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UPS Retirement Topics
Just started my 401k, thoughts?
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<blockquote data-quote="3838373" data-source="post: 1218682" data-attributes="member: 19776"><p>The debate rages on the internet about which to choose, but for now almost everyone is staying with the traditional 401k style plan instead of the Roth401k. The reason is that very few people make more money in retirement than they do while working and saving. Even if you only save 10% of your income, you're living off of 90% and thus only need 90% of your pre-retirement income once you retire, which moves you into a lower tax bracket in retirement, and thus favors a traditional 401k over a Roth401k. TFor most people on this site, the Roth401k isn't going to be very helpful in achieving an early retirement, because it just requires you to pay more taxes. The primary benefit of the Roth IRA, on the other hand, is estate planning benefits and the ability to withdraw contributions before retirement age, making it a safe hedge for most of this audience.</p><p>Summary: Roth IRA: good. Max it to $5k/year Roth 401k: bad. Probably better to stick your $17k in a traditional 401k.</p></blockquote><p></p>
[QUOTE="3838373, post: 1218682, member: 19776"] The debate rages on the internet about which to choose, but for now almost everyone is staying with the traditional 401k style plan instead of the Roth401k. The reason is that very few people make more money in retirement than they do while working and saving. Even if you only save 10% of your income, you're living off of 90% and thus only need 90% of your pre-retirement income once you retire, which moves you into a lower tax bracket in retirement, and thus favors a traditional 401k over a Roth401k. TFor most people on this site, the Roth401k isn't going to be very helpful in achieving an early retirement, because it just requires you to pay more taxes. The primary benefit of the Roth IRA, on the other hand, is estate planning benefits and the ability to withdraw contributions before retirement age, making it a safe hedge for most of this audience. Summary: Roth IRA: good. Max it to $5k/year Roth 401k: bad. Probably better to stick your $17k in a traditional 401k. [/QUOTE]
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Just started my 401k, thoughts?
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