UnThreaded | Threaded | Whole Thread (8) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: jmjkon One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76078  
Subject: Re: Taxable vs tax Defered Date: 9/7/2001 2:07 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
jrr7 writes:You have to choose between "keeping all the years of compounding" and "being cushioned against a 25% loss right before you were about to retire" (which is the goal of the REHP thinkers)

JK adds: Yeah, thats the main question I'm struggling with a little bit here. I believe I will go forward with my plan to invest at least some of my retirement money on an after-tax basis because I don't want to have all my eggs in one basket.

Don't get me wrong, I'm still contributing to my 401k past my employers match, so I'm getting all of that "free money". But I really have seen that many early retirees have wished they had more after-tax equity investments to draw from, I guess so that they could pay lower taxes on those withdrawals.

It makes some sense to me, although the risk there is that, as always, the market could drop suddenly and stay there right as you were counting on that money. So I believe that if I have both after-tax as well as a 401k to draw from in retirement, I could draw from the after-tax account when the market was up to take advantage of the lower capital gains tax rates. When low, I could take my withdrawals from the 401k.

Does that sound reasonable/sane? I guess I'm also assuming that I would have enough cash/CDs in my 401k to sustain at least 4-5 years of steady, stable living expenses, so that if I didn't have to draw from the aftertax account if I didn't have to.

Anyway, just thinking out loud, since I have at least 29 years to go! But all thoughts are appreciated, thanks in advance-

JK


Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (8) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Value Hounds

Netflix Riles Investors
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement