How will you retire?

[jmjj215]

Jesse, are you sure it's true that paying taxes later rather than now is always advantageous? I think if you're in a lower tax bracket now, say 28%, it's plausible that your situation could improve enough to bump you into higher bracket later in life.

Fern, could point. I failed to attach the assumption that your tax bracket stays the same. Most make the assumption that your tax bracket will be lower in retirement b/c your income will be less (supposedly you spend 70-80% less in retirement, although an article in "Fortune" recently said 80-90% is more realistic possibly). And if your tax bracket would be lower then you'd want to go with tax-deferred investments as I mentioned above.

With longer time horizons, the present value of a dollar saved today vs. one saved in 20-30 years might still outweigh a higher tax bracket upon retirement. But those calculations are probably not as useful as going out and working hard and making lots of money!

Retire@50 - you raise a great point about paying it off. Where will you be investing the money earmarked for house-payoff for those 6-7 years? Was that 4.5% interest rate including the interest deduction (of course you're close enough, there probably isn't much interest)?

[retire@50]

Originally Posted by jmjj215

Retire@50 - you raise a great point about paying it off. Where will you be investing the money earmarked for house-payoff for those 6-7 years? Was that 4.5% interest rate including the interest deduction (of course you're close enough, there probably isn't much interest)?

No the 4.5% interest rate doesn't include the interest deduction, if I take that into account I'm really only paying 3.5% in interest. I diversify my investments, so 20% will go to foreign funds, 20% to small caps, 20% growth stocks, 20% value stocks, 10% health care fund and 10% REITs.

[cicy33]

Originally Posted by retire@50

No the 4.5% interest rate doesn't include the interest deduction, if I take that into account I'm really only paying 3.5% in interest. I diversify my investments, so 20% will go to foreign funds, 20% to small caps, 20% growth stocks, 20% value stocks, 10% health care fund and 10% REITs.

Anyone else lost? sounds like a foreign language to me! I wish I understood more then I could probably invest better. my company matches 3% on a simple IRA that is done for me. I wish I understood it better.