Originally from ticket #14148.
Chris M.
Fox Point, WI
QUESTION:
When I enter my required yearly yearly retirement income (in today's dollars), should I enter a pre-tax or post-tax dollar amount?
To be specific, I need 12k per month for expenses. Should I use 144k/year or should I increase this number by 35% to allow for federal taxes. The bulk of my retirement funds are in taxable accounts and my sheltered accounts are not Roth. My retirement state of FL does not have a state tax for those who live there 6+ months per year.
Thank you!
ANSWER:
The retirement income goal should be AFTER taxes… the spendable cash you need to live on.
For Florida enter 0% for the state tax.
The program treats the different buckets as needed with respect to taxes.
It knows that tax free can be used as is with no additional taxation.
The tax-deferred qualified though requires extra money to be pulled out to cover taxes.
The program automagically does all of those calculations for you.