

I guess our total spend is quite a bit higher than OP.

In any case, I think RunningBum's outlook on this is spot-on and I appreciate that he posts it frequently. I'm not 100% there, mentally. I keep telling myself... "I'm just moving money from here to there and removing a liability. No fundamental change in the balance sheet." But in April, when I have to sell some stock in the taxable account to pay the IRS, I guarantee it's going to feel like "spending"... like buying a new car but with no car to show for it.

I'll get there.

 

[RunningBum]

In any case, I think RunningBum's outlook on this is spot-on and I appreciate that he posts it frequently. I'm not 100% there, mentally. I keep telling myself... "I'm just moving money from here to there and removing a liability. No fundamental change in the balance sheet." But in April, when I have to sell some stock in the taxable account to pay the IRS, I guarantee it's going to feel like "spending"... like buying a new car but with no car to show for it.

I'll get there.

Good luck. And you can count on me repeating myself repeatedly.

 

[MarieIG]

DS got engaged in December and we now have a wedding in November 2020. Relative to this thread, whatever we spend as the groom's parents will reduce our dry powder that could be used to pay Roth conversion taxes. How much do groom's parents usually spend?

DS and betrothed are coming to visit this weekend. This will give us an idea of what their vision for their wedding might be.

It depends. In one case, we covered the rehearsal dinner (about 50 people not cheap) and gave a cash gift. It is also not unusual for the grooms family to cover flowers. With another son, the bride's family ran into financial problems so we covered additional items (bride's shower, cake, photography, DJ); as well as giving a cash gift.

 

[RenoJay]

In 2004, my taxes paid were about 12x my living expenses. IMO, that’s a first world problem.

 

[tenant13]

I see myself converting a massive amount to ROTH only if I then turn that ROTH into self-directed IRA and buy an investment property as IRA. That way when I turn 60 or so (56 now) I'd be able to sign the title to myself without worrying about any tax consequences or triggering any "forbidden transactions" rules.

I just want to move a portion of my portfolio away from the US stock market, US financial institutions and away from any potential law changes that would affect withdrawal of funds from retirement accounts. Real estate is a way of achieving it.

 

[FIREd]

In 2019, I permanently relocated from an area of low taxation to an area where the level of taxation is far higher. So I realized a maximum amount of capital gains in 2018 and I ended up voluntarily paying a large amount of taxes to reduce my future tax liability. I can't say that it felt good when I had to write the check to the IRS, but I have no doubt that it was right thing to do, long term.

 

[DrRoy]

I have no words.

 

[BeachOrCity]

I track my actual spending but I have a special allowance for what average car spending, health spending, and tax spending should be. And then I show what the delta is in each of these so I don’t concern myself too much with blowing the budget by buying a car, or paying a large capital gain on the sale of a house would be etc.

My car spending avg is the IRS rate x 20k miles.
My tax spending is my average spend assuming 1/2 is capital gains and appropriate tax rates.
My healthcare spend is premiums plus deductibles.

Usually I am way under the average, last year way over as I sold a rental house I owned for a long time with huge gains.

 

[Perryinva]

Assume you're referring to me, though it's hard to say when you don't quote anyone for reference. I don't think I'm in denial, I just face up to the reality...

I was responding to you, but the denial quote referenced myself. I am obviously in denial even knowing it is the right thing to do. One of my celebrated milestones was when I entered the two comma club after taxes (estimated of course). I know it is a mental thing.

I try not to quote, too many people quote entire responses and it is not necessary and makes negotiating a thread more cumbersome. I have a lot of company in not liking to write voluntary checks to the IRS. It is no different in my mind than convincing myself to delay filing for SS until 69. I KNOW when I am FRA, I will have a hard time, despite the math, convincing myself to not grab those “free” $3300/mo checks and instead wait for the $3800 or $4000/mo checks. Assuming I make it to 80, I will be glad I did, I’m sure, but....

 

[Chuckanut]

Assume you're referring to me, though it's hard to say when you don't quote anyone for reference. I don't think I'm in denial, I just face up to the reality that my IRA has a tax liability associated with it since the day I put it in there.

I may do calculations 12 times every way I can to figure out how much to convert, but once I do, I'm glad to have more of the liability taken care of. Maybe it helps that I've never converted more than $105,000 in one year, but that's because it didn't make sense to convert at a higher rate rather than displeasure at paying the tax. I've had a few urges to just convert the whole thing and be done with it, but resist it because it makes bad financial sense.

+1

The tax has to be paid at some time, so if a Roth conversion reduces it, then that's the way I choose to go. I consider it a 'success tax'. I suppose I could minimize the taxes I pay on withdrawals from my tIRA accounts by investing the IRA funds into things like Venezuelan Beaver Cheese futures and thus run the IRA down in the direction of $0. As my British friend says, "You could do that.".