I'm a little embarrassed to be asking, what (to me) would be a no-brainer type question, but thinking about this a little more, it was within the context of while I was working and earning an income with the goal of some specific objectives all still centered around accumulation and maximizing.
Now, things have changed. I recently retired at 50, and am planning to prioritizing the conversion of pretax accounts to Roth in small chunks for the next 20+ years or so to (ideally) eliminate RMDs at 72 while also attempting to maximize my ACA subsidies until I can apply for Social Security. This suggests getting my taxable income down as low as possible, but my post tax account is already throwing off a fair amount of interest and dividends. If I now add a pre-tax retirement distribution, OMG, a rough back of envelope Turbo Tax simulation yielded a pretty fair amount of tax liability. So, that got me thinking, and this is the hard part for my brain to accept. I *think* I should stop investing in things like CDs, T-Bills, MMAs, etc. which all hit line 2b on a 1040. Ok, so if I do that, what do I do with the money? Just let it sit there and do ...... nothing???? That's the part that I'm having difficulty accepting.
In this account, the major holdings are VTSAX, VBTLX, VPCCX, and VCADX. The first three throw a fair amount of dividends and the only saving grace for VCADX is that it seems to go 100% into line 2a, which does not count against me when determining total taxable income. Perhaps the real problem here is my asset allocation, but throughout my accumulation years, I maxed pre-tax first, and then the extra amount ended up in taxable, and here we are today. Yes, first world problems, I know, but I could use some suggestions on what to do here.
Now, things have changed. I recently retired at 50, and am planning to prioritizing the conversion of pretax accounts to Roth in small chunks for the next 20+ years or so to (ideally) eliminate RMDs at 72 while also attempting to maximize my ACA subsidies until I can apply for Social Security. This suggests getting my taxable income down as low as possible, but my post tax account is already throwing off a fair amount of interest and dividends. If I now add a pre-tax retirement distribution, OMG, a rough back of envelope Turbo Tax simulation yielded a pretty fair amount of tax liability. So, that got me thinking, and this is the hard part for my brain to accept. I *think* I should stop investing in things like CDs, T-Bills, MMAs, etc. which all hit line 2b on a 1040. Ok, so if I do that, what do I do with the money? Just let it sit there and do ...... nothing???? That's the part that I'm having difficulty accepting.
In this account, the major holdings are VTSAX, VBTLX, VPCCX, and VCADX. The first three throw a fair amount of dividends and the only saving grace for VCADX is that it seems to go 100% into line 2a, which does not count against me when determining total taxable income. Perhaps the real problem here is my asset allocation, but throughout my accumulation years, I maxed pre-tax first, and then the extra amount ended up in taxable, and here we are today. Yes, first world problems, I know, but I could use some suggestions on what to do here.
Statistics: Posted by Observer — Mon Jul 29, 2024 12:18 am — Replies 1 — Views 261