drgo on Nostr: Good questions. Roth SC IRA isn’t always the best bet; because stacking early ...
Good questions. Roth SC IRA isn’t always the best bet; because stacking early matters, your marginal tax rate matters a lot. Here’s why:
If you are allowed to get a Roth, your income by definition isn’t high. So perhaps your average tax rate is 15%.
Say you earn $10,000. This leaves you with $8500 (or adjust to be whatever max contribution is for the year) to put in to a Roth.
You put away $8,500 a year for 10 years and then stop contributing…you’ve paid $15,000 in tax and both $85,000 of bitcoin but probably spent $9,000 on IRA fees. The roughly 0.34 bitcoin you accumulated is worth say $450,000 when you stop accumulated after 10 years (note, in the first three years you stacked 0.2 bitcoin). T
Then you spend 10 years spending the dollars you would have put away in an IRA…then you retire (now at 20 years total). Your bcn stack is perhaps worth $3,000,000 which you draw down at a rate of $14,500 per month, assuming draw down increases at 3% inflation per year.
Your money runs out at year 47, but would last over 60 years at $12,000 per month and indefinitely if monthly spend were $10,000 (or if inflation were 2% instead of 3%)
Your marginal tax rate with this income will probably be less than current 24%, but you don’t pay it because it’s a Roth. So your avoiding say 15% of $175,000/yr in tax..that’s roughly $25,000/yr of not tax.
This is getting long…let me run the pretax contribution scenario in a separate note
If you are allowed to get a Roth, your income by definition isn’t high. So perhaps your average tax rate is 15%.
Say you earn $10,000. This leaves you with $8500 (or adjust to be whatever max contribution is for the year) to put in to a Roth.
You put away $8,500 a year for 10 years and then stop contributing…you’ve paid $15,000 in tax and both $85,000 of bitcoin but probably spent $9,000 on IRA fees. The roughly 0.34 bitcoin you accumulated is worth say $450,000 when you stop accumulated after 10 years (note, in the first three years you stacked 0.2 bitcoin). T
Then you spend 10 years spending the dollars you would have put away in an IRA…then you retire (now at 20 years total). Your bcn stack is perhaps worth $3,000,000 which you draw down at a rate of $14,500 per month, assuming draw down increases at 3% inflation per year.
Your money runs out at year 47, but would last over 60 years at $12,000 per month and indefinitely if monthly spend were $10,000 (or if inflation were 2% instead of 3%)
Your marginal tax rate with this income will probably be less than current 24%, but you don’t pay it because it’s a Roth. So your avoiding say 15% of $175,000/yr in tax..that’s roughly $25,000/yr of not tax.
This is getting long…let me run the pretax contribution scenario in a separate note