New Thinking
Recycles dryer sheets
As I look into the future, it seems evident to me that tax rates must go up..I just don't see MAJOR changes to Medicare, SS, or Medicaid..The boomers hitting retirement will result in even higher deficits going forward..Whatever your politics might be, what you saw with the SS debate last year was that it was tremendously difficult to change an entitlement program even for those who are not on the cusp of retirement..I just see higher and higher tax rates..I also see some means testing for Medicare..I doubt that you will ever see it for SS as it would be a disincentive for people to save for retirement...and the onus is on the individual to save since DB pensions are fading away..But with Medicare, I do see higher premiums being paid by those who have higher income..In fact, it is not known by many but the recent Medicare law (which includes prescription drugs - Part D) includes higher premiums for those with AGI over a certain amount...Bush's proposal this week included more of the same..I do see this coming more and more to fruition..I don't see Medicare being cut drastically because retireee healthcare paid by employers is vanishing and the AARP and others are very powerful voting blocks and only getting stronger..Therefore, the only answer may be to raise taxes and raise premiums for those with higher incomes....The bottom line is that I think getting as much income into Roth will be a very valuable exercise..Get your AGI below $100k and convert to Roth..This will make your nest egg last longer..Also, contribute to a Roth 401k if your employer will offer it..The government could always choose to tax Roth but I doubt that would ever happen as politicians would be run out of office..What is more probable, but still highly unlikely is that Roth income becomes "countable" when determining how much of one's SS is taxed and what their Medicare premium is.
I would be interested in your own thoughts. Have a good day.
I would be interested in your own thoughts. Have a good day.