Advice on US retirement - tax accounts, non tax accounts, roth ladders, etc.

[racemize]

I'm catching up on how taxes work in retirement and various strategies.  E.g., I've read things like:

http://www.physicianonfire.com/the-taxman-leaveth-taxes-in-early-retirement/

http://rootofgood.com/roth-ira-conversion-ladder-early-retirement/

 

It seems likely that I'll hit a FI number that can sustain 75k+ a year in the next couple of years, maybe 5ish on the conservative side.  At that point, I think it will break down as 67% taxable, 33% non taxable.  I'll also be well below withdrawal age.  The problem I've found is that most of the people talking about this topic are in the early retirement, but extremely low income level camp (e.g., <50k a year).  I'm not in that situation, so I thought I'd ask this forum for any thoughts, as it is a bit more affluent.

 

Anyway, from all the reading I've done, I think I should probably set up a Roth conversion ladder as soon as I "retire", which will give me access to the retirement accounts after 5 years.  However, there's also the 0% cap gain taxable income area to stay under, which might be tricky if I'm doing any amount of stock rotations in the taxable account.  So that seems kind of hard to deal with while also setting up the ladder.  Perhaps the 0% rate is rather hard to pull off at the same time.

 

Anyway, looking for any input on people who have thought about this heavily and/or already started doing it.

 

Thanks in advance.

[stahleyp]

Hey race,

 

You probably are but are you factoring in deductions on the $75,000 you need? That can possibly increase your withdrawal amount to use. Even if you pass it, you're still only taxed at 15% on long term gains.

[racemize]

Yeah, I think that can get it up to say 90k, maybe higher if I keep the mortgage.

 

I think it's likely that I'll just have to suck up the 15% long term gains, but I thought I'd check in to see if I was missing something.

[stahleyp]

Hey race,

 

From my understanding, with just the standard deduction and exemptions, you should be able to get close to $95,000 for the 15% tax bracket. If you itemize, all the better.

[racemize]

Yes, but that 95k has to cover both the Roth conversion (that I don't use) and long term gains/dividends (to live off of).  So it really only works if you live off of 47k as a couple.

 

I could do that without a mortgage, but I like the low percentage rate/inflation hedge/etc. 

[stahleyp]

You need $75,000 to live off of, right? Couldn't you also do Roth conversions of $20,000 a year? If you don't have a mortgage would you still itemize? If you have a mortgage and a bunch of itemize deductions, you can do quite a bit more than the $95,000. You probably know the tax laws as well if not better than I do though. If you take the standard deduction I don't know of a way to get past the $95,000 level.