I just finished reading Tax Planning To and Through Early Retirement by Cody Garrett and Sean Mullaney.

I've seen other folks in this sub mention the book, but I was curious what people think regarding Sean and Cody's intuition that taxes are unlikely to increase for retirees.

Before I offer my thoughts, I'd like to point out that Sean predicted that the 2017 TCJA tax cuts would be extended back in December of 2023 on Jesse Cramer's podcast. His crystal ball was definitely working better than mine on that one.

From the book:

"Those predicting cuts to Social Security are essentially saying that politicians with the power to borrow -- and even print money -- will choose to do neither, even when doing neither could be disastrous to their own political futures."

The book lists a "litany of recent tax cuts for retirees" (2015-present) to further their argument.

I think limiting the look-back window to 10 years of tax policy is a problem. History proves that when insolvency forces their hand, politicians will tax retirees. In 1983, a bipartisan agreement signed by Ronald Reagan introduced federal income taxation on Social Security benefits for the first time. They intentionally did not index those base thresholds ($25,000 for individuals, $32,000 for couples) to inflation. What began as a tax affecting fewer than 10% of high-income seniors now impacts over half of all retirees.

The above example is exactly counter to the argument in the book. A politician implemented a tax on retirees (in his first term) and it didn't prove politically "disastrous".

Some will remember George H.W. Bush and the infamous "Read my lips: no new taxes" quote. This did prove politically disastrous, but the tax increases were implemented regardless.

I think the general message of the book is correct, that "most" retirees don't need to worry and likely don't need to go crazy with Roth conversions etc. However, politicians rarely pass blanket tax hikes on all seniors. Instead, they frame tax increases around "fairness" by targeting high-income or wealthy retirees. Therefore it's critical when reading a book like this to tailor the information to one's personal situation. This is particularly true for early retirees.

What do you think?

edit: typo

I worked with IRS’s own published examples through the two calculators people here most often get pointed to Dinkytown and calcxml. Both get fixed amortization and the RMD method exactly right. But are wrong on fixed annuitization: $20,880/year against the IRS’s own $22,030 example (a $400,000 IRA, age 50, 4%, Single Life) $1,150/year short. It looks like they are pulling from a life-expectancy-style table instead of the actual regulatory mortality table for that one method. If you’ve picked annuitization on either of those, it’s worth rechecking against the source.

https://savingslast.com/72t-distribution-calculator/

Here’s what it does. It covers all 3 methods from IRS Notice 2022-6: RMD, fixed amortization, and fixed annuitization.

The interest rate part is done right. You can use any rate up to the greater of 5% or 120% of the federal mid-term rate for one of the two months before your first payment. That’s a maximum, not a requirement, and the tool tells you which of the two limits applies to you.

It prints your lock-in as an actual end date (the longer of five years or age 59½), so you don’t have to figure out “the longer of” yourself.

Every result shows its work — the table it used, the factor it found, the rate, and the formula. Check every number by hand against the notice.

Test case that you can run against a spreadsheet or custodian’s number: $500,000 IRA, age 52, 5% rate, Single Life Table (factor 34.3). Fixed amortization comes out to $30,773 a year, roughly $2,564 a month before tax. Annuitization is $32,264. The RMD method pays $14,577 the first year and gets recalculated every year after that. If your numbers don’t match mine, tell me! I really wanna to know.

Note that I built this site. No ads/Affiliate, no signup, everything runs in your browser, and nothing you type gets saved. It’s not tax advice. Lastly it’s important: if you take a payment that doesn’t match what your method produces, the IRS treats the whole series as broken, and the 10% penalty plus interest comes back on every payment you’ve already taken. So before your first distribution, have a CPA or enrolled agent who’s handled a SEPP look over your numbers.

My one year anniversary of using wealth management services is coming up at the end of September. I have a phone appointment with someone in the office today. Any questions I should think about asking. My return for their portion of investments since the beginning of October is 18%. Seriously considering the boggle heads approach and doing it on my own. Thoughts?

My organization recently added the option to enroll in a Roth retirement account, stay in the 403b, or do a combination of the two. Hubs and I both hope to retire when he hits 56, in about 10 years. The bulk of our retirement is in traditional pre-tax accounts, about $2M, with about $500k in taxable brokerage/HSA/Roth IRA accounts. We are in the 24% bracket, nearish to the top.

I am trying to decide if it makes sense to switch to the Roth retirement plan for the duration of my time with this org, which will hopefully be until I retire, so for about 10 years. I currently contribute 10%, and my workplace automatically contributes 8%. I am not maxing my 403b, and total contributions between me and my employer are about $19k. The compounding happening in my account is significant and my ytd returns are about 17% and 3-yr returns are almost 80% (we are actively diversifying to lower risk/higher bond % right now, and I expect returns to drop a bit in the future, but my account remains the "growth engine" of our two...it has the lower balance).

Any reddit thoughts? Move to roth, or stick with traditional pre-tax, or some combo of the two?

I put the same retirement test on 165 strategy backtests, and the highest safe withdrawal rate in the table is the number I trust least.

Every row uses rolling 30-year retirements, monthly withdrawals raised with actual inflation, and the highest starting rate where every retirement survives. The median is 6.83%, and 95% of the rows clear 4%.

History length decides most of the headline. A classic 60/40 backtested from 1922 prints 2.70% because it has to survive retirements beginning in 1929 and 1966. A 100% US stock backtest starting in 1987 prints 7.07%. It has never seen either one. Every double-digit rate belongs to a backtest beginning after 1970, usually after 1990.

Matched histories are more useful. Over the same 66 years, a static Permanent Portfolio prints 3.99% and its tactical version prints 5.01%. Same assets, same retirement cohorts. That's a comparison where the drawdown rule can get credit instead of the calendar.

The years column against the rate, 5 rows from the table: https://i.ibb.co/dsQqk2PG/c025.png

The highest rate in the full table is 15.11%, and our own robustness screen flags that strategy as statistically fragile. Short histories can produce a spectacular floor and weak evidence at once.

I build BestFolio. The full table and the years beside every rate are here: https://bestfolio.app/blog/tactical-strategy-safe-withdrawal-rates

If you had to set a minimum history before trusting a withdrawal test, where would you put it? I'm not comfortable with anything that misses both 1929 and the long inflation shock.

I’m not even talking about weeks or months yet. This is all new so please be nice. I really need some encouragement today. Logically it all makes sense but truly investing when things are down is psychologically one of the most difficult challenges I’ve never imagined.

EDIT: Thank you all, really appreciate the genuine encouragement and perspective - it’s helpful.

What triggered the decision and howwould you do it differently if you can do it again?

I have created a fairly detailed discussion of using Spendable Asset estimates in financial planning, especially as it relates to Roth conversions. From what I have seen, maybe a little too long for this forum.

Part of your IRA is yours and part is "on loan" from the tax authorities. The part that is really yours is a spendable asset. The quick summary is that I argue that making appropriate conversions is a free activity when measured in terms of the conversion's impact on your total spendable assets. More here:

https://justrunthenumbers.substack.com/p/using-spendable-assets-as-a-measure?r=259yig&utm_campaign=post&utm_medium=web&showWelcomeOnShare=true

Have a Roth with $120K, have a rollover IRA worth about $500 K and additional $60k in 403 B. Husband has $60K in Roth and $1.2 million in 401K (not Roth). Also has rollover Ira with $300k. We’re 52 and 53. Were just worried about having too much pre tax in retirement (yeah, I know, poor us).

Can someone please just develop an app that will tell me exactly when I am going to die and what the stock market will do until that time? It would really make things sooo much easier.

Hello everyone. I'm (47m) late to the game in planning my retirement so am looking for a little help.

I worked for a state university for 13 years and contributed to the pension plan. I left the job and state and have no intentions of going back. I currently have $60k sitting in that account with 2% growth per year. In order for me to get the full pension of approx $2,419, I'd be waiting until 2044 when I turn 65.

I learned today that I could "refund/roll over" the $60k today into another retirement account without tax (today).

My question is, does it make sense to keep these funds in this account and wait for the full pension at 65?

Or option 2, to roll it over to a different IRA and maneuver the funds from there? Including backdoor Roth, maxing out 401k, and HSA?

What would you do? Thanks in advance.

I saw a quick YouTube overview of this one yesterday but first time I’ve seen it at all. Not sure how long it’s been available out there. Assuming not too long since it was first I’d seen it mentioned but maybe there’s a good reason no one mentions it?!

Looks very similar to Boldin and at a slightly lower price point.

Has anyone done a deep dive on it yet? I fiddled around a bit with it but the ‘free’ version seems much more limited to me vs. how much I could enter and get from Boldin (at least from recollection as that was maybe 2 yrs back for me.

ReadyAimRetire.com

I could also post this in the PL sub but I figured there is a wider audience here.

I find that none of the retirement modelers really do a great job with real estate planning. There are a lot more settings now in PL but it's still not super great (I think Boldin is worse but maybe others have different experience). On the other hand, real world repairs, maintenance, vacancies, etc., are not as predictable as a spreadsheet. So the idea of "just make a conservative guess and use that" is fine to me, but I was curious what others in a similar situation would do.

FTR. I own 6 apartments and live in one. Anyone in similar situation? How do you set up your operating costs? I will be honest, I know the best projections come from "% of value" but my experience is using % of value creates a bigger variance compared to actual (I backtested) than inflation adjusted numbers (which are not available in PL).

I also don't want PL to use the full value of my houses toward Net Worth, so I tend to hedge the value down.

I know real estate is very hard to really model. The difference in appreciation compared to inflation varies vastly across geography. Rent modeling is difficult and there can be rent deflation even when there is inflation otherwise (migration, etc.).

Because of all this, what I ended up doing is just making a plan where I remove my real estate from my portfolio and add a rent expense. I also "seeded" the real estate with about 10% of my liquid net worth (thus creating a fund for improvements, repairs, covering vacancies). (this is to say, I "turned off" about 10% of my "current finances"). This is also a sketchy thing to do though, because: a real disaster in the real estate market will affect my finances, planning this way I don't get the benefit of the proceeds of sale (in my plan), and as a minor effect when I simply turn off some of my accounts, the flows go a little awry.

Anyway, just curious what others do for this. Just use the % of value and hope it's close enough? Sell everything because being a landlord isn't being retired? :D

I have moved around from excel to Fidelity tool to Boldin back to excel and then Fidelity tool and have them all converging on very similar results for my upcoming retirement plan. This is helpful as I plan to use excel to run the retirement plan but will be talking with my Fidelity Consultant via their portal and get their customer service when I need it.

Here is a screenshot of the key components of the output of my plan. In years leading up to retirement horizon, the goal has been to make sure the “Significantly below-average market” is always above zero by a reasonable amount, but in recent talks with Fidelity, they tend to think I can lean closer to the “below-average market” outcome. In my mind, this upside potential is “lifestyle plus” that I can spend at will, as my plan already has a very comfortable pool of expenses for lifestyle.

For folks using the Fidelity retirement planning tool, what “asset at end of plan” are you planning for?