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Why Did Goldilocks Get It Wrong?
First things first, Goldilocks is a thief – let’s just get that out of the way. But have you ever happened to notice the other, less obvious way that Goldilocks got it all wrong? Together we will explore that answer as it relates to your – you guessed it! – finances, but more specifically, we will look at how it refers to the type of accounts you can use to store and grow your wealth.
Maxing and Relaxing
So, you want to live comfortably in your future years and you’re not so sure it’s going to happen. What to do? The best step is to maximize your savings. If you’re not already putting the most you can into your retirement accounts, consider starting now.
How to Use Traditional Retirement Accounts
Traditional Retirement Accounts are tax-deferred. This means you get a tax deduction when you put money in, and you pay tax when you take money out (usually in retirement). Most typically, these are your Traditional 401k and Traditional IRAs.
The Three Types of Account Taxability
We have many choices when investing. Today, we are going to look at the different ways an account may be taxed: now, in the future, and never again. Given these choices, we might think the “never taxed again” structure is best and the “taxed now” is worst, but there’s much more to the story.
Consider Taxes When Making Withdrawals
I know that might sound odd as we tend to save throughout our working life and even sometimes well into our retirement years. But there will be times you need to withdraw your savings and it’s important to consider the tax implications.