Need help with Planning Your Finances?
Need help with Planning Your Finances?
Tax-Free Retirement
Tax rates are at their lowest levels in 80 years and the future of taxes does not bode well when viewed in terms of balancing the Federal budget. This makes planning for a tax-free retirement an imperative.
Most people do not have an optimal allocation of their tax buckets. Learn our framework on how to achieve a near 0% tax rate at retirement. FinCrafter’s Tax Free Retirement Calculator applies this framework to optimize your tax buckets. Read about how to adjust for inflation and the differences between real and nominal terms.
Tax-Free Retirement Calculator
Your first step towards achieving Financial Independence!
Tax-Free Retirement Calculator
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Rule of 72: value doubles every ‘N’ years when the underlying investment grows at ‘R%’ annually, provided N x R is 72. For example, an investment growing at ~7% CAGR will double every decade.
Our working and retirement years each could potentially last for 35-40 years, due to increasing life expectancy.
0% Tax: Model your own tax-free retirement scenario. But first watch this how-to video for instructions on how to use this advanced calculator.
0% Tax: Model your own tax-free retirement scenario. But first watch this how-to video for instructions on how to use this advanced calculator.
A key insight that the calculator provides is how much of your future savings should be allocated between regular (Pre-Tax) and Roth 401k in order to achieve a near 0% tax rate at retirement. The calculator attempts to achieve optimality (aka near tax-free rate) by only working with your future savings, which may not be sufficient, as we will discover in the next module.
Our working and retirement years each could potentially last for 35-40 years, due to increasing life expectancy.
Our working and retirement years each could potentially last for 35-40 years, due to increasing life expectancy.
TFR Scenarios: Rerun your retirement scenario by varying the retirement age to get a sense of how early you can retire without compromising your lifestyle needs too much.
TFR Scenarios: Rerun your retirement scenario by varying the retirement age to get a sense of how early you can retire without compromising your lifestyle needs much.
1
Have you been contributing 100% to pre-tax 401k? If yes, what is the new allocation between regular and Roth 401k going to be?
2
How long do you have to wait until you can afford to buy a home? (From the calculator output, see when the Taxable asset drops by approximately the down payment amount.)
3
How do you feel about your nest egg size (net worth at retirement) and retirement income?
4
How optimal are your tax buckets (look at the tax-free portion of your retirement income) if you followed the calculator’s recommended allocation to Pre-Tax savings?
1
Have you been contributing 100% to pre-tax 401k? If yes, what is the new allocation between regular and Roth 401k going to be?
2
How long do you have to wait until you can afford to buy a home? (See when the Taxable asset drops by approximately the down payment amount.)
3
How do you feel about your nest egg size (net worth at retirement) and retirement income?
4
How optimal are your tax buckets (look at the tax-free portion of your retirement income) if you followed the calculator’s recommended allocation to Pre-Tax savings?
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