Could go either way. Depends on your situation.Well, I wasn't worried about having $1M in my tax-deferred accounts as a single person in my early 40s until a few minutes ago. Now I wonder if I should be.For a single person, a tax-deferred account of $500k is not worrisome to me. For a couple, my number is about $1 million. It is because, as you suggested, the RMD from these amounts will not create a terrible burden. Even when the couple becomes a single, the RMD should not be a terrible burden.
For example, if you retire with $1 million and spend regularly from the IRA and it stays close to the same value during your retirement, the first RMD is about $36,000....not enough to cause real harm if you are spending from the IRA anyway.
If you have $2 million by the time you retire and spend little of it because your expenses are covered by other income...your $2 million could grow for a decade and first RMD might be $90k....which is could easily push you into a higher bracket. Whether that "higher bracket" is higher than what you pay now is something to think about.
From my point of view, a single person with $1 million in tax-deferred at age 40 probably needs to give some thought to this issue. You may want to smooth out taxes by using more Roth now. Or you may just want to not worry about it even if there are higher tax rates later.
Statistics: Posted by retiredjg — Sat Jul 13, 2024 11:16 am — Replies 18 — Views 1161
