Deep Dive: Set Yourself Up to Pay No Penalties or Taxes in Early Retirement

The Money with Katie Show

Money with Katie

Self-improvement, Education, Business, Investing, How To

4.8 • 1.3K Ratings

🗓️ 31 August 2022

⏱️ 47 minutes

🔗️ Recording | iTunes | RSS

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Summary

If you’re normally a “casual commute” listener of The Money with Katie Show, prepare to park your car and whip out your notebook—today’s episode is a complex deep dive into exactly how you can set yourself up to pay no taxes or penalties in retirement on any of your pre-tax, taxable, and Roth funds, even if you retire in your thirties. We’ll dig into how much a couple would need to save and invest to retire early and then break down how they can strategically access those funds for the most optimal tax-free outcomes. Remember to caffeinate before this one—your brain cells are about to be workin’ and twerkin’. If you’re a visual learner, the YouTube video for this episode or the episode transcription may be your best friends. — Mentioned in the Episode IRS Tax Code: https://www.irs.gov/privacy-disclosure/tax-code-regulations-and-official-guidance Standard deduction for 2022: https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2022 0% capital gains tax rate brackets for 2022: https://www.kiplinger.com/taxes/capital-gains-tax/602224/capital-gains-tax-rates Required Minimum Distributions (RMDs): https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds Roth IRA Five-Year Rule: https://www.investopedia.com/ask/answers/05/waitingperiodroth.asp Compound interest calculator: https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator Combining finances for marriage: https://moneywithkatie.com/blog/what-to-consider-when-combining-finances-with-your-partner — Follow Along - Listen to Money with Katie here: https://www.podpage.com/money-with-katie-show/ - Read Money with Katie: https://moneywithkatie.com/ Follow Money with Katie! - Instagram: https://www.instagram.com/moneywithkatie/ - Twitter: https://twitter.com/moneywithkatie - TikTok: https://www.tiktok.com/@moneywithkatie Subscribe to Morning Brew - Sign up for free today: https://bit.ly/morningbrewyt Follow The Brew! - Instagram: https://www.instagram.com/morningbrew/ - Twitter: https://twitter.com/MorningBrew - TikTok: https://www.tiktok.com/@morningbrew Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Welcome back to the Money with Katie Show Rich Girls and Boys.
0:08.6	I am your host, Katie Yaddi Tossan, and this week we are diving into the weeds together
0:14.8	for one of my favorite topics.
0:23.6	A little known ways to use your own investment gains later in life without paying any taxes
0:31.4	on them.
0:32.4	Also known as how rich girl millionaires don't pay any income tax, this is my super bowl.
0:40.4	And by the way, this episode is going to be pretty numbers heavy, so if you're a fairly
0:45.3	visual person, I recommend also tuning in to the episode on YouTube or reading the episode
0:52.8	of Transcription afterward.
0:55.8	Let's begin with a little bit of context.
0:58.9	When we say the word millionaires colloquially, we could be referring to people who have jobs
1:04.2	or people who don't have jobs.
1:06.4	In this context for this episode, it is safe to assume from here forward that when I'm
1:11.9	referring to the hypothetical millionaire, I am talking about someone who no longer has
1:17.5	a job.
1:18.6	So we can use the word retired to describe them, sure, but what we really mean is regardless
1:25.1	of age, this individual is now at the point where they've amassed enough wealth that their
1:30.4	investments are probably paying them more than their typical work or labor would.
1:36.6	After a certain point, if you are generating $100,000 per year from an investment portfolio,
1:42.5	will you feel as motivated to work 40 hours a week to earn another $100,000 maybe?
1:47.9	But no, probably not.
1:50.1	So here you found yourself with at least a million in the bank, and now it's time for the
	...

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