Withdrawing Money After FIRE

In the last couple of posts we’ve discussed how to compute ACA (Obamacare) subsidies and marginal subsidy loss rates vs income (what I’m calling a “hidden” income tax).

Now let’s look at the next question I had regarding ACA subsidies: 

Is it worth increasing your income via long term capital gains to take advantage of the 0% LT cap gains tax bracket (i.e., tax gain harvesting), even if it means a lower ACA subsidy?

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Wondering how best to withdraw money after FIRE (Financial Independence / Retire Early)? And/or standard retirement?

In particular, are you wondering how much to pull from each of your various retirement and taxable accounts?

I had the same questions, so last summer I started working to figure out the answer.

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This week I worked on a wide variety of things, instead of focusing on a single main task. Hence the long list in the title of the post.

It’s amazing how much you can get done when your wonderful spouse takes the kids out of town to visit family for the weekend!

And of course I’m sure everyone will agree that there’s nothing more fun than working on personal finance content all weekend.

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This week I did two main things: create a couple diagrams and fix an acronym mistake.

Doesn’t sound like much, right? How long can it take to put together a couple diagrams and fix a typo? I must be slacking!

Well, turns out those diagrams were some of the most challenging I’ve ever done, and that acronym mistake was spread across lots of posts, diagrams, and plots that I had to recreate. Bleh… 

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It’s been tough to get stuff done this week here in Austin, as we’ve had a wicked ice storm blast through. Why is it tough to do stuff on a computer during an ice storm? Two words: no school.

But I still managed to get a couple things done: a big upgrade to the Roth withdrawal tax and penalty models, and I finally finished a total overhaul of the Traditional and Tax and Penalty Minimization (TPM) withdrawal strategy write-ups, which I previously had on the FIRE Withdrawal Strategy Algorithms page. 

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Well I’ll admit this is a bit of a disappointing post for me, because I had really hoped to complete a major overhaul of the FIRE Withdrawal Strategy Algorithms Page I’ve been working on all week, as I mentioned at the bottom of my last post. But that’s how it goes sometimes – I’d rather have a decent product than rush to “ship” a super rough / sloppy product. Especially for THIS product – I expect this page will serve as an important reference for much additional analysis I’m planning.

The graphical diagrams on that algorithms page also need a big overhaul, to reflect the current version of the methods.

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This week I’ve got some (mostly) good news regarding the “20% withholding from retirement accounts” challenge I mentioned in the previous post.

I also have a bit more stress testing analysis results of the Tax and Penalty Minimization (TPM) withdrawal method and the Traditional withdrawal method, this time looking at how each method does if expenses increase each year. 

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