[Eclas]

[QUOTE=blueash;2265854] You're not buying Medicare or don't you know that? If you were paying the cost your premium would be huge, not a few hundred a month. The people paying for your health insurance right now are the workers of the US. And they are paying your premiums for you because, well Socialism. See how you benefit when the government takes money from somebody and gives it to you?

Not true. I and everyone else has paid for their medicare thru your wages when working. I'm tired of hearing my social security and medicare are giveaways. I PAID for many years.
Now uncle sam likes to say they "give' us that. I call BS!

[dewilson58]

Originally Posted by Eclas

Not true. I and everyone else has paid for their medicare thru your wages when working. I'm tired of hearing my social security and medicare are giveaways. I PAID for many years.
Now uncle sam likes to say they "give' us that. I call BS!

Breath, Breath.....................that's not what Blue is talking about............Breath.

[Nevinator]

Originally Posted by GoRedSox!

It is not 37% on all your income, though, only the portion of your income over $693,750 for couples or over $578,125 for singles. And if your income is coming from qualified dividends, the top rate is 15%.

CORRECT! We have a progressive tax system, and taxes are calculated by tiers. Most people are unaware of that. Good comment.

[Nevinator]

Originally Posted by CoachKandSportsguy

…the starting point is we are both 65 at the end of this year, start taking Social security on Jan 2025, when I qualify for full retirement benefits for both. )

From your post, my guess is that you were born in 1958. Assuming that is true, your full retirement age is 66 years and eight months which would put your FRA for the purpose of SS at about Aug, 2025.

Separately, I do quite a bit of development on various spreadsheets to track, stocks, options (calls, puts, IC, spreads…) and numerous calculations for various options trades. I would be very interested in seeing what you’ve created at such point that you decide to share your work product.

[LoisR]

Start taking SS at 62. Waiting until full retirement age to start SS means youl will have to live to approx 80 years old to make up for the years you didn't take SS. How many people do you know who passed before reaching 80?

[MandoMan]

Originally Posted by manaboutown

Top Federal rate is now 37% + 3.8% NIIT = 41.8%. That ain't chicken feed. Moreover a substantial percentage of people pay no income tax whatsoever.

" In total, about 59.9 percent of U.S. households paid income tax in 2022. The remaining 40.1 percent of households paid no individual income tax. In that same year, about 47.1 percent of U.S. households with an income between 40,000 and 50,000 U.S. dollars paid no individual income taxes."

From: Households paying no income tax by income level U.S. 2022 | Statista

That is astonishing. Add to that the large number of people who pay NO IRS taxes who vote for candidates who want to cut taxes. A tax cut doesn’t help you if you don’t pay that kind of tax. Some people don’t think clearly, yet they are still allowed to vote. And drive.

[huge-pigeons]

I’m tired of hearing if you have money, you need to share it. Most people who have money when they retire worked hard and long hours during their working years. And these same people did the right thing and invested a lot of their money during those years for the future instead of partying and overspending. Now, the have nots want to condemn the people that did the right thing.

Socialism/robbing Peter to pay Paul does not work and will never work. ACA is the worst thing that was ever created, ask around.

As for taxes, your goal every year for your whole life is to pay the least amount of taxes legally. If you want to pay more, there is a line that lets you add more taxes to your return. Same for social security, we all paid SS taxes during our working years and now we are double taxed on these distributions which is unfair. Hopefully that will change.

Everyone got a tax reduction 5 or 6 years ago. Somebody mentioned the rich only pay 20% tax, that is huge. If you make $1M a year, they will be paying $200,000 in taxes, this is a huge amount of money.

We should implement a flat tax of 10% for everybody, no deductions, no loopholes, and we would have much more money coming in for the government to spend foolishly.

[Robbb]

Originally Posted by spinner1001

This thread deviated quickly from the OP’s financial modeling post.

Yea that's disappointing, the op had some very interesting things to say.

[retiredguy123]

Originally Posted by huge-pigeons

I’m tired of hearing if you have money, you need to share it. Most people who have money when they retire worked hard and long hours during their working years. And these same people did the right thing and invested a lot of their money during those years for the future instead of partying and overspending. Now, the have nots want to condemn the people that did the right thing.

Socialism/robbing Peter to pay Paul does not work and will never work. ACA is the worst thing that was ever created, ask around.

As for taxes, your goal every year for your whole life is to pay the least amount of taxes legally. If you want to pay more, there is a line that lets you add more taxes to your return. Same for social security, we all paid SS taxes during our working years and now we are double taxed on these distributions which is unfair. Hopefully that will change.

Everyone got a tax reduction 5 or 6 years ago. Somebody mentioned the rich only pay 20% tax, that is huge. If you make $1M a year, they will be paying $200,000 in taxes, this is a huge amount of money.

We should implement a flat tax of 10% for everybody, no deductions, no loopholes, and we would have much more money coming in for the government to spend foolishly.

I don't see a line on the tax return to pay additional taxes. What tax form and line are you referring to? In my experience, if you overpay your taxes, the IRS will usually correct your return and send you a refund.

[Ski Bum]

Originally Posted by CoachKandSportsguy

My financial expertise is in building models for future decision making about whatever the topic is, doesn't matter, there are thousands of financial decision topics.

So, since I (Sportsguy) am now retired and my wife (CoachK) is still working but will retire next year, I have built out the retirement model even further to include medical insurance premiums and Roth Conversions to understand when to take Social Security and what is the status of our IRA savings and investment savings to weather the future expenses in TV, for taxes and a cash flow statement to see when additional withdrawals may be required. (I have not factored in the latest increase in AUTO insurance premiums )

After researching IRMAA, a hot topic du jour for some, I modeled out a married couple, with both at current max social security, again maybe us , with IRAS with RMDs, as everyone has. With the model being dynamic, the starting point is we are both 65 at the end of this year, start taking Social security on Jan 2025, when I qualify for full retirement benefits for both. At that time, i am assuming 5 k in additional taxable income above SS from any other sources, investments, part time work, etc.

Using inflation and other annual increasing assumptions (IRMAA threshold increased at nearly 6 % and Social security increased at 4%+ for CY24) and market returns for investments are 6% out for 20 years, the effect of RMDS can be seen in AGI and in taxes and tax brackets.

By entering an CY22 ending IRA balance as a total for a married couple, here is the age and year we would have to pay IRMAA penalties based upon current RMD percentages, based on max SS, RMD and taxable income year by year

Conclusion: Its not worth ROTH conversions and paying taxes now to save future IRMAA penalties in the future for married couples with IRAs less than $3,000,000

certainly its a non issue for us, and i suspect many others.

I am more than willing to share the workbook after I detail out the IRMAA penalties by taxable income bracket, I just used the max penalty in the example, and since its per person for a couple, it gets a bit detailed to calculate out which person in a couple, so i just doubled the per person penalty. . (may need to research the married couple scenario a bit as well), however, i am still looking for a CFP willing to review it for reasonableness. There are a few financial types here who can PM me to discuss validation of formulas, but not assumptions)

Thank you! I realize there are a bunch of variables, but I really appreciate this analysis (and I know it was a ton of work). This describes my wife and I fairly well and I have been wondering where the cut off point would be. This analysis places that point at $3M. Even if that is off by $1M, the info is useful. I always suspected it wasn't worth doing a conversion. I just wish I would have started a Roth younger. My kids know from my error though!

[Boilerman]

Originally Posted by CoachKandSportsguy

My financial expertise is in building models for future decision making about whatever the topic is, doesn't matter, there are thousands of financial decision topics.

So, since I (Sportsguy) am now retired and my wife (CoachK) is still working but will retire next year, I have built out the retirement model even further to include medical insurance premiums and Roth Conversions to understand when to take Social Security and what is the status of our IRA savings and investment savings to weather the future expenses in TV, for taxes and a cash flow statement to see when additional withdrawals may be required. (I have not factored in the latest increase in AUTO insurance premiums )

After researching IRMAA, a hot topic du jour for some, I modeled out a married couple, with both at current max social security, again maybe us , with IRAS with RMDs, as everyone has. With the model being dynamic, the starting point is we are both 65 at the end of this year, start taking Social security on Jan 2025, when I qualify for full retirement benefits for both. At that time, i am assuming 5 k in additional taxable income above SS from any other sources, investments, part time work, etc.

Using inflation and other annual increasing assumptions (IRMAA threshold increased at nearly 6 % and Social security increased at 4%+ for CY24) and market returns for investments are 6% out for 20 years, the effect of RMDS can be seen in AGI and in taxes and tax brackets.

By entering an CY22 ending IRA balance as a total for a married couple, here is the age and year we would have to pay IRMAA penalties based upon current RMD percentages, based on max SS, RMD and taxable income year by year

Conclusion: Its not worth ROTH conversions and paying taxes now to save future IRMAA penalties in the future for married couples with IRAs less than $3,000,000

certainly its a non issue for us, and i suspect many others.

I am more than willing to share the workbook after I detail out the IRMAA penalties by taxable income bracket, I just used the max penalty in the example, and since its per person for a couple, it gets a bit detailed to calculate out which person in a couple, so i just doubled the per person penalty. . (may need to research the married couple scenario a bit as well), however, i am still looking for a CFP willing to review it for reasonableness. There are a few financial types here who can PM me to discuss validation of formulas, but not assumptions)

But there are several reasons for doing Roth conversions besides avoiding IRMAA. Like being pushed into higher tax brackets. Or being subject to NIT. Or the risk that tax rates will be higher in the future than today’s rates. Or the risk that Social Security benefits might be means tested in the future. Or the psychological benefit of having tax free money to spend from a Roth (my parents refuse to spend their IRA money because of the taxes they would pay.) I’ll say that all these reasons mostly apply to large IRAs, but I don’t agree that $3M is the threshold.

[GoRedSox!]

Originally Posted by huge-pigeons

I’m tired of hearing if you have money, you need to share it. Most people who have money when they retire worked hard and long hours during their working years. And these same people did the right thing and invested a lot of their money during those years for the future instead of partying and overspending. Now, the have nots want to condemn the people that did the right thing.

Socialism/robbing Peter to pay Paul does not work and will never work. ACA is the worst thing that was ever created, ask around.

As for taxes, your goal every year for your whole life is to pay the least amount of taxes legally. If you want to pay more, there is a line that lets you add more taxes to your return. Same for social security, we all paid SS taxes during our working years and now we are double taxed on these distributions which is unfair. Hopefully that will change.

Everyone got a tax reduction 5 or 6 years ago. Somebody mentioned the rich only pay 20% tax, that is huge. If you make $1M a year, they will be paying $200,000 in taxes, this is a huge amount of money.

We should implement a flat tax of 10% for everybody, no deductions, no loopholes, and we would have much more money coming in for the government to spend foolishly.

Many of those tax cuts, if not all them, are set to expire in 2025-26 because they were passed in Budget Reconciliation to avoid the Senate filibuster rule. The amount these tax cuts increased the national debt was so large that they had to make them temporary in order to stay within Reconciliation rules. Extending them or making them permanent will add trillions more to the national debt. It will be interesting to see what happens as this will be one of the first things Congress has to tackle after the 2024 Presidential election. The Reps from both parties from many states which have high income or property taxes will not vote to extend the State and Local Tax (SALT) deduction limit of $10,000 no matter what.

As for the ACA, it is most certainly not the worst thing ever, in fact it now has public approval polling over 50%. The worst thing ever might be tying health insurance to your job. Without the ACA, tens of millions of people would have no health insurance at all. There are a lot of folks who decided to retire before age 65 who relied on the ACA to get them to Medicare-eligibility.

[mntlblok]

Originally Posted by huge-pigeons

I’m tired of hearing if you have money, you need to share it. Most people who have money when they retire worked hard and long hours during their working years. And these same people did the right thing and invested a lot of their money during those years for the future instead of partying and overspending. Now, the have nots want to condemn the people that did the right thing.

Socialism/robbing Peter to pay Paul does not work and will never work. ACA is the worst thing that was ever created, ask around.

As for taxes, your goal every year for your whole life is to pay the least amount of taxes legally. If you want to pay more, there is a line that lets you add more taxes to your return. Same for social security, we all paid SS taxes during our working years and now we are double taxed on these distributions which is unfair. Hopefully that will change.

Everyone got a tax reduction 5 or 6 years ago. Somebody mentioned the rich only pay 20% tax, that is huge. If you make $1M a year, they will be paying $200,000 in taxes, this is a huge amount of money.

We should implement a flat tax of 10% for everybody, no deductions, no loopholes, and we would have much more money coming in for the government to spend foolishly.

"We should implement a flat tax of 10% for everybody, no deductions, no loopholes"

Ahh, but that's still progressive taxation, no? A flat tax would be everybody writes the same size check. Sorta like the way everybody gets the same number of votes - the old "one man, one vote" thing. Except they now let *wimmin* vote!

On a more serious note, what I keep wondering is what happens where a threshold is crossed when the combination of national debt size and high enough interest rates leads to a % of the budget being paid out as interest on said debt becomes unsustainable.

Have read a fair bit of speculation about the subject of late. The most plausible (to me) is that it happens gradually - and then all of a sudden. Reading more and predictions that have it occurring during my (likely) lifetime. Hard to anticipate much likelihood of a sudden turn towards fiscal responsibility by our "leaders" on the national level in time to avoid that cliff. Could get interesting. . .

So, I'm wondering if your spreadsheets include any "assumptions" that factor that scenario in. That is, SS payments get massively and suddenly reduced.

[Caymus]

Originally Posted by mntlblok

"We should implement a flat tax of 10% for everybody, no deductions, no loopholes"

Ahh, but that's still progressive taxation, no? A flat tax would be everybody writes the same size check. Sorta like the way everybody gets the same number of votes - the old "one man, one vote" thing. Except they now let *wimmin* vote!

On a more serious note, what I keep wondering is what happens where a threshold is crossed when the combination of national debt size and high enough interest rates leads to a % of the budget being paid out as interest on said debt becomes unsustainable.

Have read a fair bit of speculation about the subject of late. The most plausible (to me) is that it happens gradually - and then all of a sudden. Reading more and predictions that have it occurring during my (likely) lifetime. Hard to anticipate much likelihood of a sudden turn towards fiscal responsibility by our "leaders" on the national level in time to avoid that cliff. Could get interesting. . .

So, I'm wondering if your spreadsheets include any "assumptions" that factor that scenario in. That is, SS payments get massively and suddenly reduced.

Isn't that a cause for hyperinflation? The government repays loans with "cheaper" dollars.

[Altavia]

Be careful the tail isn't wagging the dog if trying to minimize IMRAA.

I know someone who decided to delay a cruise to avoid taxes a year who didn't make it to the next year.