Retirement Plan Help!?
i am 21yo working & i am in the tax bracket of 36% - I KNOW, its ALOT of taxes!!! - anyways, my company only offers 403B plans, so i was thinking of joining either a Roth IRA or Regular IRA though one of the companies associated w/ my job (such a ING, Fiedlity etc)?? how would i know what tax bracket i would be in when i retire (around 50ish)?? should i put money into the retirement plant before taxes come out of my paycheck or after taxes are taken out of my current paycheck?? HELPP!!
Public Comments
- Whenever possible you want to put money into a retirement plan before taxes come out. You get more money in, with less impact on your take home pay. You aren't going to know what tax bracket you'll be in by the time you're 50. There are way too many variables. Who knows, the tax brackets could be at all different percentages by then. You are wise to start investing now. One thing to judge your investment on (if selecting Fidelity, etc.) is what their fees are. Some of the plans rob you when it comes to the fees they charge, so shop around a little and try to get something with lower fees.
- For most people the question of Roth vs. traditional IRA is a very difficult decision because of the impossibility of knowing in advance how much taxes they will eventually pay on the traditional IRA. Your case is easier because of your unusually high current tax rate. You can get an extremely valuable current tax break from the traditional IRA that is likely to be much more valuable than a future tax break after you retire. You should go with the traditional IRA.
- 99 out of 100 people should go with the ROTH...but at the ridiculous rate you say you're paying, any little write-off should be grabbed up...go with a Traditional IRA...
