I Have to Pay More in Taxes When I Retire?!
Yes, it’s possible that you might pay more in taxes when you retire. There is a phenomenon that has been making its way through the news because it’s so ironic. You may have heard that the tax law does a few things to the amount of money that retirees have to pay in taxes. One of them is an increase in the Medicare Part A tax. So, just what is this Medicare Part A tax and how might it affect your retirement plans?
Disadvantages of Retirement Accounts
The power of compounding may be your best friend when it comes to saving for retirement.
When you are young it can be tempting to fill your retirement accounts to the max and let your money work for you.
However, there can be some disadvantages to saving too much for retirement.
In your 40’s or 50’s, you may need to set goals outside of retirement.
These might include saving for a down payment, a wedding, buying a new car, retirement or paying for your kids’ college degree.
With retirement looming on the horizon, you may be saving for other goals and objectives.
Here are some of the disadvantages that may apply to you in your 40’s or 50’s:
You may have too much money tied in retirement accounts. You may already be a saver, but have you considered the alternative?
With retirement accounts, you have a buffer of money, but you may have more tied up than you really need to.
If you are younger than 65, you may want to keep the money accessible.
There may be some benefits to keeping some money outside of retirement accounts so that you can access within your lifetime.