Quote:
Originally Posted by Scanner
I often wonder if stuffing our retirement money in tax shelters (ROTHS, SEP's, 401(k)'s) just because the pundits tell us to do this is really the right idea. I mean, we all save and save and save and save, for that magic age of 65 (67.5 for my generation) when we can go on Medicare and we don't get to enjoy any of the fruits of our savings.
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Couple of thoughts:
1. The age for Medicare is still 65. It is the age for full social security benefits that is 67.5 for you.
2. In non-sheltered accounts, the muni interest would be tax-free but the CDs and stock dividends would be taxable. Not sure about the treasuries. So that 5% return might only be 3.75% roughly after taxes which might barely keep up with inflation. The retirement accounts have the disadvantage of not being able to touch them at a young age, but their are provisions with Roths at least to access money early if needed.
3. I would agree with you that you shouldn't "bury" all of your money in tax-sheltered accounts that you can't get to. We've got Roths, my wife has a 401k and an old 403b, and we've both got traditional IRAs from before. We also have a few taxable mutual fund accounts, a brokerage account with some individual stocks, some Series EE and I bonds, a CD, a few money market accounts and our checking account.