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URL:  http://boards.fool.com/i-and-my-wife-are-in-the-high-income-bracket-38-14977642.aspx

Subject:  Re: Totally Confised Fool Date:  5/16/2001  7:35 AM
Author:  tsouth Number:  29727 of 78168

I and my wife are in the high income bracket (38% tax rate) and are 30 years old. I would like to start saving for our retirement, reduce my tax bill, and also save for our infant (5 month) daughter's education. I spent about 2 days reading a lot of books and another day on ur web site. What I gathered is that
1. IRA is not an option as a tax saving benefit for us because of the tax bracket
2. I should start investing in a index fund.
3. Does an Educational IRA make sense?
4. I do not want to use a financial advisor (AmEx charges $2500 for creating an investment plan).
5. I have MSFT Money. Will it be useful to input the numbers into this tool and look for advise.

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You don't give the particulars of your income and current investments. The easiest way to save money on your taxes is to contribute the maximum allowed to 401k plans for both you and your wife (if you are both working at companies that have 401ks). If you are self-employed, open a SIMPLE IRA for tax savings.

If your Adjusted Gross Income is over $160k or you file separately, you won't qualify for the Roth IRA (phaseout is between $150k and $160k). If you don't qualify for the Roth IRA, you also don't qualify for the Education IRA. If you do qualify for the Roth IRA, you should contribute as much as you are allowed, up to the $2000 max for both yourself and your wife (after you max out your 401k). This will save you the taxes on future earnings on this money.

Check out the information at http://www.irs.ustreas.gov for specifics about what deductions and credits you can take on your taxes. I've found that reading the instructions for the 1040 Schedule A is very helpful in planning next year's taxes for minimum bite. Unfortunately, for high-income households the government