I haven't really given it any consideration yet due to my haphazard, unorganized approach to FIRE. I've been RE for almost a year now and I still have around 3 years worth of expenses in savings accounts. After that, I've probably got well over 10 years of expenses in my taxable investment account. After that, I guess I'll have to start worrying about drawing down my tax advantaged accounts. I'm 51 now so that will put me pretty close to SS eligibility age at that time also. I still start my first IRA to ROTH conversion a couple of weeks ago though. My plan is to use the conversion ladder to provide the taxable income that I need to qualify for ACA health coverage and subsidies for as long as they last. I know I should pay closer attention to the bigger picture but I'm just too lazy at the moment. My current SWR is probably in the area of 2.6% of my net worth so I guess I'll put off the worry for a little while longer.
You can take the low road or the high road. Low road, minimize income, maximize ACA benefit. High road, ignore ACA, pay full price, do Roth conversions. I'm doing the low road right now.
Thanks for chiming in, you make some interesting points. First, 3 years of expenses in a savings account was a little more than I was planning (I was thinking 2 years worth is a good number) but that's definitely a nice cushion to have. ACA subsidies being tied to taxable income was something I hadn't even considered! My plan was to keep my taxable income in the 15% tax bracket so that I'm not taxed on capital gains, but I'll have to make sure it's high enough to take advantage of ACA subsidies!To me, it seems like there is a lot of information online about getting to the FIRE point, but once you walk away from work the picture doesn't seem so clear about how to draw down accounts to minimize taxes or maximize other benefits.
Year 1 12/2016-10/2017: CashI have about 3.5 years in brokerage accounts and easily 1 year in annual Roth contributions. There's also half a year in a Roth 401k. That's 5 years but it's cutting it a little tight for my comfort.Year 2 2018: Brokerage accountsYear 3: Brokerage accountsYear 4: Brokerage accountsYear 5: ?????Year 6: Profit*Year 5 will probably be from annual Roth contributions.
And is this not a concern just because we should be looking at SWR in terms of total assets and not on an individual account basis? Thanks!
But when do underpants come into the equation?
Quote from: bacchi on October 22, 2017, 04:24:02 PMYear 1 12/2016-10/2017: CashI have about 3.5 years in brokerage accounts and easily 1 year in annual Roth contributions. There's also half a year in a Roth 401k. That's 5 years but it's cutting it a little tight for my comfort.Year 2 2018: Brokerage accountsYear 3: Brokerage accountsYear 4: Brokerage accountsYear 5: ?????Year 6: Profit*Year 5 will probably be from annual Roth contributions.But when do underpants come into the equation?