Government

Where are taxes going? Are you planning ahead?

Looking at the national debt, the ongoing deficit and the trillions in future liabilities that have been created (at the federal and state level) and not being paid for, if you think taxes are going anywhere but up, I think you are dreaming. And guess what, chances are you won’t be in a lower bracket in retirement either.

PS Keep in mind too all the “free” stuff many politicians are promising as well.

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5 replies »

  1. My mistake was using standard IRA instead of Roth. Turns out income in retirement is at a higher tax bracket than my early working life when I first started funding my retirement.

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    • Back in 1981, when banks first start to offer IRA to the common workers, the sales pitch was if you max out at $2500 per year you would have $50k for retirement. I was lucky enough to get a job that offer a 401K with a match. About 2005 or so my company offered the Roth IRA but it was too costly to convert over. I max out my 401K and saved my money and I retired.

      The conventional wisdom back in 1980s was the most you would need 60-80% income replacement. Today, because of medical you need 100% income replacement. I will actually have a income of about 110%.

      I do not like paying taxes, but it is a good problem to have. I am very happy to have this problem. Some people are not as lucky as me.

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  2. .

    I’ve purposefully planned my retirement so I can live on the smallest income possible [and pay the least taxes possible] while still maintaining a comfortable lifestyle. Unfortunately in the future, government RMDs will force me to take more money out of my traditional IRA investment than will be necessary. So I’ve been planning ahead for that too by taking out a little at a time now to reduce that total.

    .

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