Sentences with phrase «rate in retirement»

Not cheap really, but consumer staples never really get cheap either... I suppose there's a reason for it though - I remember reading somewhere that a 50/50 combination of utilities and consumer staples stocks had a significantly higher historic safe withdrawal rate in retirement than S&P index or any of the % index / % bond allocations.

In fact, Joel, I think you were the one who so many years ago put this tax diversification concept on my radar: the idea of even if you don't know what your tax rate in retirement will be relative to what it is today — and who does really — unless retirement's a couple years away.

High wage earners who expect a lower tax rate in retirement can also benefit from a Roth IRA.

Such steps are even more important if you think you might face a lower marginal tax rate in retirement, and are absolutely crucial if you're nearing retirement age.

So if you think you may end dropping to a lower marginal tax rate in retirement, you should be aware of a few important caveats before doing a Roth, especially if you're nearing retirement age.

Of course, if you assume a lower marginal tax rate in retirement, then things would look very different and it would be advantageous to convert / withdraw the money at your lower tax rate.

We've used an average rate of return of 6 % and assume a 5 % return rate in retirement assuming a more conservative portfolio.

But is that really retiring when most people only assume a 4 % real return / withdrawal rate in retirement?

on «Blessed by the Potato,» says the answer depends on a few factors, chief amongst them your expected tax rate in retirement versus your tax rate now (or in the near future if you choose to contribute now but defer the deduction).

The answer is that it depends on how you expect your tax rate in retirement to compare to your current tax rate.

But even in cases where someone drops to a lower tax rate in retirement, it's still possible for the Roth to end up the a larger after - tax balance than the traditional IRA plus taxable account.

There is no single right answer: an awful lot depends on awful lot on individual circumstances such as your current tax rate, your expected tax rate in retirement, whether you need liquidity, the size of your portfolio, your overall asset mix, and the specific funds you use.

If your tax rate in retirement is lower than in the years when you contribute to a traditional account, the account can perform better than a Roth.

Regardless of the tax withholding or tax treatment in your country of residence, it's likely that your tax rate in Canada during your working years will be higher than your tax rate in retirement.

One typical line of advice about RRSPs is that the RRSP is only advantageous if your marginal tax rate in retirement is lower than your marginal tax rate when contributing.

Backed up by charts and some pretty convincing math, he continues to debate how best to calculate your safe withdrawal rate in retirement.

That being said, using a tax - minimizing investment strategy in a taxable account could work out better in the long run if your long - term capital gains tax rate ends up being lower than your income tax rate in retirement.

The opposite is true for Roth 401 (k) s and Roth IRAs, so they're generally a better idea if you think you'll face a higher tax rate in retirement.

But if you think you'll face a lower marginal tax rate in retirement, you may be better off doing a traditional IRA.

It also makes sense if you anticipate paying taxes at a significantly lower rate in retirement.

For example, if your tax rate in retirement is 30 %, you could withdraw an additional $ 14,286 from your RRIF, which would leave you with $ 10,000 after taxes — enough to max out your TFSA for the year.

Much of the time the tax arbitrage is not much of a benefit, as clawbacks of various programs can make your effective tax rate in retirement higher than raw income might suggest.

So if you expect your tax rate in retirement to be higher than it is now, you're better off paying taxes on IRA contributions now and avoiding taxes when you withdraw them, which you can do with a Roth IRA.

-- Marginal tax rate now vs effective tax rate in retirement — Cost of contributions (ie you pay taxes on the Roth contributions as you outlined so you can't just compare 5500 vs 5500)

What is a sustainable withdrawal rate in retirement?

Having said that, I do agree with fully funding retirement funds (based on what one can afford), by the way, simply because of tax benefits now (and possible smaller rate in retirement).

When someone converts at 35 % and anticipates a 25 % rate in retirement, the conversion becomes a winner if the money is invested long enough for $ 25,000 invested tax - free to catch up with $ 35,000 invested in a taxable account.

Your Roth IRA starts out 24 % smaller than the traditional IRA, and that means the traditional IRA can end up being more valuable if your tax rate in retirement is below 24 %.

If he has a 32 % marginal tax rate in retirement, a $ 7,200 withdrawal would result in a tax bill of $ 2,304 — over 50 % more than his original refund.

The other thing to do is begin to even out the amount in your RRSPs if there's a big disparity — that way when you begin withdrawing from your RRSPs at a standard 4 % withdrawal rate in retirement, the higher earner won't end up with an outsized RRSP and get bumped up into a higher tax bracket, costing the couple lots of money in taxes.

Personal finance planners believe a reasonable withdrawal rate in retirement is 4 % of your assets.

Your Roth account starts out 25 % smaller than the traditional account, and that means the traditional account can end up being more valuable if your tax rate in retirement is below 25 %.

Because of this feature, traditional IRAs can make sense if you think your income tax rate in retirement will be lower than it is today.

Because of up - front taxation, a Roth IRA can make sense if you expect your income tax rate in retirement to be higher than it is today.

Fund deductible accounts when your current marginal rate is higher than your expected marginal rate in retirement.

That makes them a great option if you expect to have a higher tax rate in retirement than you do now.

In addition, your current tax rate might be lower than your tax rate in retirement, which means you're taking the tax hit at a time when you're in a lower bracket.

What is a sustainable withdrawal rate in retirement?

Remember, the safest withdrawal rate in retirement does not touch principal.

If you expect your tax rate in retirement to be higher than your current rate, a Roth IRA's tax - free withdrawals might make it the better choice.

The ideal withdrawal rate in retirement touches no principal, after all.

It's true, to go from building wealth to drawing down wealth can be daunting, which is why the ideal withdrawal rate in retirement touches no principal!

Instead, the ideal withdrawal rate in retirement draws down ZERO principal.

The amount you need will also depend on which accounts you use to pay for health care — e.g., 401 (k), HSA, IRA, or taxable accounts; your tax rates in retirement; and potentially even your gross income.3

The CBO found that this three - legged approach provides much more portable benefits to workers with similar replacement rates in retirement, at a much lower and more predictable cost to the government.

The healthiest states all surpassed the national average for participation rates in retirement and savings accounts The total amounts saved in these accounts each exceeded the national mean.

These people could reasonably expect to build up enough assets to face higher tax rates in retirement.

The most common formula for safe withdrawal rates in retirement is the 4 % rule.

From experience, I can tell you that most retirees pay lower tax rates in retirement, Linda, particularly with a bit of planning and especially given the high tax rate you'd pay today on a full year of salary plus your RRSP income.

Certified financial planner Ed Rempel says the combined impact of tax and OAS clawbacks can result in effective tax rates in retirement as high as 58 per cent (43 per cent income tax on incomes between $ 86,000 and $ 120,000 plus 15 per cent OAS clawback equals 58 per cent)