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Old 03-08-2018, 02:06 PM
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Klaymen Klaymen is offline
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Originally Posted by E View Post
2. I still agree with my 2006 self on future taxes and believe the current "tax reduction" is mostly short-term illusion.
I shifted my 401k to 50% Roth and should probably shift it to 100% Roth and enjoy the 12% marginal tax rate.

I think it will be interesting in 10 years when the temporary component of the tax cuts will be set to expire. Will our situation be bad enough and will we have the right people in office so that it is allowed to expire? That will probably be the first step towards higher tax rates in this country.

$18,500/yr x 3% tax savings = $555/yr. Of course that benefit could compound.

My liquid retirement assets are approximately:
49% taxable IRA/401k accounts
35% Roth IRA/401k accounts
15% investment accounts whose gains are taxable
1% HSA accounts

I'm just thinking to myself here. I retire and withdraw $60,000. 35% of that comes out of a Roth, so $39,000 is non-Roth. $24,000 standard deduction so $15,000 is taxable. That is taxed at the 10% rate, so $1,500. I can live with that.

It could all certainly change. I would like to retire at or before age 60 with $2M+ of retirement assets, and I think that watching how this tax thing unfolds in under 10 years will have a big impact on exactly how soon retirement day arrives.

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Old 03-08-2018, 03:08 PM
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E E is online now
Eddie Smith
Join Date: May 2003
College: UGA
Posts: 9,247

Originally Posted by Klaymen View Post
It could all certainly change.
This is why I always take the known quantity of today's tax savings. Future tax law is extremely uncertain and likely to become less predictable (change more often). The net effect of tax law is also extremely complex and well beyond our control as individuals. Superficial tax brackets are only the surface -- for example Congress decided to change how inflation is calculated so that people will be pushed into higher tax brackets faster in the future.

All of this uncertainty causes me to greatly discount any possible tax benefits that are more than, say, 5 years out. I just think it's more of a wishing exercise than a forecast.

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Last edited by E; 03-08-2018 at 04:24 PM..
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Old 03-08-2018, 03:40 PM
extrovertedactuary extrovertedactuary is offline
Join Date: May 2012
Location: West of Nowhere
College: State
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Originally Posted by E View Post
1. Don't listen to my 2006 self's advice on 401k contribution maximization. Definitely max it out to the IRS limit if you can.

2. I still agree with my 2006 self on future taxes and believe the current "tax reduction" is mostly short-term illusion.

3. The internet's memory is amazing.

4. How many people in this thread have retired since 2006?
Cool to see you two still check this. I'm just a 28 year old new Fellow, no wife and no kids. My federal withholding decreased by over $130.00 last paycheck. An accountant in my family calculated my estimated savings this year at ~$3,500.

It appears my work has a Roth option in addition to the generous contribution the company currently provides on a pre-tax basis. I must research more into the mega backdoor Roth, as I make too much now to contribute the full amount of money to a regular Roth IRA.

Hope retirement is good, Klaymen. Keep it real, E.

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