401k - Before Tax vs. After Tax

[rocafeller05]

^^ Likewise. But being 20 some years out from retirement and just starting the Roth IRA 2 years ago there is no way it can catch up to my 401k.

So it is what it is at this point. As it stands now it looks like I will end up in the 25% bracket. No sense losing sleep over it.

[mizzourah2006]

Originally Posted by rocafeller05

^^ Likewise. But being 20 some years out from retirement and just starting the Roth IRA 2 years ago there is no way it can catch up to my 401k.

So it is what it is at this point. As it stands now it looks like I will end up in the 25% bracket. No sense losing sleep over it.

This is why I think it's even more complex than just tax rates and taxing of Social Security, etc. I don't see how there is any way my wife and I end up in the 25% tax bracket (given current brackets) in retirement. That's a HH gross income of just shy of $100k/yr. But we also live in and plan to live in a low COL area in retirement. People living in NYC may need that much, heck rent and health insurance could easily push you up over $60k/yr. I choose to put as much in tax deferred as I can today because I know what our expenses are with a child in daycare and I know they aren't anywhere near $100k, closer to $50k/yr for our normal month to month expenses and then throw in another $10-$15k/yr for things like housing repairs, vacations, smaller travel, etc.

I think this decision is very much based on individual situations. I don't even think you can base it on age, because many people I know, especially those that are in cities like NYC, DC, etc. are young DINKs and together they are already easily over $200k incomes between the two of them in their late 20s, early 30s.

[hikernut]

Originally Posted by mizzourah2006

This is why I think it's even more complex than just tax rates and taxing of Social Security, etc. I don't see how there is any way my wife and I end up in the 25% tax bracket (given current brackets) in retirement. That's a HH gross income of just shy of $100k/yr.

Yup, married filing a joint return. But that $100K gets cut in half for the surviving spouse, which adds even another element of uncertainty.

A little bit of diversion, but relevant to the discussion I think...

Taxation of SS benefits is a bit friendlier to single filer than joint filers. For a single filer none of the SS benefits are considered taxable until a provisional income of $25K, but for joint filers that only goes up to $32K. Something to keep in mind.