Well, how should I look at the issue of taxes, with respect to my retirement plan. When I started, I took the conventional wisdom: tax deferred investment, on the presumption that when the account is accessed for retirement earnings, I will be in a "lower tax bracket" and pay less than if I pay taxes now and invest after-tax money. Additonally, that "after-tax money" incurs taxes on earnings every year, further lowering my investment return. There may be a flaw in that logic. If I am wildly successful in investing, I may have more income in retirement than I do now, keeping me in a similar tax bracket (Fat Chance!). Also, given the spending habits of our state and federal government, taxes are almost certain to go up for all of us soon.
So, I am taking the one step that seems appropriate in my simple mind and funding a Roth 401k. I don't get to fund a Roth IRA, given my earnings, but the Roth 401k allows me to put a portion of my total qualified plan into a an after-tax, subsequent tax-free retirement vehicle, where earnings will never be taxed (unless of course, congress closes the door), in addition to the tax-deferred earnings in my traditional 401k and my life insurance policies. From this simplistic standpoint, I'm playing both sides of the taxation issue for retirement and I'm not worrying much about an after-tax brokerage account. I'm using all the after-tax money I have to pay a mortgage, school tuition for my son, keep food on the table, etc.
I don't know for sure whether I'll have a small or large stream of income in retirement. I don't know whether taxes will be generally higher, lower or similar to today. Not being a gambling man, I am doing my best to play both sides of the field. If I'm so lucky to have a large stream of income, I won't have to worry so much about paying higher taxes, right?
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment