Zooey72

I don't consider social security when I plan my retirement in terms of 'what I am going to get'. My only question is 'what will they take'. The social security ponzi scheme only has 2 possible outcomes. One is where it becomes completely insolvent and collapses, or second (and more likely) they will 'means test' it and justify stealing my 'retirement insurance' because I had the audacity to save for retirement instead of being dependent on the system. In neither of these scenarios do I 'get' anything. My only hope is that they do not decide to steal money I have saved for myself. It would not surprise me a bit if they come up with a new tax that goes after what I have accumulated, slap a slogan on it like "The Greed Tax", and tax my ROTH savings at 90%. Outside the corruption that is social security, you have a good point about the RMDs at 71. My projected savings in standard 401k money will give me more than 24k a year (estimated 7% return), which would mean it would continue to grow despite my withdraws. Nothing I can really do about that other than take it out and get it taxed. My brokerage account and ROTH money should be none of their business, but I am sure they will make it their business. Out of my 3 buckets, at the time of retirement I am going to be mostly weighted with ROTH money so the 80k I have planned to take out w/o tax is just a foundation. This was intentional with our planning (we have been maxxing ROTH IRAs for years, and almost all of my wife's income for the next 10 years will go into a ROTH 401k). The best case scenario for me in terms of social security is that they give me some pittance of what they have taken over the course of my lifetime that is just enough to cover the tax on my RMDs at 71. I doubt that I will get even that, but even if they steal everything over the 24k I should be fine.

What I have come up with may just be me re-inventing the wheel, so if that is the case call me out on it. I am looking at retirement in terms of having 3 'types' of money. Tax deferred, which is the worst kind. Money with capital gains tax. And the best kind - ROTH. My plan is this: Out of the traditional 401ks that my wife and I have gotten during our life I am going to pull out 24k a year in retirement. That number is important because with the standard deduction I will not pay taxes on it. From there, I will pull out money out of our brokerage account, amounting to roughly 56k, which puts me just under paying long term capital gains tax. And lastly I will pull out whatever else I want from our ROTH accounts which by their nature I do not pay tax on. Is this a good strategy, because as best I can figure it I will pay nothing in taxes and have an income in retirement over 100k.

Ya, she can do $6500 more catch up because of her age. Depending on what the rules are I am considering having her employer withhold nothing in taxes and I will just pay her taxes with my money when it comes due. If that allows us to get closer to the 26k max I would be more than happy to do it.

My wife and I have developed a new strategy for our retirement, but I have run into a bit of a snag in figuring out in what way taxes are taken out of her paycheck. My wife makes 40k a year, and her employer offers a ROTH 401k which we are now taking advantage of. It matches 4 percent at a 100 match%. My wife is 55 years old. We have decided that for the remainder of her working life she will contribute as close to the max of 26k a year that we can, which currently translates to her contributing 70% of her income to her 401k. I make enough money to where I can cover all of our expenses and we should be able to live comfortably until retirement. However, although I make good money (over 100k a year) my employer offers nothing in the way of benefits, so we get all of our benefits from her employer. The max her company will allow her to contribute is 75%. We have no issue if she has no actual income coming into the house, and all of her money goes into her ROTH 401k. However, we do have an issue with too much money being taken out and not enough left in there to cover our health insurance. So this is my question. Do employers first take out tax and insurance and than use what is left over as a percentage? So with her 40k lets say tax and insurance equals 10k a year, leaving her with 30k, of the 30k $22,500 would go to her ROTH 401k. Or, do they take out the money first from her gross income of 40k (which would be 30k), and than subtract tax and insurance? I am aware of the 26k limit for her. Or to put it more plainly, if her employer allowed a 100% contribution would they take out the insurance and tax before putting the rest in, or would she not have money left for her insurance?