I've not seen discussion pertaining to Income taxes after drawing Social Security. We started REGULAR IRA contributions when in 1979, we are now 62, due to earnings structure and lack of need for deductions started ROTH IRA's in 2005. We additionally started converting funds from our REG to ROTH in 2006. While the conversions WERE taxable, we believe that our 15% Federal tax bracket to be as low as we'd ever see, and understand that withdrawals of ROTH monies are not factored in the income calculations for Federal Income Tax (provided the ROTH withdrawals meet the 5 year rule). For a couple,the income threshold is currently $ 44,000/yr, which is calculated by adding 1/2 of your Social Security to any earned income, REG IRA distributions, pensions, dividends and interest and etc. Interestingly, TAX free bond income is included for this calculation.
We soon turn 63 and will start drawing in April with combined SS income of 32,000, half of which will be used in future income tax calcs. Because we now have 38% of our IRA funds in ROTH's, we can plan IRA distributions to minimize and or avoid Income taxes. Due to State Income tax rate of 7.95% and Federal of 15% thru 2014, our planning will provide us a very livable 70 to 75k in current $ well into our 80's. And might I add, it can be done free of ANY income taxes.
