Crystal ball

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  • Vagabond MD Vagabond MD 
    Status: Physician
    Posts: 3486
    Joined: 01/21/2016

    An awful lot of brain cells are used in emphasizing building pretax retirement accounts and the importance of having a handle on the spending rates.
    Spending levels are usually after tax.
    What effective tax rates do you plug in?

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    yes taxes are another unknown in the future. I use which is 15%  But I have no idea really.

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    15% is a low estimate. 25-30%, depending on how much money you and are are earning, whether you are going to be paying state tax or not and where your moment is located (taxable, IRA, Roth, pension, etc.)

    One of the 2018 guest bloggers @WCI, a retired dentist in his early 70’s, IIRC, had his living expenses in retirement divided into four equal quadrants:

    25% Necessities

    25% Discretionary

    25% Give away (to family and charity)

    25% Taxes

    He may have labeled them somewhat differently, but that is how I am modeling it for my retirement future.

    As for the future of markets, I think 3-5% real, from where we are right now, is probably a realistic number. I admittedly do not spend much time thinking about it.

    #183636 Reply
    Drop it into MD Drop it into MD 
    Status: Physician
    Posts: 440
    Joined: 09/20/2018

    You are probably right.  About half of my money will be pretax.  I do live in a state with income tax but no idea if I would stay here into retirement.  We live on about 100K now and that includes mortgage and daycare so I am hopeful that we would be able to live on less someday or live grander on the same.  I should probably expect at least 20% tax but hopefully not upper 20s since that is where I am now.  Thanks.

    #183645 Reply
    Liked by Tangler
    Avatar Tangler 
    Status: Physician
    Posts: 378
    Joined: 08/23/2018

    30 years? Very hard to know, but my guess is:
    4-7% nominal return for next 30 years with an 80:20 stock:bond index fund portfolio.
    I hope.
    We plan on living off 2-4%
    Sequence of returns risk will keep me working until we can comfortably live on 2-3%.
    Taxes are going to increase to cover:
    1. SS
    2. federal deficit
    3. new government spending
    I am worried they will add some kind of “wealth tax” to pay for the above, but it is beyond my control.

    #183736 Reply

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