Episode #642
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Taxes in retirement have been called a “silent wealth killer” for those pursuing FIRE—but does the data tell a different story? If you’re worried about a ticking tax bomb wiping out a huge chunk of your investment portfolio or even delaying early retirement, you won’t want to miss this one!
Welcome back to the “BiggerPockets Money” podcast! Today, we’re joined by fellow investor and self-proclaimed data nerd Mark Livingstone, who has created a free resource and spreadsheet YOU can use to estimate your tax burden in retirement. For most early retirees, taxes are negligible compared to the amount of income they can withdraw, and Mark will demonstrate this with a step-by-step walkthrough of his powerful FIRE tax tool!
Along the way, you’ll learn the key differences between marginal and effective tax rates and why people who retire today pay much less tax than in decades prior. You’ll also hear about the four income “levers” you can pull in retirement, when income tax and capital gains tax kick in, and how to build the most tax-friendly withdrawal strategy possible!
00:00: Intro
04:58: The Progressive Income Tax System
10:37: Historical Effective Tax Rates
12:45: Investment Bucket Tax Impacts
15:43: Retirement Scenario Example
24:14: Using Mark’s Spreadsheet
32:37: Mark’s Portfolio Allocation
35:24: Connect with Mark!
35:49: Taxes Aren’t What You Think!