Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing.. I will write her an e-mail shortly.
60k a year seems to be my magic number. The 0/15% for cap gain tax, the 12/22% for ordinary tax, my AGI max for my ACA HDHP+HSA plan, my 80% of income at retirement age, and is my 4% portfolio distribution number. Made my decision to retire, this past July much easier when everything lined up.
We did not retire early, but I can tell you that it was great having brokerage account money for things we did that were beyond our normal income before we were 59 1/2. I'm thinking that we may convert some to Roth, filling the 12% bracket, keep it in ST funds, then have it to use to purchase a more expensive home in a couple years.
Great video. I have also not liked some of your videos bec they portray fear and lots of what ifs (but i do understand that not all have same appetite) but this one is spot on. Precise and useful for people who want to understand. Good work Ari 👌. You are winning me over lately 😂
For the brokerage you also need to consider the effect of gains on MAGI. Even if you pay zero taxes on LTCGs, if you are on ACA, they can make you loose subsidies which are essentially an additional tax, or if you are receiving SS, it can make more of it to taxable. This effect applies to MAGI, before any below the line deductions are used to offset your taxable income.
So, I plan on retiring at 55.... currently 42. I invest in both Roth and Brokage. So far $103k in Roth $68k in brokerage 5 years of brokerage and roth... $700k in 401k..20 years of saving there. . My gains in Roth have been pretty darn good. I like that I can buy and sell and not pay taxes. I generally don't sell in my brokerage account.
I've been in touch with a financial analyst ever since I started investing. Knowing today's culture the challenge is knowing when to purchase or sell when investing in trending stocks, which is pretty simple. On my portfolio, which has grown over $900k in a little over a year, my adviser chooses entry and exit orders and now i can plan for a better retirement
Gabriel Alberto William is the financial advisor I work with. Most likely, the internet should have his basic info, you can make a research with his full name
Thanks for the video, it answered a question I have been thinking about. 1.5 years before retirement and we usually put 8,000 in each of our IRA. Now I will put that into the brokerage account instead. Which we already contribute to each month. 401k is done for the year. Thanks.
really solid video, Ari. clear and more concise. don't forget about the standard federal deductions of income from 401k/IRA. yeah, it's not Roth or brokerage, just a little more context for the conversation.
You only pay taxes on the capital gains of the $60,000 that you pull from your brokerage account. All of the money you pull from your brokerage will not be subject to capital gains taxes so why use that as an example? I think you need to clarify that so people aren't confused. To clarify, Apple pays a dividend so a owning it in a brokerage account will have tax drag that the roth account doesn't have and they will never be equal.
Would love to see you do a comparison between superhero account and owning a rental. I will be selling my rental home next year, which will allow us to live for seven years on the proceeds (in brokerage account) and not touch 401(k) until after that, and bridging to Medicare, saving even more.
I’ll second that!! My wife and I are weighing the options and timing (5-7 years) of keeping the rental/income vs taking the $500k and investing in xyz.
I was pondering all this a few years back and running numbers. It is harder for me because Ill have military pension starting in my 40s which will have me over 60K already. The tax advantages while in the military are great but most people dont take full advantage of them and many cant because the net income isnt the best. encouraging my younger guys to stuff a roth IRA while they can because if they do 20 years then theyll easily not qualify to do a roth ira after
Is the tax determined on only gains? Say for example index funds were purchased for $60,000 and sold for $100,000 is it the $40k taxed at zero or is it the entire amount withdrawn subject to tax regardless of purchase price
For your example of $60,000 able to be withdrawn without any federal capital gains tax, what if the single person has $40,000 of income for that year from working part time? Does that mean only $20,000 (approximately) can be taken out of brokerage account before the 15% tax begins? In other words, how does having some income affect capital gains tax?
With a roth ira and brokerage account only and pay yourself 60k a year, the taxable income is too low to qualify for the aca subsidy for health insurance.Helps to have some pretax retirement accounts unless you are a big spender.
Love the vids and most examples seem pretty straight forward - so much $ in IRA, ROTH, SuperHero, converting to ROTH, etc!!! Can you please provide some insight on Non-Qualified Deferred Compensation Plans??? I have deferred a huge amount of my salary over many years to the NQDP (grown to $2Mil) but thinking that it would have been better to just pay the taxes on the total salary and add to my SuperHero account. I am planning to retire next year (age 60) and will start the distributions over the next 10 years (which will be now taxable income) and not taking SS until 70. This will also limit the amount of room I have to covert my 401K/IRA to a ROTH, not getting healthcare subsidies, having IRMAA surcharges after 65, etc. Basically is the Deferred Preferred or is contributing to the SuperHero the way to go??? Too late for me but might help others. 🙂
Very interesting! I've been at odds trying to figure out how much is just right to retire on in our case. My wife (37, an educator) has 15 years to go until she receives a pension, and myself (39, a private sector 401k building employee), I feel like I could retire early in 7 years. So as you can imagine, there's multiple stages in our scenario to consider - the 7 years of superhero/401k account building, the 8 years I am at home, the 5 extra years before tapping my 401k/IRAs, and then 3 more until we can early tap into Social Security (if we choose to). We plan to pay off our home in 5 years, and begin traveling well thereafter, how do you account for all of these stages of life?
I wish I found your channel a long time ago then I would have made different choices back then. I have about 2.5 million in a 401K, and roughly 200K in a Roth IRA. I wish I would have saved a lot more cash in a brokerage account or savings cause I know I need to do Roth conversions to avoid the RMDs that will push me into a higher tax bracket. Since I’m only 57 and retired, I don’t want to do Roth conversions since I don’t have the cash to pay for the taxes, and being only 57, if I have the tax withheld from the conversion, the tax withheld will be subject to the 10% early tax penalty since that amount is not rolled into the Roth. I know I shouldn’t be losing sleep over this and accept the fact I’ll pay the taxes when they hit. Maybe once I am 59 1/2 I can do Roth conversions at that time
Depends on what age. I have a lot in both. The brokerage I can contribute what I want and withdrawal how much I want and if properly taken out use tax harvesting at a low retirement income and pay no taxes.
I don't use a Roth, just because we're a couple mfj and don't plan to retire in the US. The taxable brokerage is a tank if you know what you're doing, ie ltcg, qualified dividends, tax loss/gain harvesting. The only difference is the taxation of dividend. I did some quick math and in my case it represents an additional expense ratio circa 0.20% For 0.20% a year, you have access to your gains. The Roth imo is overrated.
Why not max out Roth IRA and Roth 401k every year and when you retire roll your Roth 401k into your Roth IRA and use your initial contributions as your “superhero” funds???Seems simple enough…what am I missing???
@@michellegreen1072 that's the 0.20% I mentioned. VTi for ex: 1.15% yield with 100% qualified dividend at 15% tax bracket on qualified dividends. 1.15%*0.15 = 0.1725% additional expense ratio
@michellegreen1072 that's the 0.20% I mentioned. VTi for ex: 1.15% yield with 100% qualified dividend at 15% tax bracket on qualified dividends. 1.15%*0.15 = 0.1725% additional expense ratio
Retirement isn’t an end goal, but a journey best secured by careful and consistent investments.
Retirement is the reward of disciplined investing over the long term, not just a destination.
My adviser guided me through retirement planning, ensuring my investments were strategically positioned for long-term rewards.
Mind if I ask you to recommend this particular coach you using their service? Seems you've figured it all out.
Melissa Terri Swayne can't divulge much. Most likely, the internet should have her basic info, you can research if you like.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing.. I will write her an e-mail shortly.
Maybe your best video yet. Love the clarity, length, and always great insights and energy.
@@patrickkeating5329 appreciate that Patrick
60k a year seems to be my magic number. The 0/15% for cap gain tax, the 12/22% for ordinary tax, my AGI max for my ACA HDHP+HSA plan, my 80% of income at retirement age, and is my 4% portfolio distribution number. Made my decision to retire, this past July much easier when everything lined up.
We did not retire early, but I can tell you that it was great having brokerage account money for things we did that were beyond our normal income before we were 59 1/2. I'm thinking that we may convert some to Roth, filling the 12% bracket, keep it in ST funds, then have it to use to purchase a more expensive home in a couple years.
Great video. I have also not liked some of your videos bec they portray fear and lots of what ifs (but i do understand that not all have same appetite) but this one is spot on. Precise and useful for people who want to understand. Good work Ari 👌. You are winning me over lately 😂
Appreciate the transparency. I try to be the same in my videos so nobody retires too early, or too late.
For the brokerage you also need to consider the effect of gains on MAGI. Even if you pay zero taxes on LTCGs, if you are on ACA, they can make you loose subsidies which are essentially an additional tax, or if you are receiving SS, it can make more of it to taxable. This effect applies to MAGI, before any below the line deductions are used to offset your taxable income.
An important tradeoff!
I appreciate your sense of humor 😂 great info! Love both the Roth IRA and taxable brokerage.
@@stocksxbondage thank you!
So, I plan on retiring at 55.... currently 42. I invest in both Roth and Brokage. So far $103k in Roth $68k in brokerage 5 years of brokerage and roth... $700k in 401k..20 years of saving there. . My gains in Roth have been pretty darn good. I like that I can buy and sell and not pay taxes. I generally don't sell in my brokerage account.
@@druiz012 you sound on track!
Investing in stocks is planting a tree for your future; with patience, it will bear fruit
Just like a tree, investments need time and care to reach their full potential
I've been in touch with a financial analyst ever since I started investing. Knowing today's culture the challenge is knowing when to purchase or sell when investing in trending stocks, which is pretty simple. On my portfolio, which has grown over $900k in a little over a year, my adviser chooses entry and exit orders and now i can plan for a better retirement
Mind if I ask you to recommend this particular coach you are using their service? Seems you've figured it all out
Gabriel Alberto William is the financial advisor I work with. Most likely, the internet should have his basic info, you can make a research with his full name
I just google his name and his website popped up immediately. I'm very much impressed and i will email him right away
Thanks for the video, it answered a question I have been thinking about. 1.5 years before retirement and we usually put 8,000 in each of our IRA. Now I will put that into the brokerage account instead. Which we already contribute to each month. 401k is done for the year. Thanks.
Glad it was helpful!
Great Video!
really solid video, Ari. clear and more concise. don't forget about the standard federal deductions of income from 401k/IRA. yeah, it's not Roth or brokerage, just a little more context for the conversation.
Thank you! Good points!
You only pay taxes on the capital gains of the $60,000 that you pull from your brokerage account. All of the money you pull from your brokerage will not be subject to capital gains taxes so why use that as an example? I think you need to clarify that so people aren't confused. To clarify, Apple pays a dividend so a owning it in a brokerage account will have tax drag that the roth account doesn't have and they will never be equal.
Correct, just gains :)
Awesome video. I understand a lot more now.
Glad to hear it!
Will the academy show me how to shift portfolio into a bucket strategy as I am nearing retirement?
Yes. If you watch the lessons.
Would love to see you do a comparison between superhero account and owning a rental. I will be selling my rental home next year, which will allow us to live for seven years on the proceeds (in brokerage account) and not touch 401(k) until after that, and bridging to Medicare, saving even more.
@@karenmcgovern3452 stay tuned!
I’ll second that!! My wife and I are weighing the options and timing (5-7 years) of keeping the rental/income vs taking the $500k and investing in xyz.
Ok thank u Ari!
I was pondering all this a few years back and running numbers. It is harder for me because Ill have military pension starting in my 40s which will have me over 60K already. The tax advantages while in the military are great but most people dont take full advantage of them and many cant because the net income isnt the best. encouraging my younger guys to stuff a roth IRA while they can because if they do 20 years then theyll easily not qualify to do a roth ira after
If you all have access to the Roth TSP option that could be great too.
Is the tax determined on only gains? Say for example index funds were purchased for $60,000 and sold for $100,000 is it the $40k taxed at zero or is it the entire amount withdrawn subject to tax regardless of purchase price
Great video. Thanks.
You are welcome!
For your example of $60,000 able to be withdrawn without any federal capital gains tax, what if the single person has $40,000 of income for that year from working part time?
Does that mean only $20,000 (approximately) can be taken out of brokerage account before the 15% tax begins?
In other words, how does having some income affect capital gains tax?
With a roth ira and brokerage account only and pay yourself 60k a year, the taxable income is too low to qualify for the aca subsidy for health insurance.Helps to have some pretax retirement accounts unless you are a big spender.
Love the vids and most examples seem pretty straight forward - so much $ in IRA, ROTH, SuperHero, converting to ROTH, etc!!! Can you please provide some insight on Non-Qualified Deferred Compensation Plans??? I have deferred a huge amount of my salary over many years to the NQDP (grown to $2Mil) but thinking that it would have been better to just pay the taxes on the total salary and add to my SuperHero account. I am planning to retire next year (age 60) and will start the distributions over the next 10 years (which will be now taxable income) and not taking SS until 70. This will also limit the amount of room I have to covert my 401K/IRA to a ROTH, not getting healthcare subsidies, having IRMAA surcharges after 65, etc. Basically is the Deferred Preferred or is contributing to the SuperHero the way to go??? Too late for me but might help others. 🙂
Stay tuned!!
Very interesting! I've been at odds trying to figure out how much is just right to retire on in our case. My wife (37, an educator) has 15 years to go until she receives a pension, and myself (39, a private sector 401k building employee), I feel like I could retire early in 7 years. So as you can imagine, there's multiple stages in our scenario to consider - the 7 years of superhero/401k account building, the 8 years I am at home, the 5 extra years before tapping my 401k/IRAs, and then 3 more until we can early tap into Social Security (if we choose to). We plan to pay off our home in 5 years, and begin traveling well thereafter, how do you account for all of these stages of life?
You use an advisor who is a pro or use the academy ➡️ ari-taublieb.mykajabi.com/early-retirement-academy
I wish I found your channel a long time ago then I would have made different choices back then. I have about 2.5 million in a 401K, and roughly 200K in a Roth IRA. I wish I would have saved a lot more cash in a brokerage account or savings cause I know I need to do Roth conversions to avoid the RMDs that will push me into a higher tax bracket. Since I’m only 57 and retired, I don’t want to do Roth conversions since I don’t have the cash to pay for the taxes, and being only 57, if I have the tax withheld from the conversion, the tax withheld will be subject to the 10% early tax penalty since that amount is not rolled into the Roth. I know I shouldn’t be losing sleep over this and accept the fact I’ll pay the taxes when they hit. Maybe once I am 59 1/2 I can do Roth conversions at that time
@@tshay5112 the good news is you’re educating yourself now!
Depends on what age. I have a lot in both. The brokerage I can contribute what I want and withdrawal how much I want and if properly taken out use tax harvesting at a low retirement income and pay no taxes.
@@kckuc310 both is great!
I don't use a Roth, just because we're a couple mfj and don't plan to retire in the US. The taxable brokerage is a tank if you know what you're doing, ie ltcg, qualified dividends, tax loss/gain harvesting.
The only difference is the taxation of dividend. I did some quick math and in my case it represents an additional expense ratio circa 0.20%
For 0.20% a year, you have access to your gains. The Roth imo is overrated.
I call it Superhero for a reason 🦸♂️
Why not max out Roth IRA and Roth 401k every year and when you retire roll your Roth 401k into your Roth IRA and use your initial contributions as your “superhero” funds???Seems simple enough…what am I missing???
Show your math because are you accounting for the taxes levied annually?
@@michellegreen1072 that's the 0.20% I mentioned.
VTi for ex: 1.15% yield with 100% qualified dividend at 15% tax bracket on qualified dividends.
1.15%*0.15 = 0.1725% additional expense ratio
@michellegreen1072 that's the 0.20% I mentioned.
VTi for ex: 1.15% yield with 100% qualified dividend at 15% tax bracket on qualified dividends.
1.15%*0.15 = 0.1725% additional expense ratio
I tried to sign up for the Academy. I have to pay w CC, but I'm not told the cost. wtf ?
@@Mark-ur2il it’s there. It’s $299.
@earlyretirementari got it - thanx for your reply and clarification
Why are ETFs better than mutual funds for taxes?
@@donaldcedar7574 mutual funds distribute gains making them tax inefficient
Would love to see a short video on this
Monte Carlo. Hmm. Having to pay a lot of taxes because you have a lot of money doesn't seem to be a bad problem to have.