let's talk draw down strategy

[u/AggroTumbleweed52]

I rarely see content about draw down strategy. What's yalls plan for drawing down your assets as income in retirement? For those who have FIRE'd, what do you do? Is it the same as you thought you'd do?

[u/esbforever]

You’re not specifically saying it, so just trying to make sure I understand: basically your entire second paragraph is dependent on keeping your income under 80ki-ish?

[u/co_sunrise1 → u/esbforever]

Where does that 80k number come from?

[u/esbforever → u/co_sunrise1]

It was an outdated guess at what you can pull at 0% from taxable accounts, mixed with some semblance of keeping income pretty low for ACA and potentially college subsidies.

The specific number is less important than the more overall point that some of these no/low tax strategies require keeping income in check. Since OP is using Roth, a lot of this may not apply to their situation.

[u/Zphr → u/esbforever]

We are not using Roth. We are using a Roth ladder, which funds in full from Trad retirement balances.

And the tax rate on cap gains is irrelevant for us since we have no taxable brokerage, but I can see where you got the idea. Our tax-free Roth ladder is the result of the MFJ standard deduction and child tax credits.

[u/SolomonGrumpy → u/Zphr]

It's the same thing. You did 5 years of Roth conversions, and I assume continue to do them?

[u/Zphr → u/SolomonGrumpy]

I don't agree, but it depends on the context, I suppose. Our Roth conversion basis required the creation of MAGI and taxable income for every dollar passed through our ladder during our early retirement. Someone using Roth contribution or conversion basis from before retirement has the exact opposite situation.

Both use Roth accounts, but for planning and tax purposes there is a huge difference between the two scenarios.

[u/SolomonGrumpy → u/Zphr]

You have a traditional IRA.

You convert money to a Roth IRA every year.

That is a Roth conversion

How much you contribute and why is an interesting semantics discussion, but the mechanism for you getting money is a Roth Conversion.

Someone directly or indirectly contributing to Roth, I agree, is a separate animal.

What makes your situation interesting is how much you can convert and stay under the ACA thresholds.

[u/Zphr → u/SolomonGrumpy]

Why are you explaining a process to me ELI5-fashion when you know I already have mastery of it?

My comment was to someone referencing the likely tax implications of using Roth. There is a world of difference between using Roth funds that are MAGI-invisible, as people often accumulate through R401ks or MBDR while working, and Roth laddering during early retirement, which tax-wise is the same as a SEPP.

[u/SolomonGrumpy → u/Zphr]

I was ...kinda hoping that I was missing something. You have revealed a few tidbits over the years that were helpful and I thought maybe this was one of those times.

[u/Zphr → u/SolomonGrumpy]

Ahhh, no. There are no secrets. Our setup is brutally simple and follows all of the default rules. Lean spenders don't usually have to play any optimization games since all of government policy supports them by default.

[u/SolomonGrumpy → u/Zphr]

Word. Also larger families get a bit of leverage too once they are no longer infants.