Man Retired With $4M Told Wife To 'Pretend We Are Dead Broke'

[WorldWatcher]

401k

If you are talking young people.

Better to investigate Roth options. If your employer offers a Roth 401K over a traditional, you normally much better paying taxes now and with that post-tax money letting the Roth investements grow tax free.

As compared to a Traditional 401K using pre-tax dollars as the tax bill will still come due later.

WW

 

[The Duke]

Some people burn through money like water. Giving them some doesn't change the outcome.

 

[rightwinger]

If you are talking young people.

Better to investigate Roth options. If your employer offers a Roth 401K over a traditional, you normally much better paying taxes now and with that post-tax money letting the Roth investements grow tax free.

As compared to a Traditional 401K using pre-tax dollars as the tax bill will still come due later.

WW

I agree
I am retired now and paying taxes on the money I pull out really cuts into your retirement

But at the time I started, the idea of getting money tax free was a big incentive to save.

 

[EdwinAMartin]

View attachment 1245101

At 0.006Yen to the dollar, say 6,000,000 Yen would be about $36,000 US. Anybody can be millionaire these days. lol

 

[EdwinAMartin]

Some people burn through money like water. Giving them some doesn't change the outcome.

Prepare for retirement by owning your house and land and decent vehicles outright and no credit debt, and it's easy to get by on even a small income. Utilities will be the big expense.

 

[odanny]

Prepare for retirement by owning your house and land and decent vehicles outright and no credit debt, and it's easy to get by on even a small income. Utilities will be the big expense.

When you are not carrying debt, when your home is paid for and your vehicles paid for an not in need of repair, if you have decent medical insurance or Medicare, and your monthly income is small, you can manage pretty well, because you can predict future expenses and budget for them.

If you don't spend much on dining out or travel you really don't need much money if all the above is true.

 

[leftwinger]

I agree
I am retired now and paying taxes on the money I pull out really cuts into your retirement

But at the time I started, the idea of getting money tax free was a big incentive to save.

SHUP you made interest up-down tax free for decades.

 

[leftwinger]

Prepare for retirement by owning your house and land and decent vehicles outright and no credit debt, and it's easy to get by on even a small income. Utilities will be the big expense.

Property taxes in CA or TX can eat you alive too!!!

 

[EdwinAMartin]

Property taxes in CA or TX can eat you alive too!!!

Well, the elderly get an extra exemption in addition to the homestead one, so it's not that bad, just get a real appraisal done instead of the rigged one the appraisal districts like to puff up and protest it. In Texas you get a max 10% increase per year and a cap on it for the rest of your life. Mine topped out 30 years ago at just $170K ever since. Your heirs however will be appraised at current market rates to begin with and the cycle starts again.

 

[leftwinger]

Well, the elderly get an extra exemption in addition to the homestead one, so it's not that bad, just get a real appraisal done instead of the rigged one the appraisal districts like to puff up and protest it.

In CA it is on the value you bought it at. Going forward. It did get little weird "cheaper"? under the Obiden crash of 09'o think. Then back up in13? 15?

 

[WorldWatcher]

SHUP you made interest up-down tax free for decades.

Traditional 401K deposits and growth is not tax free - they are tax deferred.

The old mantra was save money now, tax deferred, save taxes now. When you get to retirement, you will have lower income, be in a lower tax bracket, and will save money on taxes later.

While true for many, there are many of us that will see a tax bomb as we get older because retirement income didn't decrease that much from working. My wife retired last year and I retired this year. I know this will sound weird, but here it goes. We were long term contributors to retirement and were making large catch-up contributions to our 401K's. This artifically lowered AGI. However in retirement we can't make the same type of tax deferred contributions. So even though our gross income will go down, our taxable income actually increases slightly. And that's without touching our 401K's.

Now I'm delaying SS until 70 and with RMD's coming at 73 - we really, REALLY, need to start ROTH conversions and paying taxes now before the early 70's income increase resulting in a Tax Bomb as you break into higher tax brackets.

WW

 

[EdwinAMartin]

In CA it is on the value you bought it at.

It should be on the appraised value at whatever the current market is. I've to protest mine several times. Many people don't, and these tax districts count on that .

 

[leftwinger]

Well, the elderly get an extra exemption in addition to the homestead one, so it's not that bad, just get a real appraisal done instead of the rigged one the appraisal districts like to puff up and protest it. In Texas you get a max 10% increase per year and a cap on it for the rest of your life. Mine topped out 30 years ago at just $170K ever since. Your heirs however will be appraised at current market rates to begin with and the cycle starts again.

There is a elderly formula income exemption but not a tax credit I think?

A few thousand off income at 22% tax bracket is not much if you are living off $100K out of an IRA plus paying tax on 85% your SS income.

Ill would need to go back and look. Ugh. Work.

 

[EdwinAMartin]

When you are not carrying debt, when your home is paid for and your vehicles paid for an not in need of repair, if you have decent medical insurance or Medicare, and your monthly income is small, you can manage pretty well, because you can predict future expenses and budget for them.

If you don't spend much on dining out or travel you really don't need much money if all the above is true.

Too many people retire with huge houses that are really a pain in the ass when you're old, and then get caught when they downsize and take a tax hit on selling the McMansion and moving to a small manageable place or retirement village. I merely stayed in place and don't pay squat in property taxes relative to those who bought in around here 3-5 years ago. I have about 20 acres in town here but those were grandfathered in as agricultural, so I don't pay much on those, as I plow up a big truck garden and also let a few neighbors plow some and keep some critters on it. I keep a couple of hogs. I have somebody else fatten up a couple of calves for me every couple of years on their place, as it's cheaper that way. It takes planning and being realistic about what old age does to you.

 

[EdwinAMartin]

There is a elderly formula income exemption but not a tax credit I think?

A few thousand off income at 22% tax bracket is not much if you are living off $100K out of an IRA plus paying tax on 85% your SS income.

Ill would need to go back and look. Ugh. Work.

Texas has no state income tax, and only half of SS is counted on your Fed tax returns towards the $28K earning's limit until now, when Trump exempted all of it and the elderly get an extra personal deduction addition now. I think my personal deduction was $16500 last year, plus some itemized deductions and long term capital gains..

 

[leftwinger]

Texas has no state income tax, and only half of SS is reported on your Fed tax returns until now, when
Trump exempted all of it and the elderly get an extra personal deduction addition now.

85% of SS is taxed as regular income by some complicared schedule formula or so I thought?

Bottom line. If you have any "other income" over ~$40K? 85% of your SS will be taxed as included income.

Am I wrong on that?

There is a new over age 65 formula to reduce your income which reduces your tax burden owed. I am pretty sure that is true. But not a flat tax credit for elderly over 65.

Too complicated.

 

[leftwinger]

Texas has no state income tax, and only half of SS is counted on your Fed tax returns towards the $28K earning's limit until now, when Trump exempted all of it and the elderly get an extra personal deduction addition now. I think my personal deduction was $16500 last year, plus some itemized deductions and long term capital gains..

No income tax but TX property tax is high (over 2%). CA is 1.1125% of what you paid for house fixed until next sale Prop13.

 

[EdwinAMartin]

85% of SS is taxed as regular income by some compacted schedule formula or so I thought.

Bottom line. If you have any other income 85% of your SS will be taxed.

Am I wrong on that?

There is a new over age 65 formula to reduce your income which reduces your tax burden owed. I am pretty sure that is true. But not a flat tax credit for elderly over 65.

Too complicated.

I don't recall any 85%. I'll look again. Is that California's state tax from re counting SS income?

 

[WorldWatcher]

Too many people retire with huge houses that are really a pain in the ass when you're old, and then get caught when they downsize and take a tax hit on selling the McMansion and moving to a small manageable place or retirement village. I merely stayed in place and don't pay squat in property taxes relative to those who bought in around here 3-5 years ago. I have about 20 acres in town here but those were grandfathered in as agricultural, so I don't pay much on those, as I plow up a big truck garden and also let a few neighbors plow some and keep some critters on it. I keep a couple of hogs. I have somebody else fatten up a couple of calves for me every couple of years on their place, as it's cheaper that way. It takes planning and being realistic about what old age does to you.

It must really be a McMansion.

There is a $500,000 capital gains exemption on capital gains available to married filing jointly and the sale occurs within 2 years of the spouses death. That's capital gains, meaning subtract the purchase prise first.

WW

 

[WorldWatcher]

I don't recall any 85%. I'll look again. Is that California's state tax from re counting SS income?

Federal taxes based on income.

Single, Head of Household, or Qualifying Widow(er):
Under $25,000: Not Taxable.
$25,000 – $34,000: Up to 50% taxable.
Over $34,000: Up to 85% taxable.

Married Filing Jointly:
Under $32,000: Not Taxable.
$32,000 – $44,000: Up to 50% taxable.
Over $44,000: Up to 85% taxable.

WW