Join Early Retirement Today
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

Reply
 
Thread Tools Display Modes
Old 09-22-2012, 08:16 AM   #41
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,872
Quote:
Originally Posted by Stress-Free Retirement View Post

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.
Because you don't pay tax on the "much larger account balance", but on the income you draw from the account. If you know that your retirement income requirement will be substantially less than your current salary, IMHO, it's a good idea to defer tax......even given the uncertainly of future tax rates.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”

Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
nun is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-22-2012, 09:38 AM   #42
Thinks s/he gets paid by the post
photoguy's Avatar
 
Join Date: Jun 2010
Posts: 2,301
Agree with above. FIRE income is expected to be 1/5 or less of working income. So it's hard to imagine being in a higher tax bracket.

With respect to amounts, we just max out the contribution.
photoguy is offline   Reply With Quote
Old 09-22-2012, 09:54 AM   #43
Administrator
Alan's Avatar
 
Join Date: Jul 2005
Location: N. Yorkshire
Posts: 34,056
Quote:
Originally Posted by Stress-Free Retirement View Post
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
Quote:
Originally Posted by photoguy View Post
FIRE income is expected to be 1/5 or less of working income. So it's hard to imagine being in a higher tax bracket.

With respect to amounts, we just max out the contribution.


I agree with photoguy. While we were working we were in the 35% tax bracket so that is the rate at which we were deferring taxes. We've been retired 3 years now and will have access to those funds in 2 years at a much lower tax rate.
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Enough private pension and SS income to cover all needs
Alan is offline   Reply With Quote
Old 09-22-2012, 12:33 PM   #44
Recycles dryer sheets
 
Join Date: Sep 2007
Location: Chicago
Posts: 221
I'm at about 36% among ESOP, Roth401(k), RothIRA and HSA. Despite probably being in a lower tax bracket in the future, I decided to take advantage of the current tax breaks that will expire to pay Roth401k taxes now and manage my taxes in the future on withdrawal. I probably won't be in the same "tier" on income taxes in the future, but I expect all the tiers to be higher, so may be equivilent.

Next year I may go back to regular 401k for the tax benefit and put the difference in a taxable investing account. The company ESOP has ended up being a majority of my funds due to growth and lack of ability to divest, and will all be taxable on withdrawal, so the reg vs. roth contributions will help me manage taxes in coming years.
seabourne is offline   Reply With Quote
Old 09-22-2012, 12:41 PM   #45
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
steelyman's Avatar
 
Join Date: Feb 2011
Location: NC Triangle
Posts: 5,807
Quote:
Originally Posted by nun

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.
Another reason to go with 457 in Illinois is that the state (stupidly, in my opinion given the sad state of the budget) does not tax retirement income - pensions, IRA/401/403/457 withdrawals. Instead, they are clamoring to reduce pensions and health care benefits.
__________________

steelyman is offline   Reply With Quote
Old 09-22-2012, 01:41 PM   #46
Dryer sheet wannabe
 
Join Date: May 2012
Posts: 17
Approx 5.5% of my gross goes into a tax deferred retirement account; the regular IRA is my only option (no 401 or hsa, etc).
I save another 10 - 20% on top of that. (I usually calculate my numbers from my net, which is 30% towards retirement)
sunrise is offline   Reply With Quote
Old 09-22-2012, 02:54 PM   #47
gone traveling
 
Join Date: Mar 2007
Posts: 559
I'm at 401k max
gerrym51 is offline   Reply With Quote
Old 09-22-2012, 06:56 PM   #48
Full time employment: Posting here.
 
Join Date: May 2008
Location: Lexington
Posts: 714
I'm maxing it, my FIRE income is going to be 15-20% of what I'm making now. I'm at a waaaay higher tax bracket while working, to a ridiculous degree.
plex is offline   Reply With Quote
Old 09-23-2012, 11:51 PM   #49
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2008
Posts: 5,176
I am maxing out my 401k with the catchup plus the backdoor IRA, plus HSA, but I am spending my HSA, so I don't know if that counts.
tmm99 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


» Quick Links

 
All times are GMT -6. The time now is 02:05 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.