This is incredibly helpful, Jeremey! Thanks so much. I am so impressed with how dialed in you are with every detail.
Of course, holding off on the IRA while I empty the Inheritance IRA and 457 make total sense. And trying to get the lowest tax bracket and especially the lowest MAGI for the ACA saves a lot of money too. I haven’t thought enough about the ACA savings. And I am regretting my lack of brokerage and Roth funds to help offset the taxable funds I have saved.
So, I’ve been going over my spreadsheet with these new ideas and adjusting all the variables to see various outcomes of taxes, penalties, ACA costs, accumulating funds and depleting funds. And I’m fretting over keeping money from the house sale for a future down payment or using it to buy a van outright (or should I finance the van?) or dumping into the brokerage so I can use it to keep the MAGI down as long as possible. And then my eyes wander to the total value of the portfolio over time and I can see that only spending 49K a year will never get me to die with zero…or anywhere even close. I’ll be so busy saving several thousand dollars a year that I’ll end up with an oversized portfolio while withhold from myself some the possibilities of reaping enjoyment from spending a bit more.
And so I’m back to the odd conundrum of being a lifelong frugal saver who can’t seem to see that at some point I need to stop skiing up hill; that it’s ok to turn around and glide down, to reap the rewards of that money I have earned to buy experiences, and even some material things, after years of hard work saving it all up. Will it raise my MAGI and make my insurance more costly? Yes. Will my taxes be higher? Yes. Will my portfolio decrease? Yes. But isn’t that the point? Didn’t I do all this to get this exact freedom?
And I’m further tormented over the reality that each year forward will get harder physically and cognitively and that many great experiences that I could enjoy now with my money, which I earned at great sacrifice, have a limited time to be accomplished. And perhaps I should do the hard work of de-accumulation and pay a few more taxes, shell out more for health insurance, and pay a few penalties here and there so I can realize some of those opportunities that are fast disappearing.
So, now I’m starting to say to myself, try this: spend 70 or 75K for a year for a year or two and see what parts you enjoy and hate. Evaluate the portfolio at that point and decide how to proceed. I think I can find the sweet spot that way and settle in. And then I chuckle as I think, ok if I spend 75K a year, how can I minimize my taxes? How can get my MAGI down? Should I start rolling into Roths? Should I keep putting money into my HSA? What about capital gains and loss harvesting? So, I guess it doesn’t matter what I free myself to spend, I will fret none the less. Ha! I guess we can never escape our true selves.
In the end, what I likely will do is splurge in some years, spend done down the portfolio for experiences, and then toggle back on others (likely in response to the market). And I will never actually get to zero, but I would like to see the portfolio get cut in half or less before entering the full pension and SS stage. That way I have a cushion for emergencies and some peace of mind but know I enjoyed my savings. I suspect at 70 and beyond I’ll have slowed considerably and not need nearly what I will in my 50s.
What I do know for sure after reading so much on this website and reading the forums is that Jeremy is a savant with all he knows, and a mensch with all he shares. It’s a pretty incredible resource. Thank you, sir. I’m planning to apply soon for an individual consult to find a strategy for hitting that sweet spot.
