Sean Mullaney

But I just don't think that fear of taxation in retirement is that justified in today's environment and looking into the future.

Yes, so IRMA, let's talk about that one.

That is an increase in Medicare Part B and Part D premiums.

And it's based on your income from the two years previous.

Now, when you run the numbers, two things sort of emerge.

One is IRMA tends to be a tax on affluent singles and widows.

So if you look at when IRMA kicks in, it's over $200,000 of income for a married couple.

Even very affluent married couples, when they're no longer working, often have a difficult time reporting $200,000 or more of income on a tax return in retirement.

That's partly because of basis recovery with capital gains transactions.

By the way, in retirement, our spending tends to form a natural ceiling on our taxable income in a way it did not during our accumulation years.

That's an important insight.

So when we're married, Irma tends to barely bite.

Now I will say Irma starts biting when we become single, either we're single going into retirement or become a widow.

And that's when Irma can bite.

But like you were saying, Robert, it tends to be more of a nuisance.

It tends to be a tax on affluent single retirees.

just the way it functions, that's just how it breaks down.

But even then, IRMA tends to be an indication that things generally speaking worked out well in your financial life and perhaps you had some tax inefficiencies in the later part of your life when they don't impact you as much.

This is one of the lessons of the book is that when we think about taxes, we should think about when are they the most impactful?

I would argue that the most impactful when you're 40 years old, you got two kids at home, you got a spouse at home, and you haven't built up sufficient assets to be financially independent or whatever you want to call it.