Which accounts to withdrawal from in retirement
Ok, so I'm trying to figure out the most tax efficient way to withdrawal for retirement. For this I'm assuming there is enough money invested to meet the withdrawal rate. Here are the conditions:
- Withdrawal after taxes needs to be $300k
- Capital gain are all long term
- 401k is the only income tax
- Basically excluding SS from this calculation.
It seems to me the best approach is to withdrawal from 401k until I hit the 15% tax bracket effective tax rate, which is about $183,600. Based on a 7% return and 2% inflation adjustment, the money should last 19 years, so I don't think RMDs will kick in because it would only be 6 years of the 401k. The SS would adjust the withdrawal amount from 401k down a bit so the 6 years would last a bit longer but not sure how to calculate that out at the moment.
So the withdrawal looks like this then:
- $183,600 Income Tax
- $164,000 Capital Gains
- 13.6% tax rate paid.
Am I missing something? Is there a different way to look at it that I'm not thinking of.
For anyone interested in how I came up with this, I used this site. https://engaging-data.com/tax-brackets It's awesome for calculating tax liability with capital gains.