Do You Know How Much You Will Pay In taxes in Retirement and How Much Your Loved Ones Will owe?
We are taught to save for retirement by contributing to our companies 401(k) program and do that by having them deduct an amount from our paychecks each pay period. We think we are doing the responsible thing by saving for retirement and reducing out current taxable income by the amount of our contribution. Not so fast, the amount we save in current taxes is minute compared to the future tax bill we will be liable for and our beneficiary's will be liable for. takes some time and do some research on this. My recommendation is to take advantage of the Roth 401(k) option if your employer offers it. If your employer like most only offer the traditional 401(k) plan then just contribute up to the match. You should never turn dow free money. 401(k)'s and traditional IRA's are nothing less then a tax trap. Fast forward to retirement years and now you have to pay ordinary income tax rates on the large sum of money. The numbers can be mind blowing. Not only will you pay ordinary income tax rates on an amount much higher than the amount contributed but the balances are also included on your taxable estate. The Secure Act went into affect in 2019 and in 2024 they came out with the Secure Act 2.0. It stands for The Setting Every Community Up For Retirement Enhancement. It couldn't be further from the truth The Secure Act 2.0 is ver complicated and confusing and have provided a link to Secure Act 2.0.
If you feel a bit overwhelmed or don't know where to start, you are not alone. I have attached a retirement tax bill calculator to get you started. Some call this time bomb the 65 year old tsunami! Do not worry, with well thought out retirement planning this can be minimized. Feel free to contact me to discuss solutions.
I can be reached at ksaia@s2retirementsolutions.
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