workburnout
Recycles dryer sheets
I was wondering what my tax rate would likely be in semi-retirement/retirement.
Could anyone who recently scaled back working give an idea as to if their tax rate went down much?
Lets say I make $100K a year now, with some deductions, and after a few more years, scale back work to making $50K and using $10,000 a year from my Roth accounts. Would tax rate likely go down much?
If my tax rate is going to be a lot lower, maybe I should stop contributing to the Roth IRA and use a traditional instead.
As of now, I have almost all retirement savings in Roth accounts. A lot I contributed from earnings each year. A lot was converted slowly throughout several years after I rolled over a previous employer's 401K to a Traditional IRA.
My effective tax rate has been 10-15 percent due to taking a lot of work deductions - around $30,000 worth.
Now, my tax rate is going to go up some this year due to changes in the tax law which mean I can not take as many business deductions as an employee as I could.
I will be able to take some as I also have a part time 1099 job for some income where I can deduct some expenses, so it's unclear how much my taxes will increase -but for certain they will this year.
I will need to wait until taxes are done for 2018 to know my effective tax rate.
After about 4-5 more years working full time, I plan to slowly scale back working a little less each year.
I will probably never totally stop working due to the fact I have old customers I worked a lot with in the past, now calling in repeat orders for which I now get paid for doing little work. Sometimes I get referrals so I would call those, but I would not prospect for new business as I do now, as that takes up a lot more work and time.
As of now, I work hard with both old and new customers, constantly developing new business - and that keeps my income up to the $100,000 a year.
If I scaled back slowly over the years, I could be to where I work 2-3 days a week and make $50,000 a year, after 7-10 more years. I would be in my early to mid-50's.
House will be paid off and little expenses, so I would let most of the Roth and taxable accounts grow, and still contribute to the Roth - I think - or maybe I should quit making Roth contributions?
I do not know if it's likely to benefit me much longer to use a Roth.
No one knows for sure what tax rates will do, but I am guessing they will go up in general.
But if my income goes down, and say in 10 yrs I'm making half what I make now - then 10 yrs after that I'm making $30,000 instead of $50,000, using money from my Roth for some income - is anything going to happen with my tax rate - up or down much?
The business expense deductions would go down proportionately with income.
Also, in semi- retirement, I could draw from my taxable non-retirement accounts if it made sense to do that - instead of taking from the Roth.
I also have some taxable investments where I make maybe $5000-10,000 a year that varies based on a little trading (short term, but not day trading) each year.
Wondering if anyone has a similar situation where they recently scaled back working or has a good idea on whether or not I'd be better off with adding to the Roth each year, or would be better with the Traditional due to likely tax rate changes?
Could anyone who recently scaled back working give an idea as to if their tax rate went down much?
Lets say I make $100K a year now, with some deductions, and after a few more years, scale back work to making $50K and using $10,000 a year from my Roth accounts. Would tax rate likely go down much?
If my tax rate is going to be a lot lower, maybe I should stop contributing to the Roth IRA and use a traditional instead.
As of now, I have almost all retirement savings in Roth accounts. A lot I contributed from earnings each year. A lot was converted slowly throughout several years after I rolled over a previous employer's 401K to a Traditional IRA.
My effective tax rate has been 10-15 percent due to taking a lot of work deductions - around $30,000 worth.
Now, my tax rate is going to go up some this year due to changes in the tax law which mean I can not take as many business deductions as an employee as I could.
I will be able to take some as I also have a part time 1099 job for some income where I can deduct some expenses, so it's unclear how much my taxes will increase -but for certain they will this year.
I will need to wait until taxes are done for 2018 to know my effective tax rate.
After about 4-5 more years working full time, I plan to slowly scale back working a little less each year.
I will probably never totally stop working due to the fact I have old customers I worked a lot with in the past, now calling in repeat orders for which I now get paid for doing little work. Sometimes I get referrals so I would call those, but I would not prospect for new business as I do now, as that takes up a lot more work and time.
As of now, I work hard with both old and new customers, constantly developing new business - and that keeps my income up to the $100,000 a year.
If I scaled back slowly over the years, I could be to where I work 2-3 days a week and make $50,000 a year, after 7-10 more years. I would be in my early to mid-50's.
House will be paid off and little expenses, so I would let most of the Roth and taxable accounts grow, and still contribute to the Roth - I think - or maybe I should quit making Roth contributions?
I do not know if it's likely to benefit me much longer to use a Roth.
No one knows for sure what tax rates will do, but I am guessing they will go up in general.
But if my income goes down, and say in 10 yrs I'm making half what I make now - then 10 yrs after that I'm making $30,000 instead of $50,000, using money from my Roth for some income - is anything going to happen with my tax rate - up or down much?
The business expense deductions would go down proportionately with income.
Also, in semi- retirement, I could draw from my taxable non-retirement accounts if it made sense to do that - instead of taking from the Roth.
I also have some taxable investments where I make maybe $5000-10,000 a year that varies based on a little trading (short term, but not day trading) each year.
Wondering if anyone has a similar situation where they recently scaled back working or has a good idea on whether or not I'd be better off with adding to the Roth each year, or would be better with the Traditional due to likely tax rate changes?
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