I think you will be fine. There are a lot of expenses in there that can be slimmed down if needed.The basis is about $200k in my $417k Roth IRA.What are the contributions in both Roth accounts? Include the contributions in any accounts which were rolled into them.
Are you or your spouse older?
It seems a large need is to figure out how to access money between now and 60 without tax penalties and staying under 100K MAGI. The answers to those questions can help with figuring out a good plan.
In my husband's Roth IRA it is about $80k out of $115k.
My husband is older and is allowed to make catch up contributions.
We made direct Roth contributions for tax year 2023, but not yet for 2024.
Yes, if the market doesn't go your way, you may need to sell the house, but most likely you will be fine. I would not listen to anyone telling you to sell soon or move when your strong desire is to stay right where you are.
Have you heard of a Roth conversion ladder? The MadFientist has a great article on it.
Essentially, let's say you converted 50K from a traditional account to your Roth account. In 5 years, you will be able to take out the 50K tax free, no matter what your age is.
You need a plan of how to come up with roughly 120k a year for the next 12 years. It would be ideal to not pay tax penalties and keep your taxes as low as possible. Top priority is not to go over $102K MAGI so I'll keep it at a max of $100K in the example.
Taxable: 143K cash, 516k stocks with 225K of gains
Your trad accounts: $1,222K
Your Roth: 413K (Contributions of 200K)
His Roth: 114K (contributions of 80K)
Goal: To have 120K in spending money over the next 12 years without tax penalties and staying under 100K of MAGI. Goal of 12 years so you can hit 59.5 and not get penalized on your trad withdrawals. On average, you have a 43% basis on your taxable account.
Year 1: 72K roth conversion, Sell 65K in stocks (28K basis), use 55K cash
Year 2: 72K roth conversion, Sell 65K in stocks (28K basis), use 55K cash
Year 3: 72K roth conversion, Sell 65K in stocks (28K basis), use 33K cash, use 22K spouse Roth contributons
Year 4: 72K roth conversion, Sell 65K in stocks (28K basis), use 55K spouse roth contribution
Year 5: 72K roth conversion, Sell 65K in stocks (28K basis), use 3K spouse contribution, use 52 your roth contribution
Year 6: 72K roth conversion, Sell 65K in stocks (28K basis), use 55k your roth contribution
Year 7: 72K roth conversion, Sell 65K in stocks (28K basis), use 55k your roth contribution
Year 8: sell last 61K from taxable account, use last 38K from your roth contribution, use 21k from year 1 conversion
Year 9: 51k from year 1 conversion, 69k from year 2 conversion
Year 10: 3k from year 2 conversion, 72k from year 3 conversion, 45k from year 4 conversion
Year 11: 27k from year 4 conversion, 72k from year 5 conversion, 21 from year 6 conversion
Year 12: 51k from year 6 conversion, 69k from year 7 conversion
This gets you to age 60. With a 0% return, you would have roughly $718k in your Trad IRA, $247K between the two roths, and a paid off home. In reality, you will probably be in a much better financial position than this at the time.
This is a rough idea of how to get to age 60 even if you have no other payments coming in. You would have minimal taxes by doing something like this. I really would go through this with an advisor such as Mark Zorril as mentioned earlier.
For real, I personally would tone down the risk in the portfolio. You don't need a home run, you just need to get on base. Keeping your risk higher only means you might end up with more money than you need. It also means you might end up with less money than you need.
Good Luck!
Statistics: Posted by slow n steady — Thu Mar 07, 2024 6:40 pm — Replies 60 — Views 6897