KlangFool wrote: ↑Wed Jun 09, 2021 9:56 am
smitcat wrote: ↑Wed Jun 09, 2021 9:21 am
Wannaretireearly wrote: ↑Wed Jun 09, 2021 8:55 am
How about RMD rules (likely?) to change over the years. E.g. pushing the age RMDs start from 72 to 75 or higher?
You can model any unknown factors in the calculators and get a decent result to follow.
Only you can decide what potential significant future factors are prudent to model:
- portfolio performance
- age of demise of each spouse
- SS amounts and election age
- possible value of Roth conversions
- inflation rates
- tax rate(s) of heirs
If you want you can easily add to that:
- potential RMD rules changes
- potential changes to tax rates not yet under law
- potential changes to SS not yet under law
We find the initial set of variables to be suitably challenging such that we do not venture into varying the others - but you can do any variables that you would like.YMMV
IMHO, balance is the key. Over-optimization means that if one of the variables changes, the impact would be very significant.
In my case, with about 900K in the tax-deferred account, the goal is to Roth convert up to 12%/0% LTCG tax rate this year and 2022 since there is no ACA cliff. With ACA, Roth convert up close to ACA cliff every year.
It may not be the most optimum answer. But, I am fine in paying 12% taxes for this year and next.
"IMHO, balance is the key. Over-optimization means that if one of the variables changes, the impact would be very significant."
It is not that hard to run the pontential variables seprately and in concert with each other and form a chart for the possibilities.
We then know the significance of each potential variable in our case.
Running any/all variables that we see as reasonably possible thru a number of well designed calculators is a great advantage for review.
"It may not be the most optimum answer. But, I am fine in paying 12% taxes for this year and next."
We have no experience trying to stay within the ACA and/or within the 12% bracket and therefore cannot add any value to the strategy.
"In my case, with about 900K in the tax-deferred account, the goal is to Roth convert up to 12%/0% LTCG tax rate this year and 2022 since there is no ACA cliff."
For someone else to try and add any value to your strategy they would need a bunch more than this, they would also at least need: AA across all accounts, after tax balances, age of each spouse, projected portfolio performance, projected inflation, SS amounts and election years, any pensions or other fixed incomes, goals for yearly draw, goals and tax rates for heirs, projected age of demise of each spouse, etc