Suppose that I'd like to net $5k of monthly income ($60k per year after taxes) from my 401k when I retire in 20 years. For 2017, I would need $69.5k gross distributions from my 401k because my effective tax rate would be 13.7%.

In the US, how do financial planners typically project the effective tax rate for retirees from today (like this website) to what it could be in the future? Do they use a historic trend?

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Update: This website seems to have a more straightforward calculator. By trial and error, it looks like (at today's income tax rates) $67k is the minimum gross distribution to net $60k.

$67k - $4.779k - $1.991k = $60.2k

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  • 3
    Funny story. The tax code changed from 2017 to 2018. Oct 23, 2018 at 21:17
  • Note that you would have to include income from Social Security in that, which (depending on how you look at it) pushes your 401K withdrawals into a higher bracket. Also, that tax table is incorrect. Because of the standard deduction, the first $12K (for a single person) is not taxed.
    – jamesqf
    Oct 24, 2018 at 3:24
  • @jamesqf Do you know of a website with a calculator that will do the math correctly? I want to know how much I'd have to withdraw to net $60k after taxes. Oct 24, 2018 at 3:26
  • @JoeTaxpayer Even funnier story: The tax code changes pretty much every year.
    – Jay
    Oct 25, 2018 at 17:22
  • 1
    True dat. But. The last decade+ had incremental movement, mostly adjusting for inflation. The change from 2017 to 2018 was great enough that any reference to lash year is very misleading. If the question was asked into017 at someone pulled up the tax table that was one year Old, I would not object as the difference would be $100 or less. Oct 25, 2018 at 19:52

3 Answers 3


There's not a consensus that I am aware of, as there are many variables:

  • What other income (e.g. Social Security) will there be?
  • What deductions/credits will be available?
  • What will the tax brackets be in the future
  • How will the tax rates change in the future?

You certainly can't use today's tax brackets and the income amounts from 20 years in the future, as tax brackets will probably change roughly with inflation.

If, on the other hand, you want the equivalent in 20 years of $5k monthly today, then using current tax brackets and rates is a reasonable assumption.

In the situation you present, I would probably suggest you be conservative and use a 15% tax rate or higher since it would be better to have more money than you need than less.

Another alternative is to use Roth accounts as much as possible so you get the tax out of the way now and don't have to worry about it in the future.


I'm not a financial planner, but I don't see how they could predict future tax rates. Tax rates have bounced around, up and down, for decades. See this page, for example. https://bradfordtaxinstitute.com/Free_Resources/Federal-Income-Tax-Rates.aspx

I think the best that one could do is to assume that present tax rates will be in effect indefinitely. Of course the tax rate you pay when you retire is likely to be different than the rate you pay when working because your income will not be the same. But I'd estimate based on what tax you would pay on your projected retirement income under current tax law.


Answer: The software we currently use allows 1) the tax cut is renewed 2) the tax cut expires in 2026 or 3) a custom flat tax rate. It also allows the inclusion of information like mortgage payments, what state do you live in / plan to live in, and how much of a portfolio is allocated to municipal bonds.

Although it would be great to know what future tax rates are going to be, we don't know. Seeing a range of scenarios and/or using conservative assumptions can be beneficial (it is better to be pleasantly surprised). If you have deferred tax assets and are concerned about tax rates going up, Roth conversions might be worth researching, but without knowing your situation I can't make a recommendation.

  • @joeTaxpayer, my disclosure is required per the site's rules "However, you must disclose your affiliation in your answers." money.stackexchange.com/help/promotion Oct 23, 2018 at 22:15
  • Sorry, can you provide a link to that quote? I am unaware of this. Oct 23, 2018 at 22:17
  • @joeTaxpayer money.stackexchange.com/help/promotion Oct 23, 2018 at 22:17
  • It’s with respect to answers that reference your product or website. To distinguish between users of a product and those who have a financial interest in said product. Thus is not applicable to this type of answer or any routine participation. Oct 23, 2018 at 22:21
  • @CharlesFox What software? Oct 23, 2018 at 22:23

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