Where we Stand

We have been using modern tools to plan a retirement portfolio using an epoch strategy for accumulation and deflation. Here is an example of where you might want to end up at age 65

We have 1M in the Roth which we started saving for at age 24

We have 1M in Taxable Brokerage which we have been stuffing extra money into all along. We have managed to tax loss harvest an additional 200K over the years. This turns the taxable into a Roth like account until the TLH is used up. Useful for the TIRA to Roth conversion situation.

We have 600K in TIRA which becomes an annuity with RMD so it pays out a yearly income. 600K keeps us in the 12% low tax bracket for a long time. Included are 5 yr increasing payouts. At 6% the TIRA grows to 700K by age 85 so there is extra money here to increase payout along the way if needed

Our W2 job provided the ability to save for an HSA so we stashed a little and let it compound to use to pay our Medicare Insurance expense well into retirement. There are tax dodges associated with HSA but IMHO those can be cut or means tested at any time so a little dab will do ya IMHO

We chose to max out SS and dual spousal income pays out 50K+/yr I use 50K as a convenient example.

We have a bank account and credit. We store some in the bank enough for say a year which gets spent down during the year and we have credit for emergency cash. We pay all out bills with credit card, get cash back, pay it off monthly from bank account. We save some every month to buy a new/er car every 6 years. The money is stashed in CD’s and timed so between us a new/er car is purchased every 3 years alternating spouses. It was useful during my working life because it guaranteed a healthy car, less so in retired life. YMMV

College: this might be a typical plan, save some for tuition and save some for kid expenses outside of college but still in the kids name. It separates cash flow in retirement and if funded correctly can replace some insurance costs along the way since once established and funded they grow on their own till needed. IMHO college should neither be over funded nor underfunded but properly funded and that requires making some boundaries on likely disposition when accumulation commences. The best gift you can give your kid is a richly lived (not necessarily costly) debt free start. For me that didn’t include Harvard in the plan or money for grand kids.

Roth conversion is a special case that need to be analyzed. It has a big cost and a big benefit associated depending on your situation.

We haven’t covered funding TIRA and Taxable Brokerage and we haven’t covered how to fund living during the W2 stage of life. But by describing where we want to be at 65 and where that money will go after 65 and the built in safety nets we have a stronger understanding of how to jigger the numbers and what forces like progressive RMD compounded by progressive tax code can affect your decisions. The government is very happy to maximize their “take” in accounts where you have joint ownership like taxable accts and TIRA. But the code also allows you to make maneuvers to control that “take”. You can also “what if”, like what if two spouses becomes one single. What if you get divorced, what level college funding can you really afford etc. We have learned to use modern tools that take into account risk as well as reward and read out in a range of probable futures so you can set upper and lower limits on expectations and create your own SOR of safety to reduce the chance of failure to nearly zero. Wait there’s more! We will learn about Personal Capital as a very sophisticated account aggregation tool and longevity planner. We will learn how to budget and track expenses in Mint and use that along with Excel to track and predict. We will learn how I knew it was time to retire and the dangers of RE. It’s all doable but nothing like the monstrosity save 25x spend 4%.

2 Replies to “Where we Stand”

  1. You have made some smart moves. It is definitely nice to have banked 200k in tax loss harvesting as well which gives you even more freedom to maneuver around without tax cost.

    1. 200K was just an example. I have about 350K but I’ve been at this a long time. 200K is pretty easy to acquire with some diligence and volatility. This example is close to my portfolio but I have a large brokerage and a smaller TIRA compared to most portfolios. Around age 50 I realized I was setting myself up for big tax problems if I kept adding to the IRA. So even though the “advice” is max out your pre-tax, I switched to maxing out my brokerage and streamlining the tax consequence pay as you go. That’s the beauty of these tools you can run the numbers on taxable v Roth v IRA v TLH 20 years before the scenario plays out and position yourself more favorably.

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