Seriously, if you are trading, you need to find a good accountant; you probably need to set up a LLC if you want to create carry-forward losses, and avoid pushing your personal tax rate up too high. But, that all depends on your personal situation, so the accountant (find a good one who understands business and investing … not just an income-tax paper pusher) is the ‘solution’.

I recommend that you pick a tax rate b/w 25% and 35% and use that, knowing that there are legal and moral ‘things’ that you and your accountant and attorney will figure by the time you get there … believe me, you won’t even get near your Number without having a lot of these things in place already.

Your example of assuming that you will be paying cash for your house but perhaps refinancing to release some of the equity for other things is a good one e.g. I have a HELOC on my home for investing in the US stock market, where I am still 100% leveraged … I like to ride the thin edge of the razor

As for income tax, could you shed some light (without endangering your status with the IRS!) on this subject? Do you have a formula for this? How much do millionaires pay in taxes? I realize we will be in the highest tax bracket, but what can you realistically expect to pay Uncle Sam?

Let’s assume in my case that we will have $350,000 in annual income. Let’s also assume that our vehicles, health insurance, child care, some travel, phone, internet, and other business type expenses will be under our corporation.

We could also, potentially, have some serious mortgage expenses to write off. Though we previously discussed paying cash for houses upon retirement, it might make more sense to have the cash to buy our houses, but invest it elsewhere so as to reap the tax benefit.

Lastly, we will be donating approximately $60,000/year. Much of this might not be considered charitable donations, but could probably be deemed business losses.

So in this scenario, what figure should I put in for taxes? This will also change upon “standard” retirement age, correct?

Thanks!

I would recommend that others who want to try this format begin by listing TWO dollar columns:

1. For each line item in today’s dollars
2. for each line item inflated to future dollars

… but, you did this all in one which is fine.

I do have a question though:

Have you covered annual living expenses and taxation etc. for a family (as Michael Masterson suggested in this series of posts: http://7m7y.com/2008/07/25/living-off-100000-per-year/ )

e.g. income tax / electricity / gas (home ad car!) / phone / internet / cable / groceries / clothes / kids clothes / school / college / etc. ?

For example, Debbie (who provided this list) has estimated $443k for 2 kids, 4 years each at private college (in 2018 dollars)