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Message
Reading material request - stuck in the W2 trap
Posted on 12/31/25 at 9:19 am
Posted on 12/31/25 at 9:19 am
I feel like I learn a lot from people who have been in my boat before - years or even decades in the past.
My wife and I are both W2 employees. I’m 40, she’s 37. We earn well - about 500k but it wasn’t always like that. Our income doubled a few years ago. We are saving well but we are getting killed with taxes. We both enjoy our careers even though we both work long hours.
We have been putting a lot into our retirement savings and we have one rental property. Our net worth is just passing $1m or so and I’m actually pleased with what we are saving every month even though we have a long way to go before we are comfortable…..
We are trying to figure out how we are going to manage tax brackets and preserve capital after we retire.
What are some good books that we can read up on about retirement planning that is a little more strategic for someone in our situation? Something deeper than just “save save save” or “start a business”? Maybe something that explores ways to avoid getting killed with taxes later in life?
My wife and I are both W2 employees. I’m 40, she’s 37. We earn well - about 500k but it wasn’t always like that. Our income doubled a few years ago. We are saving well but we are getting killed with taxes. We both enjoy our careers even though we both work long hours.
We have been putting a lot into our retirement savings and we have one rental property. Our net worth is just passing $1m or so and I’m actually pleased with what we are saving every month even though we have a long way to go before we are comfortable…..
We are trying to figure out how we are going to manage tax brackets and preserve capital after we retire.
What are some good books that we can read up on about retirement planning that is a little more strategic for someone in our situation? Something deeper than just “save save save” or “start a business”? Maybe something that explores ways to avoid getting killed with taxes later in life?
This post was edited on 12/31/25 at 9:22 am
12
Posted on 12/31/25 at 9:46 am to dewster
a good CPA can help you with this
Posted on 12/31/25 at 9:52 am to dewster
Talk to a cpa.
When you say you are “getting killed with taxes” what exactly does that mean? Do you pay a lot in April every year?
Or are you just concerned with future taxes due to being a high earner?
Are you maxing your 401k contributions?
When you say you are “getting killed with taxes” what exactly does that mean? Do you pay a lot in April every year?
Or are you just concerned with future taxes due to being a high earner?
Are you maxing your 401k contributions?
Posted on 12/31/25 at 11:14 am to dewster
To be honest, as a CPA, your W2 trap is just that - a trap. You're fed this idea that by having a high quality/paying job you're doing your time and service yet you're getting raked over the coals from an income tax perspective. What I'd recommend, as another has said, meet with a CPA to talk about other passive income strategies you could explore to give you an opportunity to offset a significant portion of your tax liability. There are a few low hanging fruit ideas but those are not for everyone.
As to your request of a book - The Lifestyle Investor & The Power of Passive Income.
As to your request of a book - The Lifestyle Investor & The Power of Passive Income.
Posted on 12/31/25 at 11:48 am to Rendevoustavern
Author of Power of Passive income? I see multiple options.
Thanks
Thanks
Posted on 12/31/25 at 12:10 pm to dewster
Buy short term rental
Airbnb it
Make money/lose money - who cares
Write offs
Airbnb it
Make money/lose money - who cares
Write offs
This post was edited on 1/2/26 at 2:23 am
Posted on 12/31/25 at 12:42 pm to dewster
Dewster- Take a moment and realize you are killing it. If you are in a trap, 99% of the worlds population would love to trade with you. With the numbers you gave, you should be thinking about early retirement. You should be able to pile up a ton of cash and walk away to do whatever you dream at a young age.
I am older than you more net worth but less income. I think you are thinking of things a little backwards. Taxes are killing you now (during peak earning years) and won't kill you in retirement if you plan correctly. Most retirees pay shockingly low levels of taxes. Obviously max out 401k's to lower taxable income, Max out roth (backdoor for you), HSA if an option, and pile cash in a brokerage account. When you retire you can control your income level by where you take the money out and then start Roth conversion ladders at very low tax rates. Cap gains in the brokerage account with be taxed favorably as well. With a little planning you can really lower the tax burden in the future. RMD's will be a concern, but that is a good problem to have and a CPA can help.
As for the book suggestion, I like
Congrats
I am older than you more net worth but less income. I think you are thinking of things a little backwards. Taxes are killing you now (during peak earning years) and won't kill you in retirement if you plan correctly. Most retirees pay shockingly low levels of taxes. Obviously max out 401k's to lower taxable income, Max out roth (backdoor for you), HSA if an option, and pile cash in a brokerage account. When you retire you can control your income level by where you take the money out and then start Roth conversion ladders at very low tax rates. Cap gains in the brokerage account with be taxed favorably as well. With a little planning you can really lower the tax burden in the future. RMD's will be a concern, but that is a good problem to have and a CPA can help.
As for the book suggestion, I like
Congrats
Posted on 12/31/25 at 1:28 pm to Penn
At 500k in w2 wages the rental losses will likely be limited and stacked for the future when they move back to lower tax brackets.
Not bad advice but, again, make sure you talk to a cpa before doing this so they can explain what it will look like.
Not bad advice but, again, make sure you talk to a cpa before doing this so they can explain what it will look like.
This post was edited on 12/31/25 at 1:29 pm
Posted on 1/1/26 at 8:19 am to Milesahead
Posted on 1/1/26 at 10:10 am to dewster
Married couple can withdraw $80k per year tax free in retirement. Thats all I got baw
Posted on 1/1/26 at 10:25 am to dewster
Your current income and taxes has very little to do with taxes in retirement if you are going to be withdrawing income from long term investments. You simply invest so that you create as little taxable income beyond what you want as possible.
As someone that owns rental property, I would rarely suggest a long term rental to someone with a household income over $300k or so. You know how to make a good income, there’s no reason to add a stressor and 2nd job to your life imo. Invest in yourself or a brokerage account. I understand the reasons, I just don’t think it’s personally worth it.
As someone that owns rental property, I would rarely suggest a long term rental to someone with a household income over $300k or so. You know how to make a good income, there’s no reason to add a stressor and 2nd job to your life imo. Invest in yourself or a brokerage account. I understand the reasons, I just don’t think it’s personally worth it.
Posted on 1/1/26 at 11:22 am to dewster
Thank ya’ll for the suggestions. I have been putting off working with a CPA. Might be time.
Posted on 1/1/26 at 4:36 pm to dewster
quote:
Thank ya’ll for the suggestions. I have been putting off working with a CPA. Might be time.
Find one that specializes in tax strategies. CPAs are not created equally. Some just want to make sure you pay what you're 'supposed' to. The good ones will offer alternatives and know people who are very familiar with legal loopholes that our beloved congressional representatives codify so they can avoid taxes. These can be quite complex but available to everyone if you have the right advisors.
Posted on 1/2/26 at 5:39 am to Penn
quote:
Buy short term rental Airbnb it Make money/lose money - who cares Write offs
I doubt this is as carefree an easy as a few keystrokes make it sound.
AirBNB seems similar to running a restaurant. One stay at a time. Worst customer is the loudest.
Posted on 1/2/26 at 9:03 am to Penn
quote:Holy shite, what terrible advice.
Make money/lose money - who cares
Write offs
This post was edited on 1/2/26 at 9:05 am
Posted on 1/2/26 at 9:19 am to cgrand
quote:
a good CPA can help you with this
Not trying to hijack the thread, does anyone have recommendations for a good CPA to help with tax/retirement strategies in the Baton Rouge area?
Posted on 1/2/26 at 9:58 am to castorinho
Posted on 1/2/26 at 10:56 am to Hickok
Oh Houston area?
Posted on 1/2/26 at 11:52 am to dewster
quote:
I feel like I learn a lot from people who have been in my boat before - years or even decades in the past. My wife and I are both W2 employees. I’m 40, she’s 37. We earn well - about 500k but it wasn’t always like that. Our income doubled a few years ago. We are saving well but we are getting killed with taxes. We both enjoy our careers even though we both work long hours. We have been putting a lot into our retirement savings and we have one rental property. Our net worth is just passing $1m or so and I’m actually pleased with what we are saving every month even though we have a long way to go before we are comfortable….. We are trying to figure out how we are going to manage tax brackets and preserve capital after we retire. What are some good books that we can read up on about retirement planning that is a little more strategic for someone in our situation? Something deeper than just “save save save” or “start a business”? Maybe something that explores ways to avoid getting killed with taxes later in life?
Wife and I are in the same boat. I just bend over and take it up the arse for the last 12 years or so.
Posted on 1/2/26 at 12:22 pm to dewster
W2 high income earners just have to accept that you will play a high marginal rate and there is very little that can be done about it. Max 401K, utilize FSA for childcare expenses if you have them, and max a HSA…that’s basically your options without getting more exotic like the creation of a business.
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