My wife and I just received our first Social Security direct deposits on Friday. Thanks to John Bogle's advice, Vanguard's low fees, and our good friend "compound interest", I hope we are pretty well set for the future.
However, I foresee some potential future tax issues, so wanted to see if folks here have any ideas on how we could work now to alleviate them?
To date my tax minimization strategy has been:
- withdraw as much as reasonable from my IRA now
- donate 25% of AGI or 1.5% portfolio from appreciated taxable to Donor Advised Fund
- delay SS until 70
My wife worked just enough years in 1970-80's to qualify for SS, then she got into a TIAA-CREF plan, then into the public school pension system which reduces her small SS payment. The TIAA-CREF was rolled into her tIRA to simplify our lives.
We each retired around age 60, and our portfolio has continued to grow; now in mid 7-figures.
Emergency Funds: 6-9 months expenses
Debt: None 1.2M House paid for in HCLA
Tax: Married filing jointly
2018 = 12% Fed 6% CA
2019 = 22% Fed 9.3% CA (due to substantial withdrawal from IRA)
Age: Him 69, Her 65
Desired Allocation: 40% Bond - 60% Stock but I am overweight on stocks right now
4.0% Vanguard CA Interm Tax-Exempt (.09 VCADX)
4.2% Vanguard CA Long-Term Tax-Exempt (.09 VCLAX)
0.5% Vanguard 500 Index Fund (.04 VFIAX)
1.3% Vanguard Windsor II Fund (.25 VWNAX)
1.4% Settlement fund MM
9.7% Vanguard Interm-Term Bond Index Fund (.07 VBILX)
15.7% Vanguard Long-Term Bond Index Fund (.07 VBLAX)
9.6% Vanguard Extended Market Index Fund (.06 VEXAX)
22% Vanguard 500 Index Fund (.04 VFIAX)
1.0% Settlement fund MM
9.7% Vanguard Total Stock Market Index Fund (.04 VTSAX)
0.8% Settlement MM
18% coming in next 30-60 days
Contributions to tax advantaged
40k Her STRS
7k Her SS (WEP)
3k His SS (spousal)
40k His SS (earned starting 2021)