Any Retirement Calculators That Include Taxes?

[MercyMe]

I've been using all sort of websites and software for retirement planning and many have an input field for an effective tax rate.

But, I'd rather use one that will calculate the taxes for me, though I know tax rates will change.

Are there any retirement calculators that can use today's Fed and state tax rates (and that would allow me to enter my local tax rate as well)?

 

[latexman]

Fidelity’s Retirement Planner estimates federal and state taxes. Not sure about local taxes, because mine are 0.

 

[COcheesehead]

Fidelity’s Retirement Planner estimates taxes.

+1

 

[Al18]

I’ve been using Fidelity Retirement Planner for years - never saw a tax estimate. How do you display taxes?

 

[COcheesehead]

I’ve been using Fidelity Retirement Planner for years - never saw a tax estimate. How do you display taxes?

It’s a main category.

 

[LateToFIRE]

Retiree Portfolio Model (RPM) by folks from Bogleheads. It is an Excel beast, but worth putting the time in to climb a steep learning curve. And it has calcs for taxes.

 

[latexman]

I’ve been using Fidelity Retirement Planner for years - never saw a tax estimate. How do you display taxes?

It calculates taxes. Not sure it displays them very well. Go to Section 3, Tax Calculations and Assumptions in the

DETAILED METHODOLOGY
Fidelity Planning & Guidance Center Retirement Analysis

 

[Exchme]

Pralana Gold (paid Excel sheet) does a good job. In addition to ordinary income taxes, it includes LTCG taxes, SS taxation, NIIT, IRMAA, AMT, ACA premium credits, state taxes, you can specify a tax increase percentage and date or a date for the TCJA to expire (scheduled for 2026).

 

[Al18]

Tax filing status is set, along with assumed state tax in Fidelity Retirement Planner, but the estimated taxes do not appear anywhere on the printout.

 

[COcheesehead]

Tax filing status is set, along with assumed state tax in Fidelity Retirement Planner, but the estimated taxes do not appear anywhere on the printout.

They are included in your spend amount.

 

[latexman]

Tax filing status is set, along with assumed state tax in Fidelity Retirement Planner, but the estimated taxes do not appear anywhere on the printout.

It's a retirement model, not tax software.

 

[MercyMe]

It's a retirement model, not tax software.

Exactly. I'm searching for software (or website) that will show the tax amounts each year. I'll check out RPM from the BH's.

 

[sengsational]

i-orp has a basic tax algorithm, and it shows you what tax brackets are used.

I'd say every retirement modeler needs to be doing a tax calculation, because, as most people have pre-tax assets, taxes become a big part of ones expenses. I wouldn't bother with a calculator that just broad-brushed federal income taxes.

 

[COcheesehead]

Exactly. I'm searching for software (or website) that will show the tax amounts each year. I'll check out RPM from the BH's.

I get what you are trying to do, but taxes are so squirrelly that I wouldn’t depend on anything that forecasts them more than a year or so out. I run proforma 1040’s during the year using Dinkytown and that gets me in the ballpark.

 

[LateToFIRE]

I get what you are trying to do, but taxes are so squirrelly that I wouldn’t depend on anything that forecasts them more than a year or so out. I run proforma 1040’s during the year using Dinkytown and that gets me in the ballpark.

That doesn't make sense for the OP. You have to make assumptions about many aspects of the future, including taxes, in order to do a reasonable retirement planning forecast.

 

[COcheesehead]

That doesn't make sense for the OP. You have to make assumptions about many aspects of the future, including taxes, in order to do a reasonable retirement planning forecast.

Isn’t that what the tools like the Fidelity planner are for, making a reasonable forecast and Fidelity’s does that. It will never be precise, Too many moving parts. Fidelity gives you an idea on taxes, but I wouldn’t use it to plan conversions or manage IRMMA.

 

[LateToFIRE]

Isn’t that what the tools like the Fidelity planner are for, making a reasonable forecast and Fidelity’s does that. It will never be precise, Too many moving parts. Fidelity gives you an idea on taxes, but I wouldn’t use it to plan conversions or manage IRMMA.

Maybe I'm projecting but didn't think the OP was looking for that level of precision, I think just looking for something that (1) Does a calc for taxes, (2) Provides transparency on how its calc works, and maybe allows for some customization to change assumptions about future rates, etc.

My own frustration when I first started using these models was that I had no idea how to even begin thinking about taxes in retirement. The tools that do tax calcs are few and usually blackboxes - they don't show you how they did it.

I think OP will like the RPM model - it is dense, but worth the effort for anyone with a thirst for more detail and customization.

 

[MercyMe]

Maybe I'm projecting but didn't think the OP was looking for that level of precision, I think just looking for something that (1) Does a calc for taxes, (2) Provides transparency on how its calc works, and maybe allows for some customization to change assumptions about future rates, etc.

My own frustration when I first started using these models was that I had no idea how to even begin thinking about taxes in retirement. The tools that do tax calcs are few and usually blackboxes - they don't show you how they did it.

I think OP will like the RPM model - it is dense, but worth the effort for anyone with a thirst for more detail and customization.

You're right. I want to at least remove my WAG on taxes so I can think clearer about Roth conversions and my bond ladder.

 

[SevenUp]

You're right. I want to at least remove my WAG on taxes so I can think clearer about Roth conversions and my bond ladder.

It doesn't do multi-year, but the case study spreadsheet (e.g., see Roth Conversion with Social Security and Medicare IRMAA) may meet your "use today's Fed and state tax rates (and that would allow me to enter my local tax rate as well)" request for a given year.

 

[Sandy & Shirley]

Taxes are a major issue during your retirement years. My last job before retirement was working for a mutual fund, and I had to sign a paper stating that I knew it was against the law for me to talk to any of our customers about their taxes!


When Social Security was created in 1935, the Treasury Department said that our benefits would be Tax Free. Then in 1983 the Government created the laws that make up to 50% of our Benefits taxable, then in 1993 they moved that up to 85% of our benefits would become taxable. Each dollar of taxable income also makes 85 cents of your Social Security taxable, until 85% of your benefits are taxable.


This is all calculated on line 5 on your 1040 Tax Return!


Bottom line, if you take $100 out of your IRA, your taxable income increases by $185. 12% of $185 = $22.20, a 22.2% Federal tax rate, 22% of $185 = $40.70, a 40.7% Federal tax rate. But it is against Federal Law for your investment advisor to talk to you about this!


Also, at the top end of the 12% Federal Bracket when any LTCGs are becoming taxable at 15%, the total of 27% of $185 = $49.95, a 49.95% Federal Tax Rate.


And, if instead of taking $100 out of your IRA, if you earned it at a part time job, you can add $6.20 for SS Payroll Tax and $1.45 for Medicare Payroll Tax; for a total of $57.60 that the Federal Government will want to take from your $100 paycheck!


Good luck getting anyone to talk to you about these taxes. It is against the law for your broker to talk to you about your taxes, AARP refuses to publish anything about this unless I stand behind everything, and I’m not a tax accountant, and Turbo Tax refuses to talk to me!


My advice to you is to learn how to do your personal taxes, then start doing your taxes in January! Don’t start last year’s taxes, start your current year’s taxes so you know at what dollar amount your will cross over from the 22.2% marginal tax rate into the 40.7% or 49.95% marginal tax rate!

 

[MercyMe]

My advice to you is to learn how to do your personal taxes, then start doing your taxes in January! Don’t start last year’s taxes, start your current year’s taxes so you know at what dollar amount your will cross over from the 22.2% marginal tax rate into the 40.7% or 49.95% marginal tax rate!

Thanks for the comments. I'm unable to do my taxes now as they are too complicated (due to owning a corporation), but I do understand what my accountant/tax preparer is doing and I double check every line. Even if I could do my taxes now, I don't think I could calculate what my taxes will be in 10 years when Medicare starts looking at my then income. This is why I'm looking for a calculator.

 

[mountainsoft]

I've been using all sort of websites and software for retirement planning and many have an input field for an effective tax rate.

But, I'd rather use one that will calculate the taxes for me, though I know tax rates will change.

Are there any retirement calculators that can use today's Fed and state tax rates (and that would allow me to enter my local tax rate as well)?

I doubt you could ever calculate future taxes very accurately as there are so many changing variables with tax rates, income, deductions, credits, etc.

However, you can use online calculators like these to get a rough estimate of what your effective tax rate would be in different scenarios.

https://www.mortgagecalculator.org/calcs/1040-calculator.php

https://www.dinkytown.net/java/1040-tax-calculator.html

Then take the highest effective rate, or maybe an average of various rates over a few years, and use that in your retirement planning software. Personally, I round up the highest effective tax rate a bit just to err on the conservative side.

 

[2HOTinPHX]

Taxes are a major issue during your retirement years. My last job before retirement was working for a mutual fund, and I had to sign a paper stating that I knew it was against the law for me to talk to any of our customers about their taxes!


When Social Security was created in 1935, the Treasury Department said that our benefits would be Tax Free. Then in 1983 the Government created the laws that make up to 50% of our Benefits taxable, then in 1993 they moved that up to 85% of our benefits would become taxable. Each dollar of taxable income also makes 85 cents of your Social Security taxable, until 85% of your benefits are taxable.


This is all calculated on line 5 on your 1040 Tax Return!


Bottom line, if you take $100 out of your IRA, your taxable income increases by $185. 12% of $185 = $22.20, a 22.2% Federal tax rate, 22% of $185 = $40.70, a 40.7% Federal tax rate. But it is against Federal Law for your investment advisor to talk to you about this!


Also, at the top end of the 12% Federal Bracket when any LTCGs are becoming taxable at 15%, the total of 27% of $185 = $49.95, a 49.95% Federal Tax Rate.


And, if instead of taking $100 out of your IRA, if you earned it at a part time job, you can add $6.20 for SS Payroll Tax and $1.45 for Medicare Payroll Tax; for a total of $57.60 that the Federal Government will want to take from your $100 paycheck!


Good luck getting anyone to talk to you about these taxes. It is against the law for your broker to talk to you about your taxes, AARP refuses to publish anything about this unless I stand behind everything, and I’m not a tax accountant, and Turbo Tax refuses to talk to me!


My advice to you is to learn how to do your personal taxes, then start doing your taxes in January! Don’t start last year’s taxes, start your current year’s taxes so you know at what dollar amount your will cross over from the 22.2% marginal tax rate into the 40.7% or 49.95% marginal tax rate!

Sorry the above post is a little confusing to me. Are you taking into consideration provisional income brackets applied to SS taxes? I may be missing something...

 

[Sandy & Shirley]

Yes, the second paragraph of my response was talking about the Investopedia image you posted.

The “basis” for the taxation of your benefits is Half of your benefits plus all of your other taxable income, then, as your image illustrates, each dollar of income from $32,000 to $44,000 causes 50 cents of your benefit to become taxable income and each dollar of income over $44,000 causes 85 cents of your benefit to become taxable income, until 85% of your benefit has become taxable income.

Those are the limits for “Married Filing Joint Taxpayers”. The taxation points for Single Taxpayers are $25,000 and $34,000. Not sure what they are for Married Filing Separate!

 

[Al18]

The actual Federal Taxes you pay on your SS benefit is smaller than most people believe. I just ran the online HR Block calculator for 2022 taxes, MFJ with $45000 in SS benefits plus $45000 in investment income. Federal taxes were $3270, or 3.63% tax rate.

I reran the scenario with 0 SS benefits plus $90000 in investment income, which resulted in tax of $5553 or 6.17% tax rate.