Finance Dave
Thinks s/he gets paid by the post
- Joined
- Mar 29, 2007
- Messages
- 1,864
Am I studying this correctly?
It appears that if a couple (family of 2) makes $62,919 they get the subsidy/credit, yet a family of 2 that makes $62,921 does not? The cost differences are huge and I can't believe they'd set up a program such that making just a few dollars more makes that much of a difference. The $62,920 threshold is 4x the FPL for a family of two if you're wondering...at least for 2014 I believe.
DW and I are in our mid '50s and semi-fired...will fully fire in 12-24 months.
First let's assume we spend $75,000/year. We have steady passive income of $35,000/year from rental properties, which means we need another $40,000 to live on. We plan to draw this down from our IRAs. However, drawing down $40k/year would put us over the threshold above and force us into the unsubsidized category, dramatically increasing our premiums EVERY year.
For those of us with MAGI near that threshold (which we are), would it then be wise to keep IRA withdrawals such that you stay below the threshold in most years, and then once in awhile take a huge withdrawal so that you can then rely on that money in the next few years to fund living expenses?
For example,
Year 1 - $35k rental income + $170k IRA withdrawal - $75k living expenses = $130k left in the bank ...we'd pay unsubsidized premiums for that year.
Year 2 - $35k rental income + $40k from bank account (not counted as income) - $75k = $90k left in the bank...we'd pay much lower, subsidized premiums.
Year 3 - Same as year 2, $50k left in bank, pay lower, subsidized premiums.
Year 4 - Same as year 3, $10k left in bank, pay lower, subsidized premiums.
Year 5, $35k rental income + $170k IRA withdrawal - $75k living expenses = $70k left in bank.
etc.
It seems this strategy would save a ton of money for us. Thoughts?
Note: Yes, I realize there will be a higher marginal tax bracket hit in the years we take huge amounts out of the IRA...and I'd have to do the math but I still think we'd come out ahead.
It appears that if a couple (family of 2) makes $62,919 they get the subsidy/credit, yet a family of 2 that makes $62,921 does not? The cost differences are huge and I can't believe they'd set up a program such that making just a few dollars more makes that much of a difference. The $62,920 threshold is 4x the FPL for a family of two if you're wondering...at least for 2014 I believe.
DW and I are in our mid '50s and semi-fired...will fully fire in 12-24 months.
First let's assume we spend $75,000/year. We have steady passive income of $35,000/year from rental properties, which means we need another $40,000 to live on. We plan to draw this down from our IRAs. However, drawing down $40k/year would put us over the threshold above and force us into the unsubsidized category, dramatically increasing our premiums EVERY year.
For those of us with MAGI near that threshold (which we are), would it then be wise to keep IRA withdrawals such that you stay below the threshold in most years, and then once in awhile take a huge withdrawal so that you can then rely on that money in the next few years to fund living expenses?
For example,
Year 1 - $35k rental income + $170k IRA withdrawal - $75k living expenses = $130k left in the bank ...we'd pay unsubsidized premiums for that year.
Year 2 - $35k rental income + $40k from bank account (not counted as income) - $75k = $90k left in the bank...we'd pay much lower, subsidized premiums.
Year 3 - Same as year 2, $50k left in bank, pay lower, subsidized premiums.
Year 4 - Same as year 3, $10k left in bank, pay lower, subsidized premiums.
Year 5, $35k rental income + $170k IRA withdrawal - $75k living expenses = $70k left in bank.
etc.
It seems this strategy would save a ton of money for us. Thoughts?
Note: Yes, I realize there will be a higher marginal tax bracket hit in the years we take huge amounts out of the IRA...and I'd have to do the math but I still think we'd come out ahead.