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re: Company doesn't offer any retirement benefits, what to do?
Posted on 8/21/13 at 1:34 pm to Broke
Posted on 8/21/13 at 1:34 pm to Broke
Ummm.
Yeah.
I never hinted otherwise.
Look at what you quoted again, especially in the context of who I was replying to.
I was arguing that there was no benefit to putting more money aside now because pre tax dollars ramps up compound interest.
Given the same tax rate, pre tax dollar investments and post tax dollar investments are the same.
Yeah.
I never hinted otherwise.
Look at what you quoted again, especially in the context of who I was replying to.
I was arguing that there was no benefit to putting more money aside now because pre tax dollars ramps up compound interest.
Given the same tax rate, pre tax dollar investments and post tax dollar investments are the same.
This post was edited on 8/21/13 at 1:35 pm
Posted on 8/21/13 at 2:04 pm to Volvagia
quote:
I was arguing that there was no benefit to putting more money aside now because pre tax dollars ramps up compound interest.
quote:
Given the same tax rate, pre tax dollar investments and post tax dollar investments are the same
10% pre tax will ramp up compound interest faster than 10% of post tax income, would it not?
So the tax benefits on Roth savings would have to be equal or greater than the benefit of 30+ years of that advantage (I'm assuming the OP is about a young person starting their career).
I don't doubt that tax rates will probably be higher in the future even if people are in a lower tax bracket when they retire....and there's always the possibility that your income can grow beyond the limits allowed for Roth contributions in the future. That said, I maximize my traditional 401K to the point my company matches, and contribute the annual maximum to my Roth IRA to take advantage of both opportunities.
If you don't have the ability to diversify your tax liability by doing both, I just don't see an obvious advantage in prioritizing Roth contributions. I'm not saying you are wrong. I've been debating this myself lately.
This post was edited on 8/21/13 at 2:21 pm
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