Tax deferral is the age old question about every retirement plan. It is a tricky situation and must be treated as such so that taxes do not creep up on you and your retirement long after you start saving.
“Just how important is tax deferral?”
Savings or burdens
Many folks are so encouraged by financial institutions and their employers, and even the government, to put as much as possible into their savings plans for retirement, knowing that they’re deferring those taxes, they’re being able to deduct those each year as they save those dollars.
But on the other end, at Barber & Associates Financial Group, we work with many people who are already at retirement and what they find out is those minimal tax savings that they incurred as they put the money in turn out to be huge burdens as the taxation on those monies coming back out is incurred in retirement.
Many of them find that that belief that they would be in a lower tax bracket turns out not to be true because they successfully deferred so many taxes.
Many people find out when they go to take their retirement money back that they may have spent decades saving in their 401K or in their IRA and yet, they pay back all of those taxes they saved for decades in just a few years.
And yet, it doesn’t stop there. They continue to be taxed year after year after year as they take money out of their tax plans.
So I find that a lot of folks at retirement look back and say, tax deferral, we weren’t really given the entire story there because the taxes we end up paying back are quite a bit more than they ever counted on.
So think about tax deferral. That’s a pretty important issue when you’re doing your retirement savings.
Finding the answers
I created twenty videos responding to the most important questions that people ask me about their money, their financing, their investment, and their retirement plans.
If you’d like to know the answer to these questions, sign up and we will send you, as a free gift, these twenty videos responding to these most important questions.