So we left off at the tax situation for Scott single and was going to look like as he from 52 work until he retires at 60 and again the idea is that we want to start drawing money out of our 401 K s 60 to avoid taking Social Security 270 which is what we’re doing here and the tax.
Situation looks like this all right so as you can see pretty significant taxes why he’s working losing a quarter of his money to taxes and that drops significantly once he stops.
Because FICA no longer kicks in and now here’s when Social Security kicks in so let’s take a look at the retirement cash flows and we can see what the tax rates look like let me see here I want to check my clock again to make sure that we’re.
Not running these videos too too.
Long all right so let’s go to cash flows and.
Let’s see cash flows yeah there’s social security there is social security at seven all right so basically actually let’s do this I want to go back bear with me just a second I want to actually change it so.
He’s taking Social Security back at at full retirement age to show.
You what it looks like so let’s go back to Fort I’m an agent who’s taking Social Security and we’re gonna go to cash lose alright so not a big difference in the ability to retire.
Had just the could have an effect on his taxes so here’s Social Security taking it as 67 which is his full retirement age and so let’s take a look so his taxes at no no at sixty are seven thousand three hundred forty all right 67 three four zero his taxes at 55 are sixteen eight oh nine his taxes at sixty-five are 8307 and there’s a reason I’m.
Writing this down share with you just second and his taxes at 70 are 3285 all right 32 85 so now the armies are gonna start kicking in so let’s just go to 80 and his taxes there are 12 at 80 years old or 12 506 they’re starting to.
Kick in pretty good at 85 they’re nineteen nineteen six 30 so 67 is when Social Security kicks in he’s got pretty big distributions planned distributions are RMDs mandatory distributions.
And they’re starting to come out faster Ferriss as taxes really started jumped up here as he gets in his mid to late 80s for sure so let’s take a look at one of the taxes we’re gonna look at what the tax brackets or the 1040 looks like here in the year when he’s 55 which is 2009 F plays F yeah 55 should be 2024 I believe let’s see all.
Now he’s only got sixty nine thousand five hundred fifty six of income but ja she’s making 70 thousand a year and again we’re fast-forwarding this to 2024 because ten thousand that in today’s numbers whatever it is in the future is being deferred it’s not taxable fat to be why see in today’s numbers sixty thousand of income but.
His salary seventy thousand because ten thousand is being deferred into his 401 K so does it flow back to the 1040 because it’s being deferred to the 401 K it will but not in this year sixty thousand dollars of total income minus the $12,000 standard deduction pretty simple math here forty eight thousand is taxable income sixty-five hundred is what he pays the feds then again.
The state of Massachusetts and in terms of a Medicare as well the FICA so be fast forward this so that’s when he’s 50 let’s go to when he’s 60 at 2029.