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re: If you could rewind the clock and start over...
Posted on 1/31/14 at 11:46 am to LSUengineer12
Posted on 1/31/14 at 11:46 am to LSUengineer12
quote:
So recently, I dropped my 401k contributions at work down to just my match. 3%. And maxed out my roth which comes out to be 14% of take home.
If you expect a higher tax bracket in retirement than you are in now, you're doing it correctly.
If you expect to make less in retirement than you do now, you're doing it wrong, and should max out your tax deferred side, now.
That is the A/B analysis for traditional versus ROTH. Unless you are like me and get additional, direct benefits from a lower taxable income now, than the raw reduction of taxation - I get lowered student loan payments, based on my AGI - so, I am heavier on traditional than ROTH.
Also, if you're paranoid, the government can come in and take the ROTH tax exemption away at any time. It would be much harder for them to do that to traditional IRAs, retroactively. You're taking a chance either way.
This post was edited on 1/31/14 at 11:47 am
Posted on 1/31/14 at 12:08 pm to Ace Midnight
quote:
If you expect a higher tax bracket in retirement than you are in now, you're doing it correctly.
If you expect to make less in retirement than you do now, you're doing it wrong, and should max out your tax deferred side, now.
I just split it because I figure this is essentially unknowable for anyone under the age of 60. I mean, what you're saying is true, but so is: "If you expect the little ball to land on a red number, put your money on red..."
Posted on 1/31/14 at 1:30 pm to Ace Midnight
FTR I'm 24. In the 2nd year of my career as a Civil Engineer. Don't have my P.E. yet, and aspire to own my own firm one day. Regardless, I'd imagine I will be in a higher tax bracket upon retirement, but who knows.
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