Chapter 1: Taking Inventory at 55
The worksheets from Chapter 1 of Fifty-Five. Type your own numbers, or try an example from the book to see how each one works.
The taxable part of a sale
When you sell an investment in a taxable account, only the gain is taxed. This finds your gain, or shows that the sale is a loss.
The formula: What it's worth when you sell − What you paid for it = Your gain
The calculator needs JavaScript. The paper worksheet below does not: it is the same arithmetic, written out.
The paper worksheet
What it's worth $__________ − What you paid $__________ = Your gain $__________
Walk through it, step by step
- Find the most recent statement for the account.
- Find the line for the investment you plan to sell. Write its current value on the first blank.
- On the same line, find the cost basis. Write it on the second blank.
- Subtract the second blank from the first. On a calculator: type the first number, press −, type the second number, press =.
- Write the answer on the last blank. That is your gain.
- If the calculator shows a minus sign in front of the answer, you have a loss, not a gain. Nothing is taxed on this sale.
- Selling only part of an investment? Ask the brokerage for the basis of just the shares you sell. Inherited the investment? Its basis is generally its value on the day the owner died. Check that the brokerage has that number before you sell.
Check your answer
- Add your gain back to what you paid. You should get what the investment is worth. For Carol: $30,000 + $50,000 = $80,000. It matches, so the math is right.
This worksheet uses only the numbers you type. It has no government figure built in.
Your pre-tax share
What part of your savings will be taxed as income when it comes out.
The formula: Pre-tax total ÷ All your savings × 100 = Your pre-tax share (%)
The calculator needs JavaScript. The paper worksheet below does not: it is the same arithmetic, written out.
The paper worksheet
Pre-tax total $__________ ÷ All your savings $__________ × 100 = Your pre-tax share ______%
Walk through it, step by step
- On your one-page list from Step 1, add up every account marked Pre-tax. Write that total on the first blank.
- Add up every account on your list, one bucket at a time, the way the examples do. Write that total on the second blank.
- On a calculator, type the first blank, press ÷, type the second blank, press =.
- Press ×, type 100, press =.
- Round to a whole number. If the first digit after the decimal point is 5 or more, add 1 to the whole number. If it is 4 or less, leave the whole number alone. Drop the decimals either way.
- Write the result on the last blank. That is your pre-tax share.
Check your answer
- Your answer must be between 0% and 100%. If it is bigger than 100, you divided in the wrong order. Divide the smaller number (pre-tax) by the bigger number (all savings).
- Work out the share for every bucket the same way. Added together, they should come to about 100%. Carol's add up to 81% + 5% + 11% + 2% = 99%. Rounding each share can leave the total a point above or below 100. That's fine.
This worksheet uses only the numbers you type. It has no government figure built in.
Your first required withdrawal
An estimate of the first withdrawal the law will make you take from your pre-tax accounts. It is called a required minimum distribution, or RMD.
The formula: Pre-tax balance ÷ IRS factor = Your first RMD
The calculator needs JavaScript. The paper worksheet below does not: it is the same arithmetic, written out.
The paper worksheet
Your pre-tax balance $__________ ÷ Your IRS factor ______ = Your first RMD $__________
Walk through it, step by step
- Find your birth year in the table: born 1951 to 1959, RMDs start at age 73 and the factor is 26.5. Born 1960 or later, RMDs start at age 75 and the factor is 24.6. Write down your RMD age and your factor.
- Write your pre-tax total on the first blank. Use the Pre-tax total from your pre-tax share worksheet. If you are planning for a future year, use the balance you expect to have then. Using today's balance shows the size of the withdrawal at today's balance. It isn't a forecast.
- Write your factor on the second blank: 26.5 or 24.6.
- On a calculator, type the first blank, press ÷, type the factor, press =.
- Round to whole dollars. If the first digit after the decimal point is 5 or more, add $1. If it is 4 or less, leave it. Drop the decimals.
- Write the result on the last blank. That is your estimated first RMD.
- This is an estimate for all your pre-tax accounts together. In real life, each account figures its own RMD from its balance on December 31 of the year before. If you're married, do this worksheet once for each spouse, with that spouse's accounts and birth year.
- If your spouse is more than 10 years younger than you and is your only beneficiary, a different IRS table applies. Ask your plan.
Check your answer
- Multiply your answer by your factor. You should get back very close to your balance. For Carol: $64,715 × 24.6 = $1,591,989. That is within $11 of $1,592,000, so the math is right.
- Your first RMD should be about 4% of your balance: about $3.77 to $4.07 for every $100. If your answer is much bigger or smaller, check that you divided by the factor and did not multiply.
Figures this worksheet uses, and where they come from: Uniform Lifetime Table factors: 26.5 at age 73 and 24.6 at age 75 (IRS, Internal Revenue Bulletin 2024-33, T.D. 10001); RMD starting ages: 73 if born 1951 to 1959, 75 if born 1960 or later (IRS, Internal Revenue Bulletin 2024-33, T.D. 10001).