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Old 08-24-2014, 11:44 AM
 
Location: Great State of Texas
86,093 posts, read 72,598,790 times
Reputation: 27566

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Quote:
Originally Posted by lizardspock View Post
I'd be willing to bet that almost anyone who has a 401k who is within a year or two of retiring is keeping a much closer eye on what the stock market is doing.

For someone like me who's over 20 years away from retirement, what my 401k does this year, or what it has done over the last two years or even five years doesn't make that much difference. It's long term strategy. That's the point of a 401k isn't it?
I always rebalanced twice a year with my 401K money..June and December.
Even long term strategy must be visited to see that you are keeping on the path.
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Old 08-24-2014, 12:29 PM
 
Location: USA
7,778 posts, read 10,159,236 times
Reputation: 11715
Another thread about those ignorant Americans.
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Old 08-24-2014, 03:36 PM
 
29,829 posts, read 34,912,438 times
Reputation: 11752
Quote:
Originally Posted by Rubi3 View Post
Another thread about those ignorant Americans.
Or another thread about the lack of transparency in the mutual fund industry. That is the real issue.
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Old 08-24-2014, 04:58 PM
 
Location: Pac. NW
2,022 posts, read 1,527,703 times
Reputation: 3601
Quote:
Originally Posted by Utopian Slums View Post
YES! I am no where near retirement but do own stocks and was intrigued by this post. I'm big on reading the comment section of all articles. Whenever I read someone knocking a story k, all I can think is "they want to lower the price so they can hop in." Conversely, when I see a stock praised, i assume they are "selling it to me" because it's underperformed and they need it to rise.

To much noise. I feel I should be better at this by now having lost a lot of money in the crash of 2009.
We ALL lost money in 2009. The more savvy of us stayed the course and are enjoying the fruits of an all-time-high.

Those of us that ignored that "noise" you spoke of.
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Old 08-24-2014, 05:16 PM
 
Location: Pac. NW
2,022 posts, read 1,527,703 times
Reputation: 3601
Quote:
Originally Posted by GeneR View Post
I've often questioned the use of popular retirement vehicles such as tax deferred 401k and IRA. We employees are sold these vehicles as a way to save for retirement so we spend decades deferring taxes on this income (and its growth). So here's my question; do you think tax rates will be higher or lower in your future? Government doesn't have a great record of lowering tax rates. So why would we put off paying taxes on this income now so we can pay higher rates in the future? Secondarily, not only are we saving money for future, probably higher, tax rates but we're also told to pay off our mortgages. So, when we retire we start pulling taxable income out of these "savings" vehicles and we no longer have a deduction for mortgage loan interest so 100% of our income is taxable. The government must love the invention of these "savings" vehicles!
For all that's been said 'bout 401k/IRA's, one thing is true: The money will grow tax-deferred.

Who's to say what the tax rate will be at one's retirement? Tax shelters are still the best way for most of us to grow savings. It's not realistic for everyone to be a landlord or own a business (both of which can be spectacular deductions). To abstain from the 401k/IRA on the possibility that future tax rates could exceed whatever a tax sheltered account will grow over the long haul is a bad bet.

That is basically betting on our economy's failure - as much merit as the doom-sayers have about our taxes possibly spiking, I think that a failure of that gravity is a stretch.

Who told you to pay off your mortgage early? You can milk that low rate (assuming it's 5% or less), and even re-fi or take a reverse mortage after it's free 'n clear.

If your mortgage is paid off at retirement, you won't need to withdraw as much for income, which will lower your tax rate. (under today's program at least)

So my answer to your basic question is:
Yes. Rates will be higher. But I'm not gonna stop investing because of that.
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Old 08-25-2014, 03:09 AM
 
6,353 posts, read 5,172,907 times
Reputation: 8528
Quote:
Originally Posted by tommy64 View Post
We ALL lost money in 2009. The more savvy of us stayed the course and are enjoying the fruits of an all-time-high.

Those of us that ignored that "noise" you spoke of.
2008, dude. The market (S&P 500 total return) was up 26.5% in 2009.
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Old 08-25-2014, 03:10 AM
 
71,898 posts, read 71,942,576 times
Reputation: 49447
if you didn't sell and jump ship you are up , it is like 2008-2009 never happened

Last edited by mathjak107; 08-25-2014 at 03:23 AM..
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Old 08-25-2014, 03:11 AM
 
71,898 posts, read 71,942,576 times
Reputation: 49447
Quote:
Originally Posted by tommy64 View Post
For all that's been said 'bout 401k/IRA's, one thing is true: The money will grow tax-deferred.

Who's to say what the tax rate will be at one's retirement? Tax shelters are still the best way for most of us to grow savings. It's not realistic for everyone to be a landlord or own a business (both of which can be spectacular deductions). To abstain from the 401k/IRA on the possibility that future tax rates could exceed whatever a tax sheltered account will grow over the long haul is a bad bet.

That is basically betting on our economy's failure - as much merit as the doom-sayers have about our taxes possibly spiking, I think that a failure of that gravity is a stretch.

Who told you to pay off your mortgage early? You can milk that low rate (assuming it's 5% or less), and even re-fi or take a reverse mortage after it's free 'n clear.

If your mortgage is paid off at retirement, you won't need to withdraw as much for income, which will lower your tax rate. (under today's program at least)

So my answer to your basic question is:
Yes. Rates will be higher. But I'm not gonna stop investing because of that.
taking delayed social security and rmd's can leave you with a combined whopper of a tax bill regardless of what your expenses are. throw in the fact if you hold any index funds or etf's in a taxable account any thing you sell can dump decades of pent up capital gains taxes with little paid along the way in to the mix.

your analysis with a paid off mortgage would only be true if it was income under your control which is not always the case.

most of our income draw will only be our choice in the early years. once ss and rmd's kick in our expenses are a moot point. our taxes are based on what we have to take at that point not on what we want to take.

Last edited by mathjak107; 08-25-2014 at 03:24 AM..
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Old 08-25-2014, 03:19 AM
 
71,898 posts, read 71,942,576 times
Reputation: 49447
Quote:
Originally Posted by tommy64 View Post
For all that's been said 'bout 401k/IRA's, one thing is true: The money will grow tax-deferred.

Who's to say what the tax rate will be at one's retirement? Tax shelters are still the best way for most of us to grow savings. It's not realistic for everyone to be a landlord or own a business (both of which can be spectacular deductions). To abstain from the 401k/IRA on the possibility that future tax rates could exceed whatever a tax sheltered account will grow over the long haul is a bad bet.

That is basically betting on our economy's failure - as much merit as the doom-sayers have about our taxes possibly spiking, I think that a failure of that gravity is a stretch.

Who told you to pay off your mortgage early? You can milk that low rate (assuming it's 5% or less), and even re-fi or take a reverse mortage after it's free 'n clear.

If your mortgage is paid off at retirement, you won't need to withdraw as much for income, which will lower your tax rate. (under today's program at least)

So my answer to your basic question is:
Yes. Rates will be higher. But I'm not gonna stop investing because of that.


what tax rates are in retirement and whether higher or lower is going to depend not so much where rates go but where your life time average over decades of ramping up income and tax rates will leave you.

folks make the mistake of looking at just their final years of income and guessing if tax brackets will be higher or lower.

but that is not accurate.

you may have spent 30 out of 40 years ramping up from much lower income and taxe rates and will actually be in a higher bracket at retirement even if rates don't rise because your career average is much lower..

for young folks just starting out roths will yield 20% more spendable income in retirement assuming tax rates just stay the same.

Last edited by mathjak107; 08-25-2014 at 03:42 AM..
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Old 08-25-2014, 07:24 AM
 
Location: Las Vegas, NV
352 posts, read 250,538 times
Reputation: 815
Quote:
Originally Posted by Curmudgeon View Post
Actually, for some of us the "real world" isn't all money all the time and to think that those with other worldly interests are ignorant is, in itself, both ignorant and arrogant in my opinion.

Perhaps not everyone's life revolves around the almighty dollar. Some of us may have broader interests.
You see, in this world we have this stuff called "money". And with this "money" we pay for our housing, food, vacations, charity donations, pets, kids, etc. When you do not save for retirement, you end up destitute, living off of your family and destroying the finances of everyone who helps you. Your ignorance not only hurts you, but it hurts many others as well. Senior care is very expensive, and healthcare is worse. If you don't save up, you become a drain on all those around you.

And I have many other interests, including the K-8 school I founded that is now ranked #2 in the region and the non-profit organization I am on the board of that provides hundreds of inner-city teenagers with athletic opportunities.
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