Now What?
This whole early retirement thing has been pretty easy so far, thanks to a solid plan and a bit of luck.
We have had a hefty economic tail wind, a strong US dollar, (mostly) good health, unexpected income, a low tax burden, and an abundance of enthusiasm and good cheer.
There is a lot to be grateful for this Thanksgiving season.
But alas, not everything goes according to plan…
(This post is the 2nd in a series. Subsequent posts forthcoming… soon. See the first post: Is Your 401k Too Big?)
A Traditional 401k / IRA allows us to invest for the future in a tax advantaged way. However, in some cases these accounts can become tax disadvantageous due to sheer size.
When the IRS forces withdrawals after our 70 1/2 birthday (the RMD), large accounts may get hit with higher tax bills. Those taxes could even be greater than what we saved on contribution.
We already saw this in the first post in this series. Even account values at age 70 1/2 of $350k or more (Married Filing Jointly) would most likely fail to Never Pay Taxes Again. But this isn’t necessarily tax disadvantageous.
Due to tax savings on contributions, are there higher account values that can be reached before our 401k becomes too big? And if so, how do we evaluate additional contributions?
For us, going back home (to the United States) means enrolling in an ACA health insurance policy and potentially stepping into the clutches of a State tax authority (e.g. California.)
Does this mean we will Never Pay Taxes Again?
Maybe.
Going back to Cali, stylin, profilin
Growlin, and smilin, while in the sun
Paying taxes and health insurance premiums
Driving to the mountains in the vintage Escort– LL Cool J ft. GCC
We have been having the Forever Home discussion for some time now… Is there somewhere we love that would be a good place to raise a kid or two?
We have a few International destinations in mind, but several places in California rank high on our list of criteria.
I hear California is an expensive place to live, with high taxes, costly health insurance, and sky high housing prices. I figured I should at least crunch some numbers before we consider putting some California cities at the center of our radar.
