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View Poll Results: What %age of your gross salary is contributed to tax deferred retirement accounts
0%, nothing, nada 4 4.40%
1% to 10% 9 9.89%
11% to 20% 31 34.07%
21% to 30% 25 27.47%
31% to 40% 8 8.79%
41% to 50% 6 6.59%
More than 50% 8 8.79%
Voters: 91. You may not vote on this poll

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Old 09-21-2012, 11:53 AM   #21
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Originally Posted by MasterBlaster View Post
If you want to know how well others on this thread are funding their retirement, then this poll won't tell you what you want to know.

(Per the thread title) Why are we restricting "retirement" funding to only tax deferred accounts ?

The quoted 10-15 percent advice (per the advisor gurus) includes any employer match.

You'll find though that many on this forum, when you include all funding, save close to 50 percent towards retirement.
I'm interested in the %age of salary going into tax deferred savings......I realize that that is not the only way people fund retirement.
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Old 09-21-2012, 01:52 PM   #22
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I've got mine down to 10% - just enough to get the company max match. After 30 years in the 401k with max contributions most years I don't need anymore tax deferred. At this point I need to emphasize taxable accounts to bridge ER and give some income tax flexibility in future years.
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Old 09-21-2012, 02:31 PM   #23
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Knowing that my retirement pension income was in the same tax bracket that I worked in, I saw know benefit for pretax investing since no matches were given. I do fully fund my HSA now, but that is it unless next year, I need to defer income to capture a tax credit, then I will put some in it off my part time job earnings.
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Old 09-21-2012, 02:36 PM   #24
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Back before ER, I was contributing the max dollar amount which was on the order of 18% at the time IIRC.

Not to throw a wet blanket on the idea of deferred savings, but it's a good idea to know how current tax law will affect withdrawals and make a guess at how future tax laws might affect withdrawals. Due to good deferred savings, a half decent match and amazing results on company stock in the plan, I ended up with way more than half my stash in deferred accounts. My main "j*b" since ER has been figuring out how to get money out of this stash without giving most of it to the gummint. It ain't easy. My point is that deferring taxes is a strategy which can backfire if you don't manage it carefully. Only a word to the wise as YMMV.
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Old 09-21-2012, 03:06 PM   #25
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Back before ER, I was contributing the max dollar amount which was on the order of 18% at the time IIRC.

Not to throw a wet blanket on the idea of deferred savings, but it's a good idea to know how current tax law will affect withdrawals and make a guess at how future tax laws might affect withdrawals. Due to good deferred savings, a half decent match and amazing results on company stock in the plan, I ended up with way more than half my stash in deferred accounts. My main "j*b" since ER has been figuring out how to get money out of this stash without giving most of it to the gummint. It ain't easy. My point is that deferring taxes is a strategy which can backfire if you don't manage it carefully. Only a word to the wise as YMMV.
Exactly what I'm running into. I think that the issue of too much tax deferred would affect this group much more than the general population. The fact that the majority of people save too little is much publicized while chronic LBYM people are a minority that don't get the attention.
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Old 09-21-2012, 03:18 PM   #26
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My point is that deferring taxes is a strategy which can backfire if you don't manage it carefully. Only a word to the wise as YMMV.
If you end up having to do large RMDs tax deferral might well be a bad move and there's always those pesky unknown future tax rates. But tax deferral does give the advantage of compounding tax free gains. I'm in a situation where I earn far more than I spend so saving to tax deferred accounts greatly reduces my current tax bill, in fact without saving to tax deferred accounts my tax rate would be 23%, maxing them out I paid 13% tax last year. I also save after tax to fund my ER before 59.5 and the strategy then becomes reducing the size of the tax deferred accounts by ROTH rollovers to use up my deductions and exemptions and the lower rate tax brackets. This is a situation when i-orp.com becomes your friend.
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Old 09-21-2012, 03:30 PM   #27
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Exactly what I'm running into. I think that the issue of too much tax deferred would affect this group much more than the general population. The fact that the majority of people save too little is much publicized while chronic LBYM people are a minority that don't get the attention.
The deferral right now is still helping since we're in the high bracket. Taxes are absolute murder right now. It won't get worse. That's why we're maxing tax deferred saving.

If I stay till 55, my plan allows withdrawals then and I'll do it. If I leave before 55, I'll have to do some modeling and look into 72(t) withdrawals, especially if we don't take any PT work.

Does that plan make sense, or I'm I off the rails?
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Old 09-21-2012, 04:14 PM   #28
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If I include my employer 401K match (fully vested so it's all mine), right around 25% for the household. I wouldn't include unvested company matches, though. And this only includes 401K and Roths, not other savings and investments.
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Old 09-21-2012, 04:26 PM   #29
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The deferral right now is still helping since we're in the high bracket. Taxes are absolute murder right now. It won't get worse. That's why we're maxing tax deferred saving.

If I stay till 55, my plan allows withdrawals then and I'll do it. If I leave before 55, I'll have to do some modeling and look into 72(t) withdrawals, especially if we don't take any PT work.

Does that plan make sense, or I'm I off the rails?
Your high income is certainly a consideration now. Overall your plan sounds workable, if your willing to be tied to the 72t rules. I found that my plan allows withdrawals after 55 but only as a one time deal. Then you need to roll it over to an IRA or take out an annuity. However the IRA comes with the 10% early w/d penalty and an annuity is out of the question at this age. The 72t option is too restrictive for me , I like to stay flexible with my future plans. It's something we need to figure out for our own circumstances
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Old 09-21-2012, 04:40 PM   #30
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I always maxed out my TSP and Roth IRA, and then put aside more non-tax-advantaged money (after taxes) than both of those combined, making a total of around 75%. I put the after-tax money either towards paying off my house or my taxable portfolio. But then, that was because I had to put myself on the retirement-preparation fast track due to messing things up earlier in my life.

It all worked out in the end. Whether I saved fast or slow, I'm retired now and loving every moment of it.
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Old 09-21-2012, 04:51 PM   #31
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W2R - Yeah the Roth is almost always a good choice .
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Old 09-21-2012, 04:53 PM   #32
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We're deferring about 23% to 401ks plus another 1% or so to the HSA. All other savings is in the form of after-tax contributions.
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Old 09-21-2012, 05:52 PM   #33
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I have maxed out 401K, over 50 catch up & HSA, but this is under 10% because of the cap limitations. Any other pre-tax options involve risks I am unwilling to take.
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Old 09-21-2012, 06:03 PM   #34
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The last few years I was working, I put a little over 50% into 403(b), 457 (deferred compensation), and Roth accounts. The 457 plans are a blessing, because for university employees (in Illinois, anyway) the notion of any "employer match" is a fantasy, there is none - so I just paid myself one and periodically sold taxable investments to make up the difference. Another plus is that you can start taking money from a 457 plan on separation, there is no 59-1/2 age restriction (which is still a few years away for me).
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Old 09-21-2012, 06:26 PM   #35
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True. We have a tax deferred annuity that you can withdraw from any time you like, without penalty, after age 59.5. The catch? Gains are distributed before principal!

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Quote:
Originally Posted by Koolau View Post
Not to throw a wet blanket on the idea of deferred savings, but... deferring taxes is a strategy which can backfire if you don't manage it carefully. Only a word to the wise as YMMV.
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Old 09-21-2012, 06:57 PM   #36
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My advice is to ONLY contribute up to the match (that's free money that you should grab!) and not a penny more.

Why save taxes today on a small amount of contribution, only to pay taxes (probably at a higher rate no matter what your politics are (we have a 16 TRILION debt load) on a much larger account balance.

If given the choice, a savvy farmer would much rather pay income taxes on the low cost of his bags of seed now, rather than on the larger value of his truckloads of harvest later on. It’s pretty simple, deferred taxes equals compounded taxes. So whose retirement are you planning for -- yours… or Uncle Sam’s?

Just my professional advice... mark
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Old 09-21-2012, 08:05 PM   #37
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I only contribute to a 401k plan to its maximum limits. I guess I invest a lot more net per year in CDs, not sure how much exactly - maybe in the $200k+ range, not sure .
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Most financial advisers suggest that we put 10% or 15% towards retirement. So how much do you contribute? and where does it go.

I'm lucky to be employed by a state university so I have access to a 457, 403b and 401a plans and as I'm over 50 I can contribute $22.5k a year to the last two.
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Old 09-21-2012, 08:08 PM   #38
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Our current personal contributions to employer-managed retirement accounts are at 27% of our gross income. Mine are going into a Roth 403b, so will be tax free at retirement.

We contribute the max we can to Roth IRAs -- depends on how much time we each spend working in the US every year (me usually 1 week, DH usually 1-3 weeks, depends on meeting schedules). When you add those amounts in, this past year our contributions went up to about 32%.

We also get an employer contribution to our accounts. Mine is automatic (not matching -- I get it whether or not I contribute myself), currently 7.5% of salary, will increase to 10% of salary on Jan 1. DH's is a 2% match. When you add those in and bump our gross up accordingly, this past year it puts us at about 35% of gross.

We are also funding our kids college funds. And we have extra cash savings every month. Add it all up and we are saving 45-50% of our gross. We have a relatively low tax bill as most of our income is excluded from US income tax due to the Foreign Earned Income Exclusion.
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Old 09-21-2012, 10:23 PM   #39
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Another plus is that you can start taking money from a 457 plan on separation, there is no 59-1/2 age restriction (which is still a few years away for me).
I see my 457 plan as part of my post ER and pre-59.5 spending. I get to save in it tax deferred, all the gains are tax deferred and I can take income from it anytime after separation. No worries about a 10% penalty prior to 59.5.
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Old 09-21-2012, 10:34 PM   #40
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My advice is to ONLY contribute up to the match (that's free money that you should grab!) and not a penny more.

Why save taxes today on a small amount of contribution, only to pay taxes (probably at a higher rate no matter what your politics are (we have a 16 TRILION debt load) on a much larger account balance.

If given the choice, a savvy farmer would much rather pay income taxes on the low cost of his bags of seed now, rather than on the larger value of his truckloads of harvest later on. It’s pretty simple, deferred taxes equals compounded taxes. So whose retirement are you planning for -- yours… or Uncle Sam’s?

Just my professional advice... mark

I don't see this at all if you manage your tax deferred accounts correctly. If you have a relatively large salary and an ability to defer large amounts of income why not do it? I reduce my current tax rate from 23% to 13% by contributing the max to my tax deferred retirement accounts and that money grows tax deferred too. When I retire I can then manage the rollovers/payouts to keep my taxes low and still maintain tax deferred growth. When RMDs kick in I will adjust my payments from other accounts to minimize the tax due. my goal is to keep a large fraction of my money compounding tax free and to manage my income to keep the tax I pay to below 15% every year. Obviously there is the wild card of future tax rates to consider too, but as I expect my post retirement income requirement to be about 30% of my current income I'm happy to defer tax.
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