CnC wrote: ↑
Wed May 23, 2018 1:31 pm
smitcat wrote: ↑
Wed May 23, 2018 9:33 am
I did not realize you were so young and projecting the amounts in the future. You have modeled the savings and are concerned with the tax situation many years down the road what have you done to adjust the tax brackets you are worried about in the future?
For a different view if I take our current retirement accounts use the tax tables from 25 years back I would be in trouble myself.
Have you utilized the OPR or RPM calculators which will adjust the taxes per your loaded inflation rate and then grid out the estimated taxes owned by each bracket?
OPR or RPM calculators? I am not familiar with them. Please explain.
Everything I have ran is via Excel sheets. I have indexed everything for inflation. I have estimated new tax brackets based on inflation.
This thread was not meant as a humble brag or just a contrarian topic it is relevant to what I do in the future.
Honestly, I'm just kind of at a loss of what I should and shouldn't do. Right now our tax rate will be 24% I'm 20 years from even an early retirement.
We save a ton of money relative to what we make simply because we have always had reasonable lifestyles and our income has quadrupled from when we got married bought our first house and moved out 10 years ago. But our expenses have not changed much more than inflation since then.
Just last year I got serious about saving and investing and while this is putting the cart before the horse, if things do continue to go well for the cnc family I want to make sure we are following the smartest path. Not the the path the "average" person should.
Perhaps the smartest thing is hedge my bets with pretax because who knows what our jobs will do in the future, but that's what I am trying to figure out.
I see some others posted the links to IORP and RPM - great.
A couple of more thoughts for your research….
"Everything I have ran is via Excel sheets. I have indexed everything for inflation. I have estimated new tax brackets based on inflation."
If we go back 25 years to 1993 you will find that the MFJ bracket for 28% (closest avail to 24%) was at $36,900.
In 2018 the 24% bracket will be at $165,000 or about 4.4175 times the 1993 bracket.
Does your 24% braket 25 years in teh future start at $737,804? Does that provide enough room each year to do Roth conversions?
Additionally - for those of us who had sizable accounts (because we are older) in 2008 to 2010 and saw them demsinish we know that the market travels in each direction. Test the math on your accounts when the market drops 50% in 2 years then it goes back up 50% over 2-3 years. Starting with $100 it looks like this.... 100 X .5 = 50 .... and then 50 X 1.5 = 75.
When you have lived through mutiple drops you become aware that accounts dont follow spreadsheets and tax brackets grow substantilly with inflation in both break points and breadth of category. Perhaps these will help resolve your view of being in a higher tax bracket way out in the future.
IORP and RPM adjust the brackets dependent upon your selected inlfation rate and yuo can view them much easier and debate and/or solve for mutiple issues at once not one at a time.