I feel that after a whole life working and paying taxes we deserve more than what we have, either cases it's not happening like this so we need to be informed to have a good retirement.
Briefly read over a few comments about my plan and wanted to clarify. People have pointed out Social Security income taxes and I rechecked the ACA rules. They are correct on the tax issues and deductible; however, I'm designing my retirement plan to withstand high deductible insurance and no Social Security (don't believe I will be able to access it based on my net worth in 30+ years). I ran the numbers for accumulating a portfolio of $1.8 million. I assume I'm starting with ~$170,000. Also, I will add $600/month and increase it 3% a year to keep up with inflation. I assumed an average of 8% annual growth. Again, this is all outside of my 401k and wife's Roth IRA contributions so these are not included in my plan. What I've invested in so far carries a an average of 2.8% dividend per year. The desire is this will negate inflation each year. Thus, after one year my value is $190,800--based on 8% growth of $170,000 and $7,200 added funds over the year. The next year its $213,480. The year after than $238,196. After 24 years, the value will break $1.8 million and retirement. I think a table would have explained better but I'm a recent poster so cannot add it. Let me know if you need me to clarify anything above.
You have quite a well-planned retirement there coloradogy. I'm amazed and impressed at how you planned your retirement well at seemingly young age. I think it's nice that you have the resources and the plan that comes along with them. I do agree with what Corzhens said however about also trying to enjoy the present while preparing for the future. Sometimes we make the mistake of getting too caught up in preparing for what's yet to come and we fail to appreciate what we have in our hands at the moment. It's great to have a plan, but it's also wonderful to enjoy the moment while you still have it.
That's true, but many times we can only enjoy the moment when we have our future organized. It's great to think about retirement, but working our whole life just thinking of that doesn't make sense either.
Hi Coloradogy, noticed a few items of concern in your post. I assume you have no pensions but do have a 401(k), so, usually when you retire you need to convert it over to an IRA, company rules, check this. Then when you reach 70-1/2 you need to start taking RMD's (required minimum distributions) else the IRS penalizes you severely. There is a life expectancy table which gives the factor for calculating the withdrawal amount. It gets larger every year unless your IRA loses value. The RMD is considered income, in your case it will be large. This is often called the "tax torpedo". The resultant tax due will hit you hard! The 4% rule is a good starting point but has fallen into some disfavor recently - many academic papers on this subject mainly by Pfau & Kitces. I am 72, retired since 70 & am going through the agony of RMD's. Suggest you convert your IRA to Roth at least 5 years before retirement. Good luck.
