Author Topic: Reader Case Study – Pre-Retirement investing strategies (Thoughts?)  (Read 1434 times)

closer

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Topic Title: Reader Case Study – Pre-Retirement investing strategies (Thoughts?)

Life Situation: IRS filing status single. Unfortunately still paying VA taxes while serving overseas (this will be nixed ASAP.) Living overseas in USG provided housing with no liabilities. Will retire in 7 years with a pension of approx. $2800.00 per month.

AGI Gross Salary/Wages: ~$101,000.00

Pre-tax deductions: TSP $18,000.00,    Health, dental and vision $2357.16

Other Ordinary Income: None

Qualified Dividends & Long Term Capital Gains: Ordinary Div $595 Qualified Div $476

Rental Income, Actual Expenses, and Depreciation: None

Adjusted Gross Income:  $86,319.00 ($76019 taxable)

Taxes: NA
 
Current expenses: Amazon Prime $99 per year, Netflix $7.99 a month. I spend less than $600 per month currently.  No other bills

Expected ER expenses:  Health Ins $1781.00 year

Assets: TSP $300,000.00 (still has 16 years to grow up), Taxable money market account $65,000.00

Liabilities: None!

Specific Question(s)[/b]:  [/b]I am curious on hearing all of your thoughts on strategies on building/protecting wealth, pre 15% bracket time, while being locked in the 25%ers.
I will retire at 50 with the above mentioned pension and am currently investing to bridge that 50-59 ½ gap. I will have no need to touch my TSP until 59. I am trying to think of the most advantageous way to invest and avoid taxes eating into earnings.
Such is life…  is an acceptable answer.
If I build up a dividend portfolio now, it will be taxed. Still a gain but it feels like a loss.

Additional background:
I am currently firmly planted in the 25% bracket until I retire. Once there I will be in 15% paradise.
I have my taxable account currently at $65,000.00 and will be adding at a minimum $26,000.00 additional per year (pre-tax)(likely closer to $45k). These monies and pension will be more than enough to get me around in retirement until 59 ½.




georgicus

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Re: Reader Case Study – Pre-Retirement investing strategies (Thoughts?)
« Reply #1 on: April 13, 2016, 12:47:43 AM »
I am not an expert on expat taxes, but there is a big chunk that is exempt.  Check this, you may already be in the 15% or 0% bracket.

I think the best deal, if you are retiring at 50, is to save whatever is above the TSP max in a regular brokerage account.  (I retired at 53, and wish I had done this to avoid the ira pipeline and 72t.)  Buy something you can hold a long time, like an index fund -- you want it to be ultimately taxed as a long-term capital gain.

With a nice pension like that, and assuming you are secure in your job, you can afford to overweight stocks -- the pension is like having 800k in bonds.


closer

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Re: Reader Case Study – Pre-Retirement investing strategies (Thoughts?)
« Reply #2 on: April 13, 2016, 01:08:46 AM »
Thank you for the input. I do not qualify for the expat bennies unfortunately. I'm here on orders.