GoodbyeYellow
Recycles dryer sheets
- Joined
- Jun 23, 2021
- Messages
- 55
Sorry for length; this decision is driving us a little batty.
We (62, 59) are working out a plan to manage health care costs for the next 6 years while also being able to keep our reasonably modest standard of living in the early years of retirement. I retired earlier this year and she is targeting end of this year. Kids are independent.
First and to be clear, I think we are well set up for retirement with a total nest egg > $5M and non-healthcare expenses around $100K/yr (currently, but we might want to increase by say 15%, I don't know the final thoughts on this yet).
To this end, the known items are:
a. $270K cash (so $45K/yr if depleting fully in 6 yrs))
b. $26K/yr dividend income
So about $70K/yr from current sources.
The variable sources revolve around the following:
1. We can harvest some old trading losses and bring in around $300K from the sale of stocks (so $50K/yr), tax free (and MAGI-free) due to loss writeoffs.
1a. This action will cut dividend income to around $15K/year (reduction of $11k/yr from (b) above)
2. Withdraw from tIRA to the tune of ~$20K/yr; this should be nearly tax free but for a few hundred a year (we would use standard deductions).
Net effect of the variables above:$59K, so known + variables add to ~$130K/yr, which should be enough to meet 90+% of spend needs/wants.
Of note is that this leaves a good bit of non-productive cash on hand AND reduces income from dividends. OTOH the cash represents < 10% of NW (if counting home equity), so by itself this amount is not risky I think.
The decision we are struggling with: whether to drive MAGI low enough to get a strong benefit from ACA (current thinking), or to pull much more from tIRA, paying both taxes and higher ACA costs.
The catch with ACA is more than just the premiums - it's the deductibles and MOOP, which can go quite high if not in a Silver CSR plan, which we are shooting for in the base scenario. I know this is not a certain amount but I tend to look at it as such, to be conservative. We are in reasonable health but I may need a minor surgery in the next year or two (hernia).
No SS yet; I think we'll defer this decision for at least 3 years, until I get on Medicare and we can reassess this whole thing.
So for those who have worked through a similar scenario, how did you reason through it to reach the decision you did? Did it work out as planned? And for all reading: if in our situation, how would you approach this, and have I missed anything?
We (62, 59) are working out a plan to manage health care costs for the next 6 years while also being able to keep our reasonably modest standard of living in the early years of retirement. I retired earlier this year and she is targeting end of this year. Kids are independent.
First and to be clear, I think we are well set up for retirement with a total nest egg > $5M and non-healthcare expenses around $100K/yr (currently, but we might want to increase by say 15%, I don't know the final thoughts on this yet).
To this end, the known items are:
a. $270K cash (so $45K/yr if depleting fully in 6 yrs))
b. $26K/yr dividend income
So about $70K/yr from current sources.
The variable sources revolve around the following:
1. We can harvest some old trading losses and bring in around $300K from the sale of stocks (so $50K/yr), tax free (and MAGI-free) due to loss writeoffs.
1a. This action will cut dividend income to around $15K/year (reduction of $11k/yr from (b) above)
2. Withdraw from tIRA to the tune of ~$20K/yr; this should be nearly tax free but for a few hundred a year (we would use standard deductions).
Net effect of the variables above:$59K, so known + variables add to ~$130K/yr, which should be enough to meet 90+% of spend needs/wants.
Of note is that this leaves a good bit of non-productive cash on hand AND reduces income from dividends. OTOH the cash represents < 10% of NW (if counting home equity), so by itself this amount is not risky I think.
The decision we are struggling with: whether to drive MAGI low enough to get a strong benefit from ACA (current thinking), or to pull much more from tIRA, paying both taxes and higher ACA costs.
The catch with ACA is more than just the premiums - it's the deductibles and MOOP, which can go quite high if not in a Silver CSR plan, which we are shooting for in the base scenario. I know this is not a certain amount but I tend to look at it as such, to be conservative. We are in reasonable health but I may need a minor surgery in the next year or two (hernia).
No SS yet; I think we'll defer this decision for at least 3 years, until I get on Medicare and we can reassess this whole thing.
So for those who have worked through a similar scenario, how did you reason through it to reach the decision you did? Did it work out as planned? And for all reading: if in our situation, how would you approach this, and have I missed anything?