My wife has a pension program at her work, and I've never given it much thought with regards to our savings rate or asset allocation. I've always figured that it is far enough out (and uncertain enough, with the way pension-type plans occasionally go) that I should plan without it. She's still 15 years or so out from retirement but, assuming her current path remains the same, I should really start adding this into our planning (it's 80% of her final pay; should be enough to cover most of our living expenses assuming no major changes between now and then). Between her pension and my social security, I'm hoping we will have to take minimal distributions from our investment accounts.
How does this apply when folks have one or more of these situations....
- they are performing Roth conversions which raises the tax base
- the taxable accounts are much larger
- they are recieving one or more SS payments which raises the tax base
- they maintain a larger 'emergency' fund which also has tax drag
- they have a pension(s) which also raise the tax base
As pensions are taxed at the full federal income rate, are there any adjustments I should be making now in order to minimize tax drag in retirement? Just shoving as much money as we comfortably can into 401k/457b/Roth every year? Or, conversely, should I be AVOIDING filling up the tax-deferred stuff in order to lower RMDs in retirement?
We're currently roughly 75/25 stocks/bonds, and 80/20 US/Int'l, which is a comfortable spot for us (with annual rebalancing, which ideally all takes place within retirement accounts.) I would think that asset allocation might look different during retirement for pension-holders (more equity-heavy due to consistent reliable income from the pension), but I wouldn't think it would affect my allocation now. Am I missing something there?
Statistics: Posted by stilts1007 — Fri Feb 14, 2025 11:23 pm — Replies 63 — Views 4929