Yeah but you'd get that "extra" $1500 regardless of chosing to allocate it to your 401 or just taking the cash, right? The way I read your original post it implied that only if you sent it to your 401 would you get the additional contribution.

 

I thought I read during the last Obama election, that over 50% of our population is not paying income tax now?

If you have a job, and pay income tax, you are considered "Rich" by their standards, so you -should- pay more, so they can have free cellphones and free health care, without even going to work!

 

Oh it gets better than that. A certain "wing" of polititians are already bragging about how a particular piece of medical related legislation is "freeing" people from "job lock" because you no longer will have to work to get things, like health care.

Humanity is hard wired to fall for the Bolshevik/Alinsky method over time. We are no exception.

 

Call me a cynic, but your conclusion doesn't follow from your premise. Here's my prediction -- feel free to cut it out and save it for 10 years and tell me I'm wrong.

Today's marginal tax bracket for a guy making $250k with a "reasonable" amount of deductions is lower than his marginal tax bracket will be in retirement when his taxable income is $100k.

No you didn't. Your PBGC benefit will still be taxed as ordinary income. Same with your military retirement (if you have one). Same with all the money Delta has contributed to your 401k and DC plans. That's a lot of taxable income in retirement. Even if you converted some to a Roth, I'll bet you'll still have 80% of your income in retirement coming from taxable sources. That also results in 85% of your SS being taxed too.

You shoudn't. I really think you'll be glad you did, when Uncle Sam finally jacks marginal rates up to 50%+ as they were for the 60 years prior to Reagan. They will have to. We will be among the small group of people who actually have good income, even in retirement, to pay tax on.

 

So, if an addiction is a disability and disabled people can get $50K per year from the .gov and disabled people will always be at the front of the line due to the americans with disabilities act, why isn't marijuana (and every other drug) federally legal already?

How much money should someone have in a retirement account in order to annuitize $50K/yr?

 

Was it Thomas Jefferson, or Ben Franklin, who said something like:

"Once 51% of the populace realizes they can vote to tax the other 49%, to pay for their benefits, we are all screwed!"

Well, it took a little over 200 years, but here we are!

You know, back in the beginning, you had to be a Land Owner to get to vote.

Now? Any 3rd generation welfare recipient can vote for a free Obama phone.

Why would you ever want to get a job, when you can get everything you need to survive, free?

 

Nah. It was some French DB, but the point remains...

 

You're mixing apples and oranges AND the point you're making is factually incorrect. I'd rather pay taxes based upon what's going to give me the most money to spend, post-tax, when I retire. I don't care if it's the seed or the harvest. I just want the most post-tax dollars.

First, let's address the tax issue. If you're going to be in a lower tax bracket in retirement then when the corresponding contribution is made, you're likely better off avoiding the Roth and taking the deductible contribution (all else being equal).

Two, whenever you talk about growth of an investment, in order to make an apples to apples comparison, you have to compare PRETAX contributions to the corresponding POST-TAX contributions. You can't just make a blanket statement about paying taxes on $1M now or $2M later. That's nonsensical. You have to look at the PRETAX dollar contributions to the POST-TAX distribution dollars that got you to that $1M or $2M or whatever, and you're not doing that in your assumption. How much it grows tax deferred within the 401K (no matter what type) doesn't matter, either.

For example, let's say a pilot can only afford to contribute $10,000 pretax dollars per year to his 401K. He can choose a Roth or deductible contribution. His effective tax rate is 15% now and he plans on it being 15% in retirement (he expects his retirement income to be lower but tax rates to be higher so no net change in the effective tax rate). Which type of 401K contribution will give him the most post-tax dollars in retirement? In the above example, does his annual return affect how much he has in post-tax dollars on the other end if he chooses a deductible contribution vs. a Roth? Does the length of his investment period affect how much he has in post-tax dollars on the other end if he chooses a deductible contribution vs. a Roth? Does it matter if the "seed" or the "harvest" is taxed in this example?

And if you whip out your Excel spreadsheet, in the example above, you'll see none of the variables matter. It's the effective tax rate on each end that matters, not the growth rate as you seem to imply. Not the length of the investment period, either. The guy ends up with the same amount of money, post-tax, no matter what variables you change. The effective tax rate, however, DOES matter.

Your parable doesn't make any sense. Don't talk in parables. Talk in math.

 

scambo

Depends a lot on the age one would need 50k/yr. At age 65, probably around 1.6 would do it with conservative withdrawal rates and an allowance for inflation. If your receipent in question is disabled at age 35, probably 2 million dollars wouldn't do it. Also, these averages have some built-in probablity for running out of money--maybe 5-10% chance. The .gov disability doesn't, short of national bankruptcy and we throw the disabled under the huge bus.

Gloopy

Agreed, anyone should enter retirement basically debt free, esp mortgages. And the 70% replacement goal is likely high and finance advisors like it because it makes people save more. My calcs make me think 50-60% should be enough.

GF

 

GF;
The question was more rhetorical. I'm not talking about lost a leg disabled or brain injury disabled...I'm talking about drug use by choice and addiction as a label disabled, followed by the "in the system" disabled income growth encouragement.

And as I've said before, I'm a tool, so I can't use that as a defense.