25-35% in taxes isn’t even close to accurate

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Jun 22, 2021
11:52:43am

PCCoug Contributor

25-35% in taxes isn’t even close to accurate

I just ran the calculation through my TaxCaster app with the assumptions of 96k income, no taxes withheld, and 4 kids. It spit out as refund of $115. This doesn’t take into account that when you withdraw from a taxable account, you are only taxed on the the growth and not any principle you pull out. It would not be hard to pay zero taxes on $96k a year.

Living off that depends on your lifestyle. Without a house payment, you could live pretty nicely off of that. With a house payment you could still live pretty decent, but not too extravagantly.

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PCCoug

Bio page: PCCoug
Joined: Aug 25, 2010
Last login: May 4, 2024
Total posts: 946 (3 FO)

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Messages

Author

Time

I think it would be really hard to retire with $2.4mm at age 40

6/22/21 11:10am

could do it easy. This amount of take home pay is probably top 10% in country

Mayor of Cougartown

6/22/21 11:11am

Yeah, but what will it be in 15 years? You aren't going to be getting raises on

cougaman

6/22/21 11:16am

yes, I'd love to have that I wouldn't work another day.

Mayor of Cougartown

6/22/21 11:19am

If I was in that situation, I'd probably go another 3-5 years and have a lot

cougaman

6/22/21 11:24am

Yep, good point. I edited my OP to make the case that my bigger argument is that

6/22/21 11:17am

You don't have to generate income through dividends. You can do it through

Baron

6/22/21 11:31am

Withdrawal rate success chart. See 4%

PCCoug

6/22/21 11:57am

What about 20 years from now?

JuicyJam

6/22/21 11:17am

Agree, that is tough right now, let alone with inflation.

JohnnyComeLately

6/22/21 11:11am

I'm older and have seen MANY do it on less than that. Depends on lifestyle.

grandpacoug

6/22/21 11:15am

Im just speaking for myself as a 39 year old. I could not live on 6500 a month right now.

JohnnyComeLately

6/22/21 11:16am

As a 54 year old with 2 grown kids, we lived on about half of that for most of

O Gaucho

6/22/21 11:21am

Cool. Once again I was speaking only for myself, where I live, and my own costs of living.

JohnnyComeLately

6/22/21 11:22am

Right. It is very subjective to where you live.

O Gaucho

6/22/21 11:22am

96k a year is hard? What kind of life are you living bro?

Hotlanta

6/22/21 11:12am

That's true. I should specify that I live in CA. $96k with four kids doesn't go

6/22/21 11:14am

Yes, but with a steady stream of money, you could live anywhere in the world.

Hotlanta

6/22/21 11:22am

You do not have to take huge risk to get 4%.

rad dawg

6/22/21 11:48am

Correct. An average of 4% after fees per year is actually incredibly bad.

ekiben

6/22/21 11:54am

I don’t think you guys understand the volatility aspect of this when making portfolio withdrawals.

RdF3

6/22/21 11:59am

Exactly

6/22/21 12:08pm

That is why I put 4% in my post which was the basis for OP.

rad dawg

6/22/21 12:10pm

I don't think 4 percent is too hard.

Scrog

6/22/21 12:00pm

The entire FIRE movement is based upon this with massive success

Nat Gas Man

6/22/21 12:03pm

Yep

Scrog

6/22/21 12:04pm

With kids at home I couldn’t live on $96k/year gross.

RdF3

6/22/21 11:25am

Tax minimization is critical

Nat Gas Man

6/22/21 11:12am

I could. My wife couldnt. Therefore, I can’t.

Iman23

6/22/21 11:12am

That's literally how much we bring home with a mortgage and 4 kids

keilbyu

6/22/21 11:13am

Try it in a major Metro on the coasts and it is not possible if you want to

Iman23

6/22/21 11:33am

You can move, I see so many articles about how you need so much money to retire

BYUFootballisBack

6/22/21 11:36am

All true. We talk about it. But I make enough to survive here…it’s just

Iman23

6/22/21 11:38am

Valid points I didn't consider. Location matters.

keilbyu

6/22/21 12:41pm

The most critical thing would be your dependency rate. Get it down and

Nat Gas Man

6/22/21 12:47pm

I think we have differing definitions of major metro or your budgeting is off.

ekiben

6/23/21 10:05am

Yeah, 100k is above the median household income in every city in the US but 3

Hotlanta

6/23/21 10:13am

This thread is jaw dropping

rad dawg

6/23/21 10:29am

What will $96K be in 30 years? Most likely it will be equivalent to $50K or a little less in today's dollars

Clark Addison

6/23/21 10:39am

In 30 years you would be 70 with 2.4 million in the bank.

rad dawg

6/23/21 10:40am

And, presumably, a paid-off house and no debt

Hotlanta

6/23/21 11:26am

If you are still only getting 96k a year in 30 years off of a 2.4 mil investment

ekiben

6/23/21 10:51am

$96K per year would be a raise for me.

Eddie

6/23/21 10:46am

We are a massive consumer country, the average person spends what they bring in

BYUFootballisBack

6/23/21 10:46am

Social psychology studies show that regardless of income people feel they'd be

ekiben

6/23/21 10:52am

I think it's very indicative of how out of touch Cougarboard really is.

Hotlanta

6/23/21 11:25am

“Out of touch” with what? Most here likely make far more than that

cougfanz

6/23/21 1:34pm

You really think "most" here make far more than $100k? I would be very surprised

BYUFootballisBack

6/23/21 2:31pm

The evidence would indicate otherwise

6/23/21 8:37pm

I was looking at this through the lens of living in and raising a family in

6/23/21 11:36am

Outside of a handful of the biggest cities, $100k should work for most anyone

BYUFootballisBack

6/23/21 12:34pm

Very doable in Portland, Vegas, Dallas, KC, etc.

ekiben

6/23/21 3:35pm

I don’t think 4% after taxes is unrealistic

Nat Gas Man

6/22/21 11:14am

<< Deleted >>

Buffalo

6/22/21 11:15am

capital gains taxes are probably going up

6/22/21 11:21am

<< Deleted >>

Buffalo

6/22/21 12:04pm

It's not a hypothetical. Biden wants to raise them from 20% to 39.6%. Would suck

6/22/21 12:09pm

That would only be for people with $1+ million income, aka non factor

BYUFootballisBack

6/22/21 12:11pm

You are correct sir. My bad....and phew!

6/22/21 12:25pm

Yeah its not "as bad" as it is constantly talked about being

BYUFootballisBack

6/22/21 12:33pm

I couldn't live on that much without working. I'd need more to be able to

CougarTwins

6/22/21 11:16am

Exactly. People who are busy at work don’t spend as much as people who have time

garyfan

6/22/21 11:18am

Actually retirees spend very little. Most are past the accumulation phase

Nat Gas Man

6/22/21 11:22am

Because most retirees aren’t 40. People in their 40’s and 50’s with time on

garyfan

6/22/21 11:28am

I'm 54 and my wife is 52 and we are just like you are describing. Accumulation

O Gaucho

6/22/21 11:53am

"We don't spend much anymore. Instead we just go to Top Golf on the regular."

garyfan

6/22/21 11:58am

That is what the kids get us for birthdays.

O Gaucho

6/22/21 12:57pm

I'd find a job that I could work as little as possible and still have insurance.

cougaman

6/22/21 11:19am

My photography teacher in high school was independently wealthy

Hotlanta

6/22/21 11:29am

This is probably the best idea to make it last. Plus, you would fill your time.

6/22/21 11:31am

Yep, adding 30K a year and not having to pay insurance would be a game changer.

cougaman

6/22/21 12:07pm

I’m willing to try it.

BW84

6/22/21 11:16am

Why don’t y’all chip in and I’ll prove it can be done. I’ll even give you a

Penske Material

6/22/21 11:18am

I could do it, but I wouldn't. There are several ways you could get screwed, and I would not be able to live

Clark Addison

6/22/21 11:21am

There's only one way to find out. I propose a long-term test. You all pull

DeekLyfter

6/22/21 11:24am

I could easy. And have 2 kids at home. My lifestyle would be just fine as well.

6/22/21 11:24am

You don't have to invest in bonds. Just do the stock market. All that matters is

Baron

6/22/21 11:28am

Easily, seeing as my current target number is just over $1 million at 40

BYUFootballisBack

6/22/21 11:29am

I could do it if single.

cougfanz

6/22/21 11:29am

I have 3 kids under the age of 8 and I could unequivocally make that work. I probably wouldn't attempt it because I'd

Pimpin4Paradise

6/22/21 11:34am

If you can make that without working you just move out of Cali.

Druick

6/22/21 11:36am

You don't even have to leave the coasts, you just need a cheap area on them

Hotlanta

6/22/21 11:42am

25-35% in taxes isn’t even close to accurate

PCCoug

6/22/21 11:52am

Huh? In order to generate $96k a year and live off that for the rest of your

6/22/21 12:16pm

Again, the tax increase is ONLY for those with $1+ million in income

BYUFootballisBack

6/22/21 12:25pm

Read this at the “$100k to spend. Zero tax.” part

PCCoug

6/22/21 12:29pm

Not at all. You're using a "traditional" retirement definition. Do you really think a 40yr old isnt going to work at all

6/22/21 1:06pm

That sounds more like a career change than a retirement to me

Clark Addison

6/23/21 6:54am

Running a blog, working at a golf course for free golf... not a career change for me. Sounds like a great retirement.

6/23/21 8:08am

My plan is to retire, take $50 a month, rent a powerwasher, turn it into $5mm

runitup590

6/22/21 4:53pm

Nah do the tomato plants plan instead!

BYUFootballisBack

6/22/21 4:59pm

Come on, man! That will never work.

Eddie

6/22/21 5:18pm

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