In response to Roderick, let me suggest you save some money in
regular non-deferred accounts, enough to live for several years.
Then, quit your job, but don't retire in the sense of starting your
401K withdrawls. Instead, convert part of your 401K into a Roth,
taking enough each year to keep the taxes low. Without any
income, your taxes should be much lower. When your 401K is
less than 25 times your retirement expenses, you can stop, and
retire for real (assuming you are old enough). I think people are
often advised to save too much in tax deferred accounts. If you
have more than 25 times expenses, stop tax deferring!
Cheers,
Susanna
Susanna Gross
of CO
@
Jul 09, 2008 19:12:02 PM
Additional ways to sabotage your 401(k)
(8) Ignore your beneficiary designations.
(9) Fail to recognize that you can make required distributions in shares to a taxable account in the same investment. Sure, it's taxable like any distribution, but it is a good strategy in down markets.
(10) Transfer your IRA interest to a Revocable Living Trust.
Ellen
of NM
@
Jun 26, 2008 20:00:04 PM
A Pickle for Boomers
As we've saved in 401(k)'s over the years, we were always told tax RATES we'd pay upon redemption would be less than what we are paying, now. When inflation gets brutal (as it must to pay for the ongoing wars and enormous increases in the costs of everything due to our oil crisis --- and because we cannot be taxed enough to end this dilemma), we will be hit with (1) less purchasing power with the money saved for retirement and (2) HIGHER TAX RATES which will be as much as the public will allow.
Furthermore, we cannot flip from traditional retirement accounts to Roth accounts without creating a huge tax liability, now, on top of the earnings taxes we already pay on wages and salaries. Having identified this problem I'd now like to suggest a solution: Either (1) allow the change from traditional savings into Roth accounts AT THE TAX RATE BASED ON OUR CURRENT INCOME LEVELS WITHOUT ACTIVATING THE ALTERNATIVE MINIMUM TAX or (2) calculate a tax rate at redemption based on the AVERAGE RATES OF EACH YEAR WE SAVED IN OUR PLANS (INCLUDING THE YEAR REDEEMED).
Better minds than mine can probably improve on these ideas or introduce other thoughts on the subject. But unless these problems are addressed as soon as possible, financial hardship will result for millions who saved faithfully to support themselves (and believed in the advice we were given). The last thing this country needs is for the Boomer generation, who by and large did what we were supposed to do, to become a big liability to the generations after us (who already know they will be financially plundered as Social Security, Medicare and Medicaid collapse under their own weight. Can this be put on the table for discussion?
Roderick Doyle
of MO
@
Jun 23, 2008 22:48:56 PM
sabotage my 401k
think for the advice on how avoid costly missteps cause i,m about to retire at the end of the year.you gave some good advice i love reading news like this
johnny thomas
of MS
@
Jun 21, 2008 23:47:50 PM
sabotage my 401k
think for the advice on how avoid costly missteps cause i,m about to retire at the end of the year.you gave some good advice i love reading news like this
Susanna Gross of CO @ Jul 09, 2008 19:12:02 PM
Ellen of NM @ Jun 26, 2008 20:00:04 PM
Roderick Doyle of MO @ Jun 23, 2008 22:48:56 PM
johnny thomas of MS @ Jun 21, 2008 23:47:50 PM
johnny thomas of MS @ Jun 21, 2008 23:47:09 PM
Back to article