Ramp Up to Retirement
Roth vs. Pre-Tax 401(k): Choosing When to Pay Taxes for Retirement
Key Takeaways
- How Roth and pre-tax 401(k) contributions determine when taxes are paid on your retirement savings
- Why lower tax rates early in a career can make Roth contributions worth considering for younger savers
- How promotions, career changes, business income and changing household income can affect your savings choice
- How Roth savings may provide flexibility when managing taxable income, healthcare-related costs and tax brackets during retirement
- How Roth IRAs and Roth 401(k)s differ, and what to know about employer matching contributions
Show Notes
Choosing between Roth and pre-tax retirement savings can feel simple until taxes, healthcare costs, income changes, and future withdrawals enter the picture.
In this episode, Dan Reese, CFP®, explains how Roth and pre-tax 401(k) contributions affect when you pay taxes and why the more appropriate choice may change throughout your career. He covers why lower-income years may favor Roth contributions, when pre-tax savings may become useful, and how Roth assets can provide added flexibility in retirement.
Dan also explores employer matches, Roth IRAs, contribution limits, healthcare subsidies, Medicare premiums, inherited accounts, and the value of reviewing your savings strategy as your income and circumstances change.
Resources
Carson Wealth Retirement Readiness Quiz
About the Podcast
You’re nearing your Ramp Up to Retirement, where work will be optional. How do you make the best decisions to set yourself up for success? Tune in to hear from Dan Reese CFP®, Founder, Senior Wealth Advisor at Avery Wealth about the decisions and subtle changes you can make to ensure your retirement is successful!
As you approach life’s next chapter, we’re here to guide you through the intricacies of financial planning. We’ll help you stay focused on what truly matters as you navigate your retirement journey, overcome financial challenges, and leave a lasting legacy.