How much to keep in 401K and is there a simple calculator for taking money?

[ca-rn]

If this has been discussed to death, please point me to the right direction to read.

I'm trying to determine much to keep in 401K once I FIRE at 55 in 2025.

Stats- Live in CA, single, no dependents, have rental property (35-40k rent), about 700k in 401k (holds mostly total bonds) w/brokerage account all total close to 2 million, plan to start SS at 67 or 68 (about 3k/month) and will have a small pension (lump sum or monthly).  I will need to buy healthcare insurance.

I want to reduce the total amount in 401k via rule of 55 (to avoid large RMDs in future) but not sure by how much.  I've guesstimated to keep about 300-400k in 401k so will need to withdraw about half between 2025 and 2033 (I'll be 63 getting ready for Medicare).

Is 300-400k in 401k a reasonable amount to keep RMDs in check? I will take distributions before 73 to keep a steady income.

Over 8 years, 350k equals 43,750 per year.

I think it might be better, tax wise, to alternate between getting ACA credits one year and taking out 87,500k the other year.  That would boost my income (with rental) to over 100k.

I'm good at saving but not great at numbers or math :( 

Is there a simple calculator to help figure this out?  I'll have distributions from taxable accounts.  Lots of moving parts and I'm not sure how to make it all work.

[seattlecyclone]

What specifically do you fear from RMDs? Is there an income level you want to stay under? A tax bracket you want to stay in? That will inform your strategy here.

The nice thing is that RMDs don't actually start at that large of a percentage of your account, and escalate gradually as you age (and draw down the balance in the account). The percentage is 4.07% when you're 75, 4.95% when you're 80, 6.25% when you're 85, 8.20% when you're 90.

So even if you don't draw the account down much at all, and it grows to $1 million by the time you hit RMD age, the taxes you'll pay on your ~$40k withdrawal likely won't break the bank. I suggest just withdrawing from the account as needed to pay your bills after you retire, maybe a bit more to top up whatever tax bracket you're already in, and don't sweat it too much beyond that.

[ca-rn]

What specifically do you fear from RMDs? Is there an income level you want to stay under? A tax bracket you want to stay in? That will inform your strategy here.

The nice thing is that RMDs don't actually start at that large of a percentage of your account, and escalate gradually as you age (and draw down the balance in the account). The percentage is 4.07% when you're 75, 4.95% when you're 80, 6.25% when you're 85, 8.20% when you're 90.

So even if you don't draw the account down much at all, and it grows to $1 million by the time you hit RMD age, the taxes you'll pay on your ~$40k withdrawal likely won't break the bank. I suggest just withdrawing from the account as needed to pay your bills after you retire, maybe a bit more to top up whatever tax bracket you're already in, and don't sweat it too much beyond that.

Tax bracket- Would like to stay at 22% or below. 

Income level- will have about 40k rental income, plus dividends (domestic/international index funds) will support all basic budget, not including healthcare/taxes/travel.

Specific fear of RMDs- its more anxiety when SS and RMD's and rental income and dividends and pension (if not lump sum) all come together pushing me into a higher tax bracket and Medicare IRMAA. 

Thought taking money out of the 401k into rothIRA over the 8 years in early retirement will help to decrease flow of income when they all start flowing at once.

Healthcare ACA between 55-65. Would like to figure out how to make it affordable at least part of the time.  Alternate years low income for ACA benefits and higher for conversions. 

[MDM]

Tax bracket- Would like to stay at 22% or below.

Why? 

Specific fear of RMDs- its more anxiety when SS and RMD's and rental income and dividends and pension (if not lump sum) all come together pushing me into a higher tax bracket and Medicare IRMAA.

What do you expect your marginal tax rate on 401k withdrawals will be when you are in your late 70s?  How did you estimate that?

Healthcare ACA between 55-65. Would like to figure out how to make it affordable at least part of the time.  Alternate years low income for ACA benefits and higher for conversions.

Roth Conversion and Capital Gains On ACA Health Insurance is probably worth reading for you.

[Catbert]

Try using the Rule of 72* to guestimate how large your 401k will be.  That can help you determine what RMD's and marginal tax rate you'll have in your 70s.  I understand wanting to stay in the 22% bracket.  Just remember that in 2026 tax rates will go back up to pre-Trump cuts.  I think that means that 25% will be the new 22%.   Converting or withdrawing at 24% could still be a net gain for you. 

I can't help with doing all this and still taking advantage of ACA subsidies.  I'm glad I never had to do that particular dance.

IIRC you have a large family?  I may be confusing you with someone else.  If you do, estimate when those little tax deductions will start disappearing.

[ca-rn]

Try using the Rule of 72* to guestimate how large your 401k will be.  That can help you determine what RMD's and marginal tax rate you'll have in your 70s.  I understand wanting to stay in the 22% bracket.  Just remember that in 2026 tax rates will go back up to pre-Trump cuts.  I think that means that 25% will be the new 22%.   Converting or withdrawing at 24% could still be a net gain for you. 

I can't help with doing all this and still taking advantage of ACA subsidies.  I'm glad I never had to do that particular dance.

IIRC you have a large family?  I may be confusing you with someone else.  If you do, estimate when those little tax deductions will start disappearing.

Majority of 401k is Vanguard Total Bond Index fund and whenever I adjust to desired AA- the bond % increases since Total Stock Index outperforms Bonds. 
Vanguard total bond under 10 yr performance is 9%- that seems really high, I expected something like 3% which using Rule of 72- doubling in about 24 years which would make it over 1.4 million in 24 years and I'll be in my late 70's.

It would be ideal to "partner" up with a single friend who have healthcare coverage to just focus on the 401k via rule of 55.   No family, single, no kids.