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Roth vs Traditional

3,844 Views | 41 Replies | Last: 2 yr ago by permabull
aalan94
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AG
I'm still trying to figure out what to do with my investments. I have a few pensions (military and State of Texas), as well as a few Simple IRAs from previous jobs. I went back to work for the state mostly to pad my state time, but my concern is I'm a bit behind, since I worked for myself for 10 years and didn't have the cash to save much back then. I'm looking for the best way to save more. Would have to be post-tax dollars that I can set aside alongside my pension money. I'm 49, so I'm really in make-up mode. What is the best option?
azul_rain
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Roth
you may all go to hell and i will go to Texas
cjsag94
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AG
Or regular non-retirement investments if light in that area. Don't overthink where to put it if you are behind.. saving all you can is top priority.
AmericanWealth
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Hi Z3phyr. Here is the link to the information provided by the Congressional Budget Office. This should resolve the authenticity of the graphic. https://www.cbo.gov/budget-options/54787
12thMan9
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AG
I'm an old guy who wishes he knew then what he knows now.

Real estate investing, done right, can make you money several different ways & mostly tax free. You can get into single family investing w/$20K easily. I know people in their 30's living off their earnings from single & multi family investing.

I started this recently(5 yrs) and am seeing double digit returns w/ little taxable income. That, IMO, should be the goal.
Ronnie '88
EagleCamden
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AG
1. match
2. Roth
3. traditional
EagleCamden
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AG
12thMan9 said:

I'm an old guy who wishes he knew then what he knows now.

Real estate investing, done right, can make you money several different ways & mostly tax free. You can get into single family investing w/$20K easily. I know people in their 30's living off their earnings from single & multi family investing.

I started this recently(5 yrs) and am seeing double digit returns w/ little taxable income. That, IMO, should be the goal.
I'll double and triple agree with this. I've done well w rentals. Only fear is the democrats coming into Texas and taking them away somehow.
permabull
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AG
I used to be in the camp that traditional was better for most people making 6 figures because if you are married and making $125k your marginal tax rate is 22% but your effective tax rate after standard deductions ends up being a little over 11%.

Assuming you plan to spend the same amount in retirement, taxes could literally double and you would be even doing Roth vs Traditional since contributions go in at the marginal rate but will eventually come out out at the effective rate when you retire. The math seems simple, if your current marginal rate is much greater than your effective, traditional all the way. Note: This math only works in states that don't charge income tax, depending on where you live and where you retire can turn this upside down quick.

My thinking has since evolved since long term financial planning is more accurate when you can eliminate risk. Having money in Roths help that planning because there is less unknown in your long term plan. That has value even if you can't assign a dollar amount to it.

I also think its a good idea to have a mix, and since most people are loaded up on 401k instead of Roth 401ks, going Roth for your IRA gives you that mix.
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