Originally Posted by
bugman61
hillarious.
Do me a favor. Run the numbers on 100k invested pretax with whatever rate of return you want for 10 years. Then withdraw at a 30% tax rate. Then do the same thing with paying 30% tax up front, same growth rate for 10 years. Let me know which is better. I’ll give you a hint it’s exactly the same. You don’t gain anything by investing your taxes if the rate coming out is the same.
Of course there are other factors like capital gains and that’s where assumptions on rates of return and future tax brackets come in. But deferring just to defer is a fools errand.
We have always targeted 60% FAE so my income in retirement would be less, 40% less. And I choose when and how much to withdraw, thereby controlling my tax burden. Do you understand why we have an income tax provision and not an income tax expense on our 10-K. It's because paying taxes when they are not due is silly. See also NOL carry forward. Clue: paying taxes is to be avoided until it is due.