Retirement Taxes – Real World Case Study Comparisons

Our Retirement Tax case study concludes with this episode where we take THREE different approaches and compare them.

The first case study we’ll call the Barry model. In this situation, we don’t take ANY distributions from the IRA until Barry reaches 70. So, Barry will draw from Social Security at 62 plus his pension. He’ll then pay very little taxes in the first few years of retirement. But they will increase each and every year until he is approaching the income limits before his Medicare Premiums start to increase.

The second scenario we call the Kris model. Kris is who commented about the pain of the large taxes on the front end is there a middle way, maybe? Yes indeed. So, here we don’t take Social Security until 70 but we do take IRA distributions to help with our income needs until we take Social Security at 70.

As you can see the taxes are more in the front years than they are under the Barry model. But all told both of these scenarios have similar results.

The last scenario, the Josh scenario, is my favorite! 🙂 But in this scenario you’re going to pay BIG taxes on the front end and minimal on the back.

At the end of the day, it’s tough to choose simply because you don’t know when you’re going die or what your investment returns will be.

We are using these analysis in a vacuum, as does ALL financial planning scenarios. Which is why I always say every year, just do a review, see how things are shaking out and plan for that upcoming year.

Don’t just take a financial plan and put it on the shelf for the next few decades!

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