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Old 02-02-2017, 08:06 PM
 
6,885 posts, read 7,289,708 times
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^^ Roth was taxed going in -- but growth and withdrawals do NOT count toward MAGI in retirement as traditional IRAs do, so it's 'generally' fed tax free. (My understanding is that keeping MAGI low is important because of taxes paid on Soc Sec.) And as was said, you don't HAVE to pull the money out on the gov's timetable or ever.

I'm, not trying to persuade anyone….those are some of the reasons I have a Roth vs. a Traditional, but I do get that some people might consider the options a wash for them.
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Old 02-02-2017, 08:17 PM
 
Location: Jacksonville, FL
11,145 posts, read 14,132,244 times
Reputation: 7075
Personally, I don't mind paying taxes. I am a Democrat. So, I prefer a traditional 401k, which allows me to have more disposable income throughout my life, pre-retirement. Life is not ONLY about living in retirement.
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Old 02-02-2017, 08:21 PM
 
Location: Bel Air, California
21,328 posts, read 21,906,527 times
Reputation: 33515
Quote:
Originally Posted by nep321 View Post
I noticed that over the past year or two, the estimated Social Security benefit (when I log onto my SS account on the official website) seems to change every couple of months. Why does it fluctuate so often? I thought it would only be changed once a year.....apparently not.

Right now I'm 32 years old but I look at my estimated SS benefit every month just to monitor things. For most of mid 2016, they estimated it to be $2,244 per month. Then, around November, it went up to $2,295 and stayed that way for the past two months, until I checked yesterday, when it DROPPED down to $1,940

WHY does this happen? I thought that they collect and store earnings data once a year for each person. Why does it change every couple of months? It's just so...erratic and makes it harder to plan for retirement.

In 2016, I was employed from March 28th and for the rest of the year, and I'm still employed since then as of today. Prior to March 28, 2016, I was unemployed since September 17th, 2015. I don't know if this matters though. When employed, I was always a W-2 employee.
Russian Hackers took some of your balance I bet
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Old 02-02-2017, 08:38 PM
 
Location: SoCal
13,237 posts, read 6,345,210 times
Reputation: 9854
Quote:
Originally Posted by Aredhel View Post
That makes no sense. Money invested in either type of IRA has exactly the same tax-free growth potential. Where they differ is at what point taxes are paid: with the Roth, you invest after-tax money and later withdrawals are tax-free, while with a traditional IRA you invest using pre-tax money and then owe tax on withdrawals. Oh, and with a traditional IRA the government forces you to begin withdrawing money at age 70 1/2 and requires a minimum withdrawal amount that increases with your age, while with a Roth there's no requirement to ever withdraw the money, so you can choose the timing and the amount of the withdrawals to suit your own needs. It's a valuable thing to have a significant amount of your retirement savings in a Roth!
I agree it's crazy talk. Finance is not creative thinking.
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Old 02-02-2017, 08:42 PM
 
Location: SoCal
13,237 posts, read 6,345,210 times
Reputation: 9854
Quote:
Originally Posted by nep321 View Post
Personally, I don't mind paying taxes. I am a Democrat. So, I prefer a traditional 401k, which allows me to have more disposable income throughout my life, pre-retirement. Life is not ONLY about living in retirement.
This post should belong in the political forum because it doesn't make sense for the retirement forum. Do you understand what you wrote? I bet you didn't.
At least now I realize I have two normal kids, they both don't like paying taxes.

Last edited by NewbieHere; 02-02-2017 at 09:02 PM..
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Old 02-02-2017, 09:39 PM
 
Location: Omaha, Nebraska
7,319 posts, read 4,167,038 times
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Quote:
Originally Posted by nep321 View Post
Personally, I don't mind paying taxes. I am a Democrat. So, I prefer a traditional 401k, which allows me to have more disposable income throughout my life, pre-retirement. Life is not ONLY about living in retirement.
So you'd rather pay 25% tax on $50,000 than 15% tax on $5,500? That's foolish (and I say that as a Democrat).

Get some money in a Roth now, while you are young and in a lower tax bracket. You can switch to a regular IRA or 401k later, when you will be in a higher tax bracket and will gain more benefit from the immediate tax savings. Then when retirement arrives, you can spend down the traditional account first and hold the Roth in reserve for your final years.
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Old 02-02-2017, 10:28 PM
 
Location: SoCal
13,237 posts, read 6,345,210 times
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The crazy part is he had a Roth IRA and he dissolved it. Why would anybody do that is beyond me.
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Old 02-03-2017, 05:14 AM
 
6,974 posts, read 3,875,045 times
Reputation: 14884
Quote:
Originally Posted by nep321 View Post
Personally, I don't mind paying taxes. I am a Democrat. So, I prefer a traditional 401k, which allows me to have more disposable income throughout my life, pre-retirement. Life is not ONLY about living in retirement.
Oh, man. You need to do some research here and possibly even model the two different scenarios.
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Old 02-03-2017, 05:20 AM
 
13,925 posts, read 7,422,661 times
Reputation: 25432
Quote:
Originally Posted by nep321 View Post
I don't like Roths at all. I used to have a Roth IRA and didn't like the concept at all, In the end, I dissolved it and switched back to a traditional 401k through my employer, because I like the tax deferred growth potential that simply isn't offered by a Roth.

My company doesn't offer 401k matching at all. It's all on me.

My company offers high deductible HSA's, but it would be a terrible choice for me. I see doctors about 30 times a year, so I have a real health insurance plan.
It depends on your Federal tax bracket and what state income taxes look like. 33% bracket and live in NYC or California? You want a traditional 401(k). If you are in the 25% bracket in a zero income tax state, pay the tax now and do a Roth. You may be able to avoid paying tax on your Social Security check and pay lower Medicare premiums. Required minimum distributions at age 70 1/2 can make 75% of your Social Security check taxable.
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Old 02-03-2017, 05:25 AM
 
Location: RVA
2,167 posts, read 1,268,333 times
Reputation: 4465
Why are you guys wasting your time? At 32, the OP has already made enough statements to warrant ignoring. (If the taxes saved now by deferring are all it takes to make a difference in his life being enjoyable now, then he has other financial issues).

If I had a Roth available from the beginning of my career, (in other words, all the money I have in tax deferred was in a Roth, except for company match 401k) I'd be retired already. My taxable income would be so low (compared to what I pay now, and what I will have to pay from 62 until 70), delaying filing would be a total no brainer, & I would net an extra $10k a year for those years. I would leave work so that my pension would not force my SS to be taxable. (Because of that, the gains in pension by staying longer would be negated by the increased taxes overall!) The net gain from low taxes would about make my net take home the same. So I would be paying only taxes on my pension and the bulk of my income would be tax free (or pre paid at a lower rate when I was younger). By the time you are ready to retire, the taxes you paid in the past are long gone and forgotten. The ability to have a large tax free savings, earnings and the bulk of your income tax free at your disposal through out retirement is a game changer.

FWIW, RMDs can make 80% of your SS taxable.

Last edited by Perryinva; 02-03-2017 at 05:49 AM..
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