When someone has a large tax-deferred account(s) like this, I like to show them what their RMDs will be like if they keep doing what they are doing. In OP's case, the tax-deferred contributions will continue from her employer even if they both stop making tax-deferred contributions themselves.
First, you need to understand the Rule of 72. Then if the tax-deferred accounts grow by an average of 7.2% then they will have $3m in tax-deferred in 10 years and double again to $6M in another 10 years. Of course, this may not be your growth rate, the employer will be adding an unknown amount of contributions and "he" and "she" will turn 73 in different years (but around 20 years from now).
To continue this example, RMDs will start at about 4% each year or will be about $240k between both of them. The percent to withdraw increases each year after RMDs start and the account balances continue to grow, together increasing the RMD in later years. Even if they have no other income (pensions, SS, capital gains, dividends, interest) the RMDs will put them in a tax bracket probably higher than they are expecting.
I commented on a similar thread yesterday and you can combine what I wrote here with the post I wrote yesterday:
viewtopic.php?p=7883507#p7883507
First, you need to understand the Rule of 72. Then if the tax-deferred accounts grow by an average of 7.2% then they will have $3m in tax-deferred in 10 years and double again to $6M in another 10 years. Of course, this may not be your growth rate, the employer will be adding an unknown amount of contributions and "he" and "she" will turn 73 in different years (but around 20 years from now).
To continue this example, RMDs will start at about 4% each year or will be about $240k between both of them. The percent to withdraw increases each year after RMDs start and the account balances continue to grow, together increasing the RMD in later years. Even if they have no other income (pensions, SS, capital gains, dividends, interest) the RMDs will put them in a tax bracket probably higher than they are expecting.
I commented on a similar thread yesterday and you can combine what I wrote here with the post I wrote yesterday:
viewtopic.php?p=7883507#p7883507
Statistics: Posted by celia — Mon May 27, 2024 12:21 am — Replies 6 — Views 474