If it sunsets, the exception reverts to 2017 amounts plus inflation, probably around $7 million per person/$14 million per couple.
It’s still large enough that the vast majority of couples will owe no estate tax.
Of course depending on who controls Congress and the White House, it could get changed back to $1 million like it was not too long ago.
I don’t know enough to argue one way or the other, but $1 million seems too low for either party. I realize that anything could happen.
Technically it’s the estate that benefits, since it’s the estate that pays the tax.
You have to do some work structuring your asset ownership to be able to take advantage of the full amount for each person, there’s no actual “couples amount”, it’s just double the individual if you set things up properly.
All the numbers are too high for me to worry about. But… it did get me thinking about examples saying “wife inheirits” - what if all of their assets were co-owned?
The surviving spouse inherits the deceased spouse’s share and becomes sole owner. There’s an unlimited exemption for spouses so no estate tax would be due.
I didn’t know about the portability thing, that’s a very interesting article. Thanks for posting that.
What happens if one spouse dies before 2026? If you file the portability, does it mean you get $12 M exemption? When the second spouse dies after 2026, is the total exemption $12M + $6M?
I believe that surviving spouse also gets a step up in basis on the decedent’s half.
If a community property state, full step up of all community property assets upon death of first spouse. And then another step-up upon the death of the second spouse.
To answer a wage earning comment on the thread somewhere, ‘to be wealthy enough’ - and honestly it is not how much you earn but how you can build up your wealth IMHO - here is a discussion on top 1% of earnings in specific states.
In my opinion it’s not even building up your wealth, but how much you’re going to spend in retirement. Some can be happy on MUCH less than others.
Not only money, but health, and other QOL factors. If your family is a mess for example.
But some on this thread are interested in income and ‘wealth’ indicators, so I thought I would throw this article in.
One living in less expensive areas, one can often live above the general standard of living.
There are several different issues. The article is talking about 99th percentile income , following up on a survey about feeling “financially secure.” Feeling financially secure involves more than how your income compares to residents in your state, which contributes to why there was such a wide variety of answers in the survey. ~Half of survey persons thought under $100k was enough to feel financially secure, while 8% said they needed over $1M.
However, the title question of this thread “how much do you think you need to retire” has much more to do with the ratio of your withdrawable net worth to your expected future retirement expenses, than income. Income and net worth are correlated, but can be very different, particularly after a lifetime of saving or not saving for retirement.
When most people have an increase in income, their expenses go up rapidly, rather than savings. This can be especially problematic if the high income does not continue. For example, pro football players typically have a 99th percentile income. The NFL and SI both found that ~80% of pro football players go bankrupt or were in “severe financial stress” within a few years after they stop playing professionally. The numbers aren’t much better for lottery winners. It’s been reported that between 1/3 and 70% of lottery winners go bankrupt within a few years of their prize.
In contrast, the Millionaire Next Door survey found that nearly half of millionaires (by net worth) had <$100k household income. A separate survey found 1/3 of millionaires have never had a household income of >$100k.
Yes.
On the topic of “anticipating future spending in retirement” (agree - that’s so, so key to determining if you have enough saved/planned for!)… can I ask how much people generally budget per year for travel in retirement?
We met with a financial planner recently (yay!) and are trying to make our anticipated retirement expenses more realistic (I think we waaay underestimated for our first meeting! 
).
Right now hub & I don’t travel a whole lot (a singe one week vacation a year w/family - usually - plus a few 4-5 day trips to move daughter to college, etc.).
But when retired seems like more travel would be great. Thinking at least two plane-flight USA trips a year, a few car trips (camping etc.) and perhaps one or two longer overseas trips? That seems pretty extravagant but looking into building up travel points, frugal travel options, etc.
Curious what others have budgeted? Thanks!
I don’t know the exact amount…but we can travel once a month if we want to. Some of these are car trips to visit family so not all that costly. Last year, it seemed like we were taking a plane trip every month (stateside only). But this year has been quieter. We haven’t done an international trip…yet.
We budgeted about $10,000 per year, after tax. We discovered that we didn’t actually need as much as we thought, overall, and we reduced our monthly draw by $1,000 after tax. Covid changed a lot of our habits, and we haven’t gotten back to traveling. I feel like the $10k would give us more than enough if we were to resume traveling, though.
Hmmm, we haven’t set a budget. We travel a couple of times a year stateside, once to see friends and a second trip to see the kids. We are planning for a big trip to Paris in 2025.
We really really want to up our travel after retirement. We’re hoping to budget $30K/year.