Fortunately, charitable donations can completely alleviate the problem of having to pay higher taxes in your old age. I'd like to believe that a higher-than-average percentage of people on this website, being smarter than the average bear, will want to use their future wealth to make the world a better place instead of a worse one.
Hmm, I never considered using donations to make the world a worse place... a "Dr Evil DAF"? Reminds me of a line from Reservoir Dogs: "Torture you? That's a good idea. I like that."
The lowest earning years are a good time to do Roth Conversions. Highest earning years are a good time to setup a Donor Advised Fund.
How much money would Dr. Evil have in his DAF?
One MILLion dollars!!!!
And I didn't go to evil medical school for six frickin' years to spend my 'stache making the world a better place!!! bwahaha
Back on topic, I'd like to add my thanks to everyone else's, the value in this thread definitely provides great ROI on the cost of several years' MMM forum membership...
@Mr. Green, thanks for the great spreadsheet. I've needed to start modeling our income & tax projections, RMDs, Roth conversion options, etc. for a while now, and your heavy lift will make that easier. Our situation differs, so I'm adapting it to our needs.
As a US Foreign Service employee hanging on for MRA, like
@MasterStache I'll receive a pension. Since I'll retire before age 62 and therefore won't have reached SS eligibility, Uncle Sugar adds an annuity supplement for the period between my retirement and age 62 (aside: some FS folks opine that continuing to work after reaching retirement eligibility makes little sense because you never have another chance at that annuity supplement). Uncle also contributes to FEHB in retirement at the same rate as for current employees, and my contribution share also remains the same, albeit with post-tax dollars upon retirement (while working, it's pre-tax). My DW will also receive a small pension.
Thus I can discard with calculations of ACA eligibility, and perhaps post-retirement Medicare part B calculations (I'm not sure whether it makes sense to opt in to Medicare part B - another topic to model and analyze).
OTOH, the income from the pensions (and the annuity supplement in the first few years) will make it difficult to squeeze some tax-free or low-tax-rate Roth conversions into the pipeline. We've both contributed heavily to taxable TSP and other retirement accounts, and are continuing to contribute to taxable through 2022, our last year to qualify for the AOTC, and we need to keep reducing AGI to maintain eligibility.
I'm using the model to decide whether to shift our TSP contributions to Roth in 2023 and beyond, because that would likely vault us into the 24% marginal tax bracket, keeping in mind that we're among those high-saving folks who will face high RMDs on our traditional funds and the accompanying federal taxes, with little room to convert at lower rates due to our pensions (boo-hoo, I know).
Also, assuming we maintain our health, we'll have so much income that taking SS before age 70 will simply increase our taxes further for little benefit (more tears fall into my beer...).
For ill or good we started contributing to Roth IRAs when they first became available in 1998 - our incomes were much lower then - and have simply continued to make IRA contributions only to Roth since then. We may have missed out on some tax breaks in the past, and nevertheless have built up large Roth balances rather than adding to our RMD/tax problem.
Upon retirement, we plan to transfer our Roth TSP funds to Roth IRAs, because according to the document
Important Tax Information About Your TSP Withdrawal and Required Minimum Distributions,
The Internal Revenue Code (IRC) requires that you begin receiving distributions from your account in the calendar year you become age 72 and are separated from federal service. Your entire TSP account—both traditional and Roth—is subject to these required minimum distributions (RMDs).
I'm definitely down with
@ender 's idea of doing a cash-out refi just before bailing out - get the mortgage while we're still receiving paychecks.