Comments on: Why You’re Likely To Be In A Higher Tax Bracket When You Retire

By: jIM

jIM — Tue, 26 Feb 2008 14:58:12 +0000

I think taxes went down more for the deductions than it did because of the tax cuts.

I say this because wife and I both work and paid about 7% effective tax rate last year on a gross income of 100k+.

Next year with same income and two kids (having twins in June) show the 3k tax refund we received this year going up to 9k next year. Our effective tax bill is significantly lowered because of the tax credit.

The fact you lowered income (one spouse left workforce) would also indicate that taxes paid would get lower.

By: Teri Newton

Teri Newton — Sat, 16 Jun 2007 03:06:51 +0000

I should clarify a lot of reasons why ROTHs aren’t always #1, or why not to put all your eggs in one basket. I will work on a future article to explain on the subject - good idea.

By: richard morse

richard morse — Fri, 15 Jun 2007 18:38:31 +0000

about half of his assumptions might apply to some of his six figure income clients, but for the great majority of today’s workers in mid-career (a few average income statistics would dhave gone a long way here) but for the other half, it’s the same old GIGO story. Neither myself nor anyone I know is making anywhere near as much money in retirement as we did when we retired at the top of our earnings days and, most of us are still married. The Roth didn’t exist when I retired and the traditional IRA was new, so it hasn’t been much of a factor for me so I really can’t comment on how much of a factor they are/should be for my kids….but none of them (two incomes) are six figure incomes either. If the writer would more clearly define the population he’s speaking of, the article would have been more pertinent.

By: Engineer

Engineer — Thu, 14 Jun 2007 00:55:52 +0000

There’s one other factor that could make your tax rate higher in retirement. Tax deferred distributions can result in $.50 and as much as $.85 of Social Security income for each $1 of taxable distribution. So a 15% bracket is effectively increased to either 22.5% or 27.75%. And a 25% bracket is effectively increased to either 37.5% or 46.25%.

By: Diane

Diane — Tue, 12 Jun 2007 20:41:12 +0000

Our required minimum distributions starting in four years is going to throw us into a higher tax bracket from then on. We are thinking of converting some of our 401 funds into a Roth but the amount we can convert at a lower tax rate will not make that much difference in our income once the RMD begins. We should have been converting funds to the Roth for the past few years but didn’t pay any attention to the problem.
And, I agree with Alex, would like to know why you think we should avoid a Roth.

By: Amy F.

Amy F. — Mon, 11 Jun 2007 22:49:32 +0000

Yes, I think that would make a great future post.

By: Alex

Alex — Mon, 11 Jun 2007 20:04:12 +0000

Thanks for the interesting article Teri.
You say: “I actually have a lot of reasons why I would avoid a ROTH.”

Would you be able to outline what your knocks are on Roth IRAs?

By: Analyzing Wealth

Analyzing Wealth — Mon, 11 Jun 2007 18:53:34 +0000

Some links of interest…

I’ve been doing some reading this morning and thought I’d highlight some posts that I enjoyed…