There seemed to be plenty of people who were discussing this. They retired before age 65 and were in “good enough” shape financially to make that a reasonable decision. If they had some tax diversification on their assets, they could manage taxable incomes for a while.
At the time, there was a “subsidy cliff” for older people at 4x FPL (about $73k today). People were certainly talking about how to make that work.
(I’m not so moved by EITC in this story. An income high enough to not qualify for Medicaid is about $24k. At that level, payroll taxes are $1,800 and EITC is $510.)
Uh, your “on the other hand” is precisely what my relatives did.
And like, I don’t have access to their bank records or anything, but I know they were saying that they were shooting for $2.5 million total, all of their own contributions Roth and once they’d cleared that hurdle and paid off the house they’d retire. And they retired at age 40, so I’m assuming they have several million. Perhaps less given the recent trajectory of the stock market, but I think they have a decent amount in TIPS as that is what they recommend to others.
I don’t entirely disagree. But the point is, if the goal is to make it easier for middle class people to afford EVs then having a subsidy on all new EVs under $30,000 will be vastly simpler and more effective and probably cheaper than one on EVs under $55,000 purchased by people with AGIs under $150,000.
So I assumed a couple. Now you’re specifying a “family of five”. That does change the value of the EITC a lot.
Given this additional information, I agree with YT
Retiring at 40 with 3 kids and $2.5 million of financial assets has to be extremely rare.
(I can’t help pointing out that you’re quoting the maximum value of the EITC. If they earn enough to not qualify for Medicaid, do they really get the max EITC or something closer to a refund of their payroll taxes?)
I think there’s a disconnect in that because the tax rebate is the feds, and the mandates are at the state level. Perhaps CA will offer something for folks who can’t afford, say, a $26k Bolt or whatever. I’ll be curious to see if someone can crack the $20k mark for a decent EV in the next few years.
Ok, well the adults are the decision makers, but yes they do have 3 dependent children. The kids aren’t the ones managing the money though… the grown-ups are.
I didn’t verify your assertion that $24,000 is the minimum income to avoid Medicaid. But the max income for the max EITC certainly exceeds $24,000 for three OR two kids (although the max EITC for two kids is lower), so if your statement about Medicaid is accurate then it seems that there is a window where folks with multiple kids can be simultaneously rich enough to avoid Medicaid and poor enough to get the max EITC.
Based on what I know about their hobby jobs, $24,000 seems like it’s in the right ballpark for their combined income.
I’m not sure if you’re being sarcastic or serious, but certainly taking advantage of Obamacare subsidies is part of it. I’m not sure about EITC. But a Google search of “health insurance FIRE” turned up several dozen articles and the few I clicked on all listed “get an ACA policy in retirement” as their top suggestion.