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UPS Retirement Topics
How big is your 401k?
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<blockquote data-quote="Ms.PacMan" data-source="post: 1411987" data-attributes="member: 4656"><p>I was 30 and my contributions were pretty half-ass in the beginning. I wish I had started earlier. Good job to all you young savers!</p><p></p><p>Our 401k is great. Stay where you are and keep trying to max it out. IMO you don't need an advisor.</p><p></p><p>One more thing. People have brought up in the past the tax savings for contributing to the 401k. The savings is significant. My federal effective tax rate averages out to 5.60% and state is 3.40% in the last 20 years (head of household, one dependent).</p><p></p><p>Your marginal tax rate is the rate that your income falls under in the tax brackets (15%, 25%, 28%, etc.). Your effective tax rate is the tax that you actually pay after deductions, credits, exemptions, etc. If you would like to see the difference that contributing to your 401k makes, you can play around with TaxCaster (Google it)</p><p></p><p>in 2013, a single filer who made $80K with no dependents, using the standard deduction would have owed $13,435. The same person contributing the maximum of $17,500 to his 401k would have owed $9,060 (because he's only taxed on $62,500). Both these guys have a marginal tax rate of 25% but their effective tax rate (the amt they actually paid) is 17% and 11% or $4,375 the non-saver is giving to Uncle Sam EVERY YEAR!</p></blockquote><p></p>
[QUOTE="Ms.PacMan, post: 1411987, member: 4656"] I was 30 and my contributions were pretty half-ass in the beginning. I wish I had started earlier. Good job to all you young savers! Our 401k is great. Stay where you are and keep trying to max it out. IMO you don't need an advisor. One more thing. People have brought up in the past the tax savings for contributing to the 401k. The savings is significant. My federal effective tax rate averages out to 5.60% and state is 3.40% in the last 20 years (head of household, one dependent). Your marginal tax rate is the rate that your income falls under in the tax brackets (15%, 25%, 28%, etc.). Your effective tax rate is the tax that you actually pay after deductions, credits, exemptions, etc. If you would like to see the difference that contributing to your 401k makes, you can play around with TaxCaster (Google it) in 2013, a single filer who made $80K with no dependents, using the standard deduction would have owed $13,435. The same person contributing the maximum of $17,500 to his 401k would have owed $9,060 (because he's only taxed on $62,500). Both these guys have a marginal tax rate of 25% but their effective tax rate (the amt they actually paid) is 17% and 11% or $4,375 the non-saver is giving to Uncle Sam EVERY YEAR! [/QUOTE]
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How big is your 401k?
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