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I know there will be some of you who will reply to this thread with statements like "It's not about the money" and "doctor's don't make that much" but I was doing some calculations and I have a financial plan that would work...I will be using the Ontario tax system which has higher rates than the US so assume a little more income if you are in the US..
Let's say that you are a doctor that makes $200,000/year before taxes but after overhead and malpractice insurance. Let's also say that your significant other is a pharmacist that makes $95,000/year before taxes.
Also, assume that your parents are alive and receiving a pension of $800/mth each. That would be $9600 per year per parent. You could give (on paper) each parent $32200 and still keep there income at $34000 after their $7800 personal tax free deduction and therefore have to pay tax at the lowest tax rate of 21%. Here is the breakdown:
Your income $200000
-$7800 (personal tax free deduction)
-$32200 (give to parent)
-$32200 (give to parent)
-$32200 (give to parent)
-$40000 (retirement savings plan (tax free))
_________________________________________________________________
$55600 (your taxable income)
Your spouses income $95000
-$7800 (tax free personal ded.)
-$32200 (parent)
-$25000 (retirement savings plan)
________________________________________________________
Your spouses taxable income is $30000
The first $34000 of your income is taxed at 21%.
From $34000-$60000, the rate is 25%.
The $128800 that you technically gave to your parents is taxed at the 21% since it is divided by the four parents.
Your income tax:
$34000*0.21%=$7140
$21600*025%=$5400
Your spouses tax:
$30000*0.21%=$6300
The tax on the parents is 128800*0.21%=$27048
Therefore the total tax paid is $45888.
Your gross income was $295,000.
Your taxes are $45888.
Your net income is $249,112.
Your retirement saving is $65000.
You are left with $184112 for the year or $15342/month!
After 25 years of work putting in $65000/year at a compounded interest rate of 6% in a retirement savings account, your total saved will be $3,780,164 earning $226,809 interest per year which you could live off without touching the principal ever again! You would pay taxes on whatever you take out from this savings account but you will still be close to around the $15000/month that you were used to. Also, don't forget all of the money which you didn't spend out of the $15000/month that you were earning throughout your life.
With this financial plan you only end up paying 15% taxes!
Good luck!
Let's say that you are a doctor that makes $200,000/year before taxes but after overhead and malpractice insurance. Let's also say that your significant other is a pharmacist that makes $95,000/year before taxes.
Also, assume that your parents are alive and receiving a pension of $800/mth each. That would be $9600 per year per parent. You could give (on paper) each parent $32200 and still keep there income at $34000 after their $7800 personal tax free deduction and therefore have to pay tax at the lowest tax rate of 21%. Here is the breakdown:
Your income $200000
-$7800 (personal tax free deduction)
-$32200 (give to parent)
-$32200 (give to parent)
-$32200 (give to parent)
-$40000 (retirement savings plan (tax free))
_________________________________________________________________
$55600 (your taxable income)
Your spouses income $95000
-$7800 (tax free personal ded.)
-$32200 (parent)
-$25000 (retirement savings plan)
________________________________________________________
Your spouses taxable income is $30000
The first $34000 of your income is taxed at 21%.
From $34000-$60000, the rate is 25%.
The $128800 that you technically gave to your parents is taxed at the 21% since it is divided by the four parents.
Your income tax:
$34000*0.21%=$7140
$21600*025%=$5400
Your spouses tax:
$30000*0.21%=$6300
The tax on the parents is 128800*0.21%=$27048
Therefore the total tax paid is $45888.
Your gross income was $295,000.
Your taxes are $45888.
Your net income is $249,112.
Your retirement saving is $65000.
You are left with $184112 for the year or $15342/month!
After 25 years of work putting in $65000/year at a compounded interest rate of 6% in a retirement savings account, your total saved will be $3,780,164 earning $226,809 interest per year which you could live off without touching the principal ever again! You would pay taxes on whatever you take out from this savings account but you will still be close to around the $15000/month that you were used to. Also, don't forget all of the money which you didn't spend out of the $15000/month that you were earning throughout your life.
With this financial plan you only end up paying 15% taxes!
Good luck!