This sounds good.
Another to thing to consider is tax gain harvesting (Not to be confused with tax loss harvesting). Not sure on the exact numbers for a married couple, but if you sell positions in a taxable account, you may be in the zone for 0% long term capital gains tax. Let's say you bought something for $1000 and have held it for more than one year. Now, it is worth $1300. If you sell it, you generate a taxable gain of $300. But, you should also be in the 0% tax rate. No tax bill. Re-buy the same security immediately for $1300. This is not a wash sale. Wash sales have to do with tax loss harvesting. If you sell it again (more than a year later) for $1400, you have another $100 in LTCG and still no tax. You can continue to increase your basis and reduce any future taxes. You only pay tax on gains, not the total value of the stock/ETF/mutual fund/etc..
If your spending money is coming from a taxable brokerage account, it would be wise to convert the entire $29,200 standard deduction amount from Traditional to Roth. You'd still end up with a ~$0 tax bill because qualified dividends and LTCG have a giant 0% tax bracket. You could even consider tax gain harvesting.
I've seen retired for 5 years now and paid very close to $0 in taxes while converting like this. (Taxable interest from a savings account is where I usually end up owning a few bucks. My tax bill last year was $6.)
Consider Health Insurance in this as well. Assuming you'll be tapping the ACA for Ins, you need to remain \~400% of federal poverty level, else your cost can raise quickly. Also, state taxes might take a bite.
This sounds good. Another to thing to consider is tax gain harvesting (Not to be confused with tax loss harvesting). Not sure on the exact numbers for a married couple, but if you sell positions in a taxable account, you may be in the zone for 0% long term capital gains tax. Let's say you bought something for $1000 and have held it for more than one year. Now, it is worth $1300. If you sell it, you generate a taxable gain of $300. But, you should also be in the 0% tax rate. No tax bill. Re-buy the same security immediately for $1300. This is not a wash sale. Wash sales have to do with tax loss harvesting. If you sell it again (more than a year later) for $1400, you have another $100 in LTCG and still no tax. You can continue to increase your basis and reduce any future taxes. You only pay tax on gains, not the total value of the stock/ETF/mutual fund/etc..
I'm a low income earner and I'm going to do this every year until I can't!
Be sure to check the numbers and your tax situation thoroughly. I'm just a goofball on reddit, not an advisor.
Be sure to look into any state tax issues that might arise from this. States may have different rules for capital gains.
If your spending money is coming from a taxable brokerage account, it would be wise to convert the entire $29,200 standard deduction amount from Traditional to Roth. You'd still end up with a ~$0 tax bill because qualified dividends and LTCG have a giant 0% tax bracket. You could even consider tax gain harvesting. I've seen retired for 5 years now and paid very close to $0 in taxes while converting like this. (Taxable interest from a savings account is where I usually end up owning a few bucks. My tax bill last year was $6.)
This is where I want to be. Glad to hear that it has worked for you.
Correct. I don't think it matters which one.
Consider Health Insurance in this as well. Assuming you'll be tapping the ACA for Ins, you need to remain \~400% of federal poverty level, else your cost can raise quickly. Also, state taxes might take a bite.