Well that's depressing

[corn18]

I was all excited because I will have $1M in savings next month. To celebrate, I thought why not take it all out in $20 bills and put it in a suitcase just to see what that looks like. So I did the math and if I withdrew everything, I would net $781,681. 35% marginal tax, 10% penalty on the 401k, 23% cap gains tax. Maybe I'll just get a smaller suitcase.

[TexasHusker]

Your analysis underscores the impact of taxes on our earnings in a very real way.

It is interesting how our tax code and entitlements are set up: I just completed my dad's tax return. He has Alzheimer's and has been in a facility since 2015.

Because he worked his whole life, earned a nice retirement, and was smart and bought a long term care policy, his total income last year was in the $75K range, just barely enough to cover all of his care. Never has taken a dime from the gubmit's pockets for his care.

Yet he still owed around $5K in income tax.

Meanwhile, you have folks living in these facilities that DIDN'T plan, who are dead broke. Those folks are being paid for by the same entity that my dad is paying $5K in taxes to.

What kind of screwball system is that?

[Smallsteps]

Meanwhile, you have folks living in these facilities that DIDN'T plan, who are dead broke. Those folks are being paid for by the same entity that my dad is paying $5K in taxes to.

I find this sort of scenario is one of the reasons we have such an abysmal savings habits. Why bother when you can get on a program and have the same care / home as someone like your dad who saved to make sure he was taken care of.
In many cases I know people actually if faced with having to move in a nursing care they divest themselves of assets etc and then have government pay.

[TexasHusker]

I find this sort of scenario is one of the reasons we have such an abysmal savings habits. Why bother when you can get on a program and have the same care / home as someone like your dad who saved to make sure he was taken care of.
In many cases I know people actually if faced with having to move in a nursing care they divest themselves of assets etc and then have government pay.

There is a multi-year "look back" that prevents this old trick. Even if there wasn't, it's not the right thing to do.

Why do otherwise morally upright people feel it is OK to "work the system" so that they get some cash?

To me, a person is only moral when they do the right thing when no one is looking.

[LivingAlmostLarge]

because too when you have money you have choices of places to live. When you are broke I believe there are less places that take medicare. You can stay in your home and live.

[TexasHusker]

because too when you have money you have choices of places to live. When you are broke I believe there are less places that take medicare. You can stay in your home and live.

yeah, it's not so much Medicare, but Medicaid, when it comes to custodial care.

[Smallsteps]

There is a multi-year "look back" that prevents this old trick. Even if there wasn't, it's not the right thing to do.

Why do otherwise morally upright people feel it is OK to "work the system" so that they get some cash?

I know first hand of a couple cases where if a "look back" was in place, it certainly was never enforced.
Homes transferred with papers being signed in the nursing home.

I know it is not right or moral but it IS happening still.
I honestly believe many of these rules or laws are simply to placate those who believe the rules are always enforced or followed up on. If you ask why not you will hear we need more money to actually follow up.
Fill out a form and in MANY cases as long as the right boxes are checked no questions are asked or followed up on in most programs.
I am not condoning it but many cross that line when they rationalize that they paid into system why not use it.

[Rocco1235]

I was all excited because I will have $1M in savings next month. To celebrate, I thought why not take it all out in $20 bills and put it in a suitcase just to see what that looks like. So I did the math and if I withdrew everything, I would net $781,681. 35% marginal tax, 10% penalty on the 401k, 23% cap gains tax. Maybe I'll just get a smaller suitcase.

Orrrr just keep it all in your 401K and withdraw even more and put it in a bigger suitcase when you retire!

[MooseBucks]

Last time I was rolling with 1mm in $20s it weighed over 100lbs. I’d suggest going with 100s even at the 789k. Much easier to carry in a single suitcase.

[Singuy]

People always complain about the taxes when it comes to 401k but the money earned is more efficient than a roth. I have done the calculation putting in post tax dollars and pre tax dollars. Because of how compounding interest work, your money grow faster using pre-tax money and even paying taxes later is worth it compared to the growth speed.

[corn18]

Last time I was rolling with 1mm in $20s it weighed over 100lbs. I’d suggest going with 100s even at the 789k. Much easier to carry in a single suitcase.

100 lbs would be a big suitcase. Would be fun to see it.

[Like2Plan]

100 lbs would be a big suitcase. Would be fun to see it.

DH and I have been traveling lately (and I'm still a bit jet lagged ) I was thinking--you would have to pay an extra fee for being over 50 pounds for a checked suitcase. (But, I suppose you wouldn't want that to be checked baggage. )

[Rocco1235]

100 lbs would be a big suitcase. Would be fun to see it.

If you really want a big suitcase withdraw it in dollar bills. You might need at least 2 of the 100lbs suitcases