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re: Should I keep contributing to my RothIRA
Posted on 1/30/18 at 9:33 am to jimbeam
Posted on 1/30/18 at 9:33 am to jimbeam
quote:
If you're not going to "fill up" the lower tax bracket in retirement (with your withdrawals), why not save on taxes (maybe 22% now) pay the lower taxes (12%) in retirement?
Correct, advice is different for anyone that earns $150k or so plus most of their life and will need that much in retirement.
But for the average person that earns $80-120k ish or a little more you will likely pay very close to the same amount in taxes now or the future. I've heard taxes are 'going up' for 25 years yet they've not really changed.
Most of the people that talk about taxes going up are frankly not very good at business or finances, because most people that are delay taxes as much as possible. If you can delay paying 25% now for another 40 years there's basically no situation where that doesn't make sense.
Most people need less money in retirement too. No house payment, no retirement savings, etc. Removing just those 2 is generally 25-40% of someone's gross pay. That's a lot less money, and can easily drop your tax bracket considerably.
2
Posted on 1/30/18 at 10:02 am to baldona
Exactly 
Posted on 1/30/18 at 12:37 pm to baldona
quote:
But for the average person that earns $80-120k ish or a little more you will likely pay very close to the same amount in taxes now or the future. I've heard taxes are 'going up' for 25 years yet they've not really changed.
You see, comments like this are why I think some people were a little quick off the gun to get excited about the tax cuts. The Senate version leaves a lot to be desired.
It’s not theoretical anymore, bracket creep is back. Unless you are planning to retire in the next decade or so, its best to put heavier in a Roth now for the next few years than you would otherwise do.
Even if rates stay the same, it now trails inflation. In the long term, it is going to be a significant difference. Something to consider for those with ~30 year retirement horizons.
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