When 401(k) plans were enacted into law nearly forty years ago, we lived in a different world. The top federal tax bracket was at 70% (today it is 39.5%), and it made sense to save money tax-deferred for retirement when your income would be lower and your tax rate less.
With the absence of pension plans, adjusted tax brackets and inflation, many Americans are now discovering that the ordinary income tax due when they withdraw their retirement income from qualified or tax-deferred plans is much greater than anticipated. Inflation over the forty years has caused an increase in costs of goods and services with corresponding incomes to match. An income of $25,000 a year in 1978 would be equal to an income of about $100,000 today. This means to maintain the same standard of living you are accustomed to, you may need to withdraw a retirement income that is greater than originally planned. If you have a tax-deferred plan such as a 401(k), you will end up paying more in taxes for the larger withdrawal.
Fortunately, there are retirement plan options that allow your investments to grow and for you to withdraw as much as you need during retirement, while you pay no taxes.
Regardless of your age or what stage you are in your working career, I can help you start a tax-free retirement plan. If you have already started a tax-deferred plan, it is not too late. A tax -free retirement can be integrated with your current plan.
For a free consultation and to learn more about tax free retirement options, please contact me at 909-714-1830 or at russ@russmorrisfinancial.com.
With the absence of pension plans, adjusted tax brackets and inflation, many Americans are now discovering that the ordinary income tax due when they withdraw their retirement income from qualified or tax-deferred plans is much greater than anticipated. Inflation over the forty years has caused an increase in costs of goods and services with corresponding incomes to match. An income of $25,000 a year in 1978 would be equal to an income of about $100,000 today. This means to maintain the same standard of living you are accustomed to, you may need to withdraw a retirement income that is greater than originally planned. If you have a tax-deferred plan such as a 401(k), you will end up paying more in taxes for the larger withdrawal.
Fortunately, there are retirement plan options that allow your investments to grow and for you to withdraw as much as you need during retirement, while you pay no taxes.
Regardless of your age or what stage you are in your working career, I can help you start a tax-free retirement plan. If you have already started a tax-deferred plan, it is not too late. A tax -free retirement can be integrated with your current plan.
For a free consultation and to learn more about tax free retirement options, please contact me at 909-714-1830 or at russ@russmorrisfinancial.com.
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