Is It Time for Roth Contributions? Key Considerations for Couples in Their 50s
Wednesday, 31 July 2024, 13:30
Key Considerations for Roth Contributions
A dual-income couple in their mid-50s finds themselves with over $2 million in their 401(k)s. They are considering whether to shift from traditional pre-tax contributions to Roth contributions. This decision involves evaluating their current tax bracket, projected retirement income, and overall financial strategy.
Factors to Consider
- Current Tax Benefits: Traditional contributions offer immediate tax savings, while Roth contributions allow for tax-free withdrawals in retirement.
- Tax Rate Projections: Consider expected tax rates in retirement compared to current rates.
- Future Financial Needs: Assess potential income sources during retirement to estimate future tax implications.
Conclusion
Ultimately, deciding whether to pivot to Roth contributions requires careful analysis. Engaging a financial advisor can provide clarity and help align this decision with long-term retirement goals.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.