04-11-2015, 11:33 PM
rayray, that's a tough question because there so many variables and guesstimates involved.
I am assuming you are contributing pre-tax to the 401(k) and getting the full employer match. Considering you can contribute up to 16% of your salary pre-tax, that would be saving you quite a bit of taxes right there.
The big question would be, will you really be in a lower tax bracket when you retire? Those who've done well tax-free throughout their working life may well find that once they reach retirement age and drawing on those accounts they are in the same marginal tax bracket if not higher. Depends on where you fall within the ranges.
If you're not immediately in an equal or greater tax bracket upon retirement may find that 1.) when RMD's kick in for the 401(k) or 2.) RMD's kick in for the traditional IRA (or both), you may well end up paying more taxes when you retire. You also may end up with up to 85% of your Social Security taxable -- you'll need to check the details on this since I haven't looked at SS tax issues for a while.
I would start building a spreadsheet with guesstimates over that time frame and try jiggling the numbers. Also, did you ask your tax advisor when you took your tax info in for preparation this year?
What? You don't have a tax pro? I wouldn't do without one knowing what I know now but that's a story for a different thread and time.
I am assuming you are contributing pre-tax to the 401(k) and getting the full employer match. Considering you can contribute up to 16% of your salary pre-tax, that would be saving you quite a bit of taxes right there.
The big question would be, will you really be in a lower tax bracket when you retire? Those who've done well tax-free throughout their working life may well find that once they reach retirement age and drawing on those accounts they are in the same marginal tax bracket if not higher. Depends on where you fall within the ranges.
If you're not immediately in an equal or greater tax bracket upon retirement may find that 1.) when RMD's kick in for the 401(k) or 2.) RMD's kick in for the traditional IRA (or both), you may well end up paying more taxes when you retire. You also may end up with up to 85% of your Social Security taxable -- you'll need to check the details on this since I haven't looked at SS tax issues for a while.
I would start building a spreadsheet with guesstimates over that time frame and try jiggling the numbers. Also, did you ask your tax advisor when you took your tax info in for preparation this year?
What? You don't have a tax pro? I wouldn't do without one knowing what I know now but that's a story for a different thread and time.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan