I have some cash in a taxable brokerage account.  This balance has grown significantly since last summer and I need a better long-term plan for it.  

We're late 40s, on track for "enough" retirement savings, college for kids will be extremely cheap or free, and only debt is a small-ish mortgage at 3%.  
I intend to quit working full-time in my very early 50s when the youngest kid finishes high school.

I don't want to pay off a 3% mortgage with cash that is earning 5%, I'm not interested in annuities or life insurance type investments, and I would like to keep it accessible for the dream of buying a lot of land in the country.  

I plan to do three things this month:
- Up my 401k to the max (I do about 1/2 the max now) and make up the lowered take-home pay with cash.  This would only use about $11k/year of the cash but would save a few $k in taxes due to the lower taxable income.
- Max the wife's roth ira for 2023 and 2024 (we don't routinely contribute to it).
- Set up a weekly buy of low-cost index funds to get the cash into the market throughout 2024 and leave it alone at least until it is all long-term.  

What better ideas are out there?

Buy land 20 years ago.

all your stuff makes sense to me. Use it to offset contributions to tax-advantaged plans, which will be better longer term.

another thing might be to bridge the gap between your anticipated retirement date and when you can pull without penalty for "actual" retirement accounts. You'd also be in a lower tax bracket if you're not working, so would pay less taxes than if you pulled now.

Seems like you have a good plan.  There is a mildly sophisticated ETF which may or may not interest you.  The ticker is BOXX.  Its strategy is simple, it uses box spreads, (options), to duplicate the return of short term T-bills.  The difference is in the tax treatment.  T-bills in a taxable account pay the highest federal tax rates, but no state income taxes.  BOXX pays cap gains taxes, 60% long term/40% short term, (the SPX options BOXX trades in are section 1256 contracts).  This may be advantageous for some people, depending on your state's income tax treatment and personal circumstances.  Maybe not for all, but it certainly can help some.

It can be fairly easily replicated by a knowledgeable option speculator, but that is a little bit more work.   Of course I have no idea where T-bill rates are going to be in the coming months.

This. Make sure you have a plan for paying for life after you retire in early 50s. I built up a pretty good amount in my brokerage account (401k not available for much of my working years), which turned out to be a good thing since I quit working earlier than I was planning. And, having some cash to pay bills also makes 0% cap gains tax bracket selling a possiblility... I tax gain harvested 3 years of stock purchases at the end of last year, zero cap gains tax.  

I'd just keep buying Total Stock Market funds, like I've been doing. Nothing fancy.

That is actually my plan for the money.  I just retired from the army so I have a modest retirement check which makes quitting work early a lot more feasible.  I’ll be 52 when last kid finishes high school so we have to make it 7 years from then to get into our pre-tax money.  Fidelity’s online retirement planner says it'll work out!

Stupid question time - I’ve never paid long term capital gains.  I see for married it is 0% up to $94k and 15% above $94k.  That is $94k of income, correct?  So if you have $95k of income and make $100 of capital gains, then you pay regular income tax on the $95k plus $15 of long term capital gains(15% of $100 because your income was over $94k), is that correct?  
Also, is that $94k of income before or after deductions?

Move more money a year to an Ira. Also you will only pay tax on sold stocks. When you do this buy more funds that are managed so that you don't have to sell then until you are in your 50s and live off that before retirement money kicks in. It's all about tax avoidance.

Can you expound in this a little more?

Or a link that better explains your position?

Buying a total stock index fund, such as Vanguard's Total World (symbol VT), it buys and sells stocks according to their market weighting inside the fund. But you don't need to sell to adjust your stock holdings over the years and thus defer all realized gains. So you can buy and hold VT and as the world transitions from horse-buggy to gas-cars to electric-cars to space-ships, your holdings automatically adjust and you don't have to do anything. There is no need to buy and sell and readjust positions historically going from GM to XOM to IBM to GE to C to MSFT to AAPL. So simply buying a total world index fund such as VT allows you to never have to do anything until you are ready to use the money in retirement and sell. This allows you to defer the capital gain taxes (in a taxable account) until you are exiting the market.

Ok, yep, got that. I guess I was looking for a strategy to reduce tax burden upon withdrawal.

As suggested, ETFs.  Do you have a wealth manager?

Any reason for ETFs instead of actual mutual funds?  
I think that's where I'm at, I'll just do a scheduled weekly buy that goes until the end of this year.  


No, but I'm curious.  My biggest issue is taxes - I just retired from the military and have a real job now.  My 2024 tax bill will be more than I paid cumulatively over 20 years in the military!  It's disgusting.  
See my other threads, my mom died last year and left behind some money that will add to my tax burden for 2024 which is why I'm figuring out so many new things.  

Mom had a "wealth manager" and I spoke to them in sorting out mom's stuff, but they get paid through commissions from the companies that sell life insurance, annuities, etc. and every 3rd sentence from their mouth is "we're not tax advisors or accountants".  
I've asked a few people I know who have lots of money and edward jones seems to be the most common.  I'm not really interested in talking to a salesman who is motivated only to get my money under their control.  

I'm good on financial basics, but I've considered paying a "fiduciary" type financial advisor for a couple hours of their time.  
I can search online and ask questions, but it's easy to miss things and there is lots of wrong/outdated/poorly explained information online.  
Given the taxes I pay now and the added dollar amounts of mom's stuff it seems like it could be a good return on the investment?  Even small things could easily save me thousands of $ now and/or 5-6 figure dollar amounts over the next 10-15 years, and there's no way I can uncover every possible advantage myself.  

Any suggestions?  
I hate to just to find a random name on the internet - aren't there arfcom guys who do this for their day job?  

If either your or your wife's employer offers a catastrophic health plan with HSA, look into whether that kind of policy makes sense for your family.  HSA contributions are triple tax advantaged as they are exempt from federal and state income taxes and from FICA.  If you can afford to pay medical bills now with after-tax money you can do that, leave the HSA alone, and then reimburse yourself years from now while the HSA grows tax-free.

I'm retired military - tricare doesn't allow you to use an HSA.

There are much finer points involved in the tax code, but this calculator can help you get a rough idea of the biggest taxable categories for individuals.

Understanding Tax Brackets

Yes, you have the rough idea of the capital gains. The brackets work off the Taxable Income (Line 15 on the 1040). So includes regular incomes that get added up first, including any tIRA and 401k and SS and ordinary dividends (which includes qualified dividends, but the qualified get taxed as long term capital gains, so when you do the cap gains and dividend worksheet to figure the actual tax, they will be treated differently than ordinary income).

Anyway, ordinary income is added up first, yes you deduct the standard deduction, then add cap gains on top of that (i.e., there's an order of operations), and somewhere in there you add in other taxable income from Schedule 2 or 3. Social Security goes into ordinary income, but there's a worksheet that you fill out to determine how much of the SS you received goes into the 1040 as taxable income.

I've spent some time last year going through the 1040 form and instructions, and ran a few scenarios (on paper) for 2023 and 2024 and once SS starts, so I could see how different withdrawal sources affect the brackets and my taxes (as per the current tax code). (eta: and I'd recommend that everyone spend a day or two doing this, well before you get to retirement...it can/should change how you plan your retirement since taxes are (or can be if they don't understand their taxes) most people's biggest expense in retirement.

So, I'm bridging to SS with mostly an inherited IRA (that has to be emptied in 10 years) & the dividends my taxable account spins off (that are relatively low because I have broad based index funds) of which the majority are taxed at long term cap gains rates, and then I have a cash bucket (it's in MM getting >5% these days) that I pull from for the rest of my expenses. So my taxable income (1040, line 15) was a little over $9k this year, and most of that was qualified dividends, so I'm paying almost no taxes for 2023. My actual expenses are really low, though, so it's really easy...no debt, house was paid off or 6 years ago, single . And really, it's going to stay that low until I start SS (I'll likely take out of my own traditional IRA before RMDs start, to pull some of the balance off the top so the RMDs to get too high when they start).

Well, I bit the bullet.  Found a local 'fiduciary' advisor, met him this morning and agreed to pay him for a year to see how it goes.  
He's an engineer who got bored and switched to money work and targets clients who are also engineers/scientists, so he was pretty cool.  
I'm quite confident he will save me way more than a year of his fees just in reducing my taxes for 2024 - I'll decide at the end of the year whether to keep him long-term.

First thing you need to do is pick a single goal. For example, but not limited to,  I want to limit my tax liability or I want to generate a lot of cash or I want low risk. There is no AND in your goal like I want to generate a lot of cash AND keep taxes low. Pick one.

Next how involved do you want to be in the operation? Do you want to make your own decisions or have someone else run it for you for a fee?

Then one can assist instead of just recommending funds or strategies.