Shouldn't somebody make a web page where you plug in your situation and get how much each state would charge you in different taxes? Rent or house prices complicates this even more.

I'm preparing to retire at 68 and seeking advice on managing my 401k distributions. I'm concerned about whether my savings will suffice for retirement, given that my current contributions are lower. Should I consider taking a lump sum payment and paying the upfront 20% tax, or would it be wiser to opt for periodic distributions and spread out the tax payments over several years? I'm looking for guidance on the most tax-efficient and beneficial option for my long-term financial situation.

Excellent. This guy knows his stuff

Do I have to wait for my ex to turn 62 so I can get his SS. In a few months I’ll be 62.

I'm 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.

I'm 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can't seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.

As part of my retirement plans and also owing to the very shaky housing market now, I just sold a property in Philly and I'm thinking to put the cash in stocks, I know everyone is saying its ripe enough, but Is this a good time to buy stocks? How long until a full recovery? How are other people in the same market raking in over $200k gains in months, I'm really just confused at this point.

Pay in 40 years, take SS at 62, die at 63, get nothing. Wouldn’t it be great if they paid for funeral expense, those greedy Democrats that started SS didn’t think of that.

Thank you for the excellent presentation! Could you also analyze total payout for those who contributed that roughly $90k in taxes? I wager that due to compounding, we will never withdraw more than the principle contribution plus its compounded interest even if we live to 95. I'm very tired of the media saying boomers robbed Social Security when I wager with compounding, we actually grew the system. Thoughts?

We are retired for 4 years. We have multiple toys including 2 boats and a couple sports cars. Everything was purchased well before retirement. We are finding that we are having trouble using everything as much as desired,mostly because we are traveling a lot, but also because we are off the hamster wheel and life has pleasantly slowed down. Carrying costs on our toys are minimal and everything is payed for. I’m realizing we need to shed a couple items slowly, especially before we buy an RV which is also on the agenda.(in the meantime RV rental is going pretty well) For us it is mostly the fun we have doing things with our toys that makes them worthwhile, and I’m also a person that loves to tinker on cars and boats. “Things” for us give pleasure and enjoyment. Sure there is some outflow, but no desire to die rich. Also well aware that our active years are finite.

There are personal property taxes in SC and other states you are not considering. Cars, boats....

Would be nice if there was a program that could run your numbers though every state and list them.

Roth should be first since it’s after tax and most are in a lower income bracket at the start of their career. HSA should should only be after 401k match contribution limit. If company matches up to 6% the put in 6%. When in higher bracket consider moving away from Roth until age 50.

Looking forward, Trump will raise tarrifs 10% across the board, but lower income tax by X. I am hoping at my income, roughly 120K in married income, that my taxes disappear to 0 or go down by at least 50%. Roth loses benefit to what Trump may do.

I'm 74 and started taking RMD's in 2023 from each of my previous employers 401K plans. I now have a new 401K with my new employer. My plan is to roll over all of my previous 401K's into my current employers 401K plan. I will pay RMD on my previous 401k's during my 2024 taxes. However, as long as I continue working, all of my 401k's have been consolidated into my current employers plan, therefore as long as I'm working (2025, 2026, etc.), I no longer need to pay RMD's on my careers 401k's. I'm surprised others don't talk about this. I contacted the IRS and their response was "Yes, you can roll over a qualified 401K to another qualified 401K", When I asked for her to confirm that I can move all funds to my current play even though I started RMD on my prior plans. all she kept saying is yes you can move the plans and combine them.

Why not just plug this into a spreadsheet and we can model it based on our income/behaviors/etc? This shouldn't be too hard.

Another outstanding video. Some of the best and most helpful retirement analysis on KZfaq.

Pennsylvania's inheritance tax is really like what you would call an estate tax. It's a tax on all the property owned by the decedent, and the rate of the tax varies based on to whom it's being distributed. A spouse, not tax. But if your daughter lives in PA and your son in VA, the two are calculated the same. Generally speaking, though, I disagree with focusing on taxes alone. Prices aren't determined by costs alone but what people in the market are willing to pay. Florida ain't so cheap anymore... and who really wants to be around all those old people? I'd really suggest people consider living abroad. You can live in fantastic places on very little income with good medical services. Why compete with working-age Americans and thir high incomes for rent and restaurants when prices for all those things can be much lower abroad. Put a little adventure in your life too. :)

Who cares? I’m just going to spend less.

What about the inflation adjusted numbers.? My taxes will be higher by 4% but the value of a dollar has decreased by 10 % in 5 years. So I am paying higher taxes on a dollar that buys less than today’s dollars. Isn’t this a consideration?

Can’t tell if your 0’s are 6’s or vis versa.

Lets not forget Healthcare and Auto Insurance. They call them insurance. I all them taxes and you can be looking at thousands in difference depending on state and county you live in.

I lost over $70k when everything started to tank. Not because I was in an exchange that went belly up. I was just stupid to hold and because that's what everyone said. I'm still responsible. It just taught me to be a better investor now that I understand more of what could go wrong. It took me over two years of being in the market, I'm really grateful I found one source to recover my money, at least $10k profits weekly. Thanks Natalie Strayer..

Thanks for the video. I'm wondering if anyone can comment on (my) specific case where wife is older and receiving Social Security and Medicare. Are the income thresholds and percent of income stay the same since only calculating one person's subsidy? Does Medicare premium paid count towards household premium expense limit? Is the Social Security portion deducted for Medicare included in calculating MAGI? Thanks.

We both retired at 58. I'm 62 and my wife is 60. We pay around $300 per month for our ACA coverage, mainly because we are able to keep our reported income very low due to large cash reserves. There are possible pitfalls with every strategy. We are saving $20k per year right now. That's $20k guaranteed during our peak spending years rather than potential savings beginning at age 75. We will definitely have some RMD issues because my wife saved most of her money in her company 401k. Paying too much in taxes is certainly a bad thing, but if you have to have a financial problem in retirement, it needs to be your tax bracket.

Super helpful video - thanks!

I don't expect to be able to retire until 65, but I'm still interested in this topic because I might get lucky in the market and wind up exiting earlier, you never know. It can be overwhelming trying to navigate all of the different factors that determine how financially successful your retirement turns out to be. Hiring a fee only advisor to could be the right call for some, but it's likely not going to be worth it for people like me who have a more modest portfolio. Those people are likely trying to figure everything out for themselves.

That was good.

I particularly enjoyed the part where you differentiate between the value people place on various purchases. How true! In this case the goose and the gander don’t always see the same value in the same purchase. I’ve been riding motorcycles for all my adult life and a good portion on my youth, just yesterday I was out enjoying my latest ride. Going down one of the local dirt roads I saw two kids, 12-14 years old heading towards me on a well used dirt bike… the grin on both their faces took me back 60 years to where I began riding. Memories!

Interesting video ...I'm not sure why everybody talks about the break-even point. I don't really care about that...what I care about is living at a certain lifestyle like being able to buy fresh fruits and vegetables being able to live in a safe area being able to live in an area where I can exercise outside these are things I care about I don't care about money in the sense that I get back as much as I put in. I just want to live a healthy lifestyle for as long as I live.

Arizona has a flat tax of 2.5%

Excellent video. I have been planning my retirement and destination for years. I have a table with all the states I am considering, which includes these various taxes you discuss. Sales tax is by far the most difficult to nail down unless you know specifically which cities you are considering in each state. Most states that have a sales tax also allow localities to add their own sales taxes up to a limit. This can sometime be as high as nearly doubling the state rate. Then does the tax apply to medicine, food, etc. Sometimes there is a lower fixed amount that does, if not the full amount. Another consideration: I live in Virginia where a personal property tax (ppt) is levied annually based on the value of your vehicle and is billed separately from registration. It's quite high and has to be considered when comparing this state to others. My ppt for my wife and I in 2023 was over $1800. She has a 2023 Wrangler. I have a 2017 Wrangler. So, not the most expensive cars. Like in your final part, where you will be happy is more important than saving a couple thousand dollars a year. It IS important to understand these taxes, though. You might be happy in a couple places that differ significantly in the tax environment.

Great explanation! Love how you get in the weeds on this, since in this case it's really the only way to make an accurate assessment. One question though - what kind of return rate are you typically assuming for the future tax graph projections? When I do this by hand, it looks like the decisions are (as one would probably expect) highly variable on this one factor. I tend to do projects on a conservative 3% real rate at which point Roth conversions aren't critical, but when I go to (say) 5% real then Roth conversions do make a lot of sense. I'd love to understand how you handle uncertainty in these projections. Thanks again for the video!

Great video topic. I know a lot of people are probably thinking about this decision but haven't actually run the numbers to see that giving up some part of the subsidy is still the right decision long term.

I'm struggling understanding the 14.04% result at the 12:00 minute mark. Anyone know the actual calculation used to obtain that result?

IRMAA can drop back down after your income drops, correct? People are treating IRMAA as if it is a death sentence.

Excellent topic! Retired and 59. Luckily, we have a sizeable brokerage account and about 750k trad ira. On ACA high deductible plan and pay 0 for health insurance. Switched investments inside IRA to SLOW growth to minimize RMDS later and brokerage account in high octane growth with cash. Plan to take 30k annually from IRA with standard deduction pay no or very little tax. Hopefully, by RMD years, IRA balance be manageable . Probably will do little conversions age 66 and 67 them get SS. Learned so much from this channel. Great work!

How about a video discussing financial aid vs Roth conversions?

The way I am dealing with this issue, I retired at 62 from a 6-figure job, was to take a much lower paying job as long as it supplied company sponsored health care for me and my wife. This kept me off of ACA insurance. I then took my 401K and decided to convert it to a Roth over the long haul, by reaching 73 I will have converted all of it to a Roth (still staying under the IMRAA limits for each year). No RMDs for me. In about a year my wife, 3 years younger, will be able to take Medicare and I will sign up for Medicare at that time. Once my wife and I are on Medicare, I will stop working.

eric, would you consider doing a video on pros and cons of doing roth conversions up to 12% possibly 22% while living off taxable bucket vs no conversions and availing of the 0% LTCGS and 15% instead for an early retiree living off a taxable bucket before drawing from retirement plans. might be too niche though.

i never applied for ACA as i found the income constraints too limiting. so i am doing roth conversions without issues as i live on my taxable bucket in early retirement and self pay for health insurance. one thing i considered though is to do private health insurance one year during which you do roth conversions as well as liquidate assets thus generating ltcgs and alternate the yr after with ACA and coast on the liquidated assets and just generate enough income to qualify for ACA. i never did do it as i am worried about any potential gaps in medical care caused by such a strategy.( might be ok for all i know).

Great Job, Eric making people think about this. When my wife and I retired early in 2018 we had this exact situation as she was 60 and I was 54. We had investment money to live on but how to have affordable healthcare and convert down the $2 mil in IRA. Best solution for us was to move to Mexico. Healthcare was now cheap (and good), and it allowed us to Roth convert $200K a year. Cost of living was also cheaper and my wife could afford to flyback several times a year to the States to see her grandchildren. Is it the a perfect solution, no, as it requires one to be willing adapt to a different culture. Six year later we are still doing Roth conversions to a level that we just stay under the IRMAA torpedo for my wife. One day we may return to the States but for now this is a great plan for us.

To all you gamblers out there, if you get W2-G from gambling winnings, this is counted as reported income even though you are likely to offset this income with losses itemized on your Schedule A. So, if you have 80k of winnings, forget ACA even though you will offset this on your tax returns with 80k losses. Screwed if you like to play the casinos.

Interesting video and confirms what I'm planning on doing with early retirement. Keep income in the 12% income tax bracket which works out to approximately a 20% marginal tax rate on Roth conversions after taking into account reduction in ACA subsidies. If the cliff comes back then we will dial that down so I'll convert enough to be at 400% of FPL.

Like everything else the government does, it is not set up correctly if people with the ability to pay can game the system. That was not the intent.

I think trying to plan to this level of detail, this many years in advance, is a waste of time. Too much is subject to arbitrary change once you look more than a year or two ahead. Right now: TCJA rates and inflation relief rates. Promised: No taxes on Roth distributions, IRMAA Anything else? Roll the dice and take your chances Right now the market has been doing well so I have post-tax money. If I didn't, I might make a different plan, but for now I'm doing Roth conversions and skipping ACA subsidies.

!!I recently sold some of my long-term position and currently sitting on about 250k, do you think Nvidia is a good buy right now or I have I missed out on a crucial buy period, any good stock recommendation on great performing stocks will be appreciated

Great vid Eric! Very interesting and this is why I hired you guys to help manage these ever changing tax laws and the impacts to my great life!

We are doing Roth conversion while on COBRA the first 18 months and then use cash to bridge for 10 years to get ACA subsidy.

This is precisely why it is sooooooooo valuable to have employer-sponsored health coverage prior to 65; I've got coverage for my entire family starting at age 44 when I'll retire early and will be systematically converting huge swathes of pre-tax accounts to Roth over the next 20-25 years with no penalties or loss of subsidies