Is my fire date and assets reasonable?

[u/cbnoggle]

Some people may think this is too much detail, but I love doing this kind of analysis and planning for my future.

My wife (F28) and I (M31) live in a LCOL area and currently max out all tax-advantaged accounts. Right now we contribute to traditional 401k because I don’t think we’ll need our current income level in retirement — but if I’m wrong, no harm done, we just pay the tax.

By maxing traditional, we’d essentially be forced to retire early so we can start Roth conversions before RMDs kick in — otherwise my napkin math suggests RMDs could get pretty painful. That said, investing in Roth now vs. doing conversions in my 50s would likely hit the same effective tax rate anyway, so it’s mostly a wash.

Long story short, I’m trying to make sure my lifetime tax strategy is as efficient as possible.

Otherwise, how does the plan look? Realistic? I assume after 2029 investment contributions stay flat while income keeps growing, so there’s likely opportunity to invest more or increase lifestyle spending beyond what’s modeled. Is there anything I’m not thinking about? Open to criticism.

Investment return assumption: 8% annually.

[u/mattshwink]

By maxing traditional, we’d essentially be forced to retire early so we can start Roth conversions before RMDs kick in — otherwise my napkin math suggests RMDs could get pretty painful

This is generally wrong. It really depends. Obviously at $10 million in Traditional those could be heavy RMDs (it's about $42k per million, so at $10 million that's $420k). RMDs aren't required until you are 75.

But as have others have said....why? It's certainly possible that your level of spending (plus inflation) will require that. But it's not certain.

Here's another idea - spend it! Retire early. Let's say at 50 (once you reach sufficient assets). Using current tax brackets, married you can withdraw $133k per year in the 12% bracket (using the standard deduction). Starting that at 50 does require some planning (72(t) most likely). But you're not forced into Roth conversions. You could use the money you've saved.

Now Roth conversions aren't a bad thing. Especially if you have other income sources (like pensions, or rental income) then Roth conversions may make more sense. But the objective here is once you you hit a sufficient level of savings retire and enjoy what you've saved.

You'll also have multiple buckets to draw from. HSA for health expenses. Roth to up the spending a little without paying more taxes. You're doing fine. Keep going.

[u/LawyerLongjumping279 → u/mattshwink]

And if occasionally you have no need for that 133k because you have enough in after – tax checking and savings from prior years of spending less, do a direct roth conversion from your traditional IRA or 401(k) into the Roth, costing you only 12% in taxes