Roth vs. Traditional Factors

Should you save in Roth accounts or traditional pre-tax retirement accounts? It depends on what’s happening now, and what happens in the future.

One way to figure it out is to look at today’s tax brackets vs. the tax rate you expect to pay in retirement. Then, pay taxes at the lowest rate possible. That is, if you have a very high income today and you expect a very low income later, it could make sense to take advantage of pre-tax contributions when possible.

But there might be more to consider. Your income in retirement can affect your healthcare costs, such as Medicare premiums. It can also impact how much of your Social Security income is included in your taxable income. So, it could make sense, in some cases, to favor Roth when it’s a close call.

Remember that tax rules are complicated and they change regularly, so speak with a tax expert before deciding on anything.

#rothira #retirementplanning #personalfinance

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IMPORTANT:
It's impossible to cover everything you need to know in a video like this. The only thing that's certain is that you need more information than this. Always consult with a CPA before making decisions or filing a tax return. This is general information and entertainment, and is not created with any knowledge of your circumstances. As a result, you need to speak with your own tax, legal, and financial professional who is familiar with your details. This video is not a substitute for individualized, personal advice. Please verify with your plan administrator when employer plans are involved. This information may have errors or omissions, may be outdated, or may not be applicable to your situation. Investments are not bank guaranteed and may lose money. Opinions expressed are as of the date of the recording and are subject to change. “Likes” should not be considered a positive reflection of the investment advisory services offered by Approach Financial, Inc. The Comments section contains opinions that are not the opinions of Approach Financial, Inc., and you should view all comments with skepticism. Approach Financial, Inc. is registered as an investment adviser in the state of Colorado and is licensed to do business in any state where registered or otherwise exempt from registration.