Great video. Very valuable information. I just retired and looked into Roth conversions. One of the reasons I am not converting yet is that my marginal tax rate is higher today than it will be in a couple of years when my spouse retires.
Thank you for helping me understand ❣️❣️❣️ why I need to focus on marginal tax rate rather than effective tax rate in order for me to make better decision in where to draw the money in retirement. I finally understood what you meant by social security tax torpedo. I think this is the key concept to why you don't need more money in retirement, but you need a better plan. Thank you ❣️❣️❣️
Jerome, that example was a very hypothetical example just to clearly explain why focusing on Marginal Tax Rate matters vs. Effective Tax Rate. We believe this concept is easier to understand using a simple hypothetical example vs. explaining a layered example using the real tax brackets. Sorry if this created any bit of confusion
I agree. In his example, he should have stated ROTH IRA, not Traditional IRA. This is very confusing, particularly to those that are new to TRIA/ROTH tax issues.
I find the treatment of social security tax here to be kind of misleading. Saying that 50% of your social security income is taxable is not equal to saying you pay 50% tax rate on your social security income. I think your graphics and discussion make this very easy to confuse.
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Great video. Very valuable information. I just retired and looked into Roth conversions. One of the reasons I am not converting yet is that my marginal tax rate is higher today than it will be in a couple of years when my spouse retires.
Thank you for helping me understand ❣️❣️❣️
why I need to focus on marginal tax rate rather than effective tax rate in order for me to make better decision in where to draw the money in retirement.
I finally understood what you meant by social security tax torpedo. I think this is the key concept to why you don't need more money in retirement, but you need a better plan. Thank you ❣️❣️❣️
Thank you for the video! Everything was very clear. I like the hypothetical world example.
You are welcome! Glad you found value here :)
Why is the first 80K tax free? Aren't traditional IRA's subject to tax? I understand the Roth part is not taxed.
Jerome, that example was a very hypothetical example just to clearly explain why focusing on Marginal Tax Rate matters vs. Effective Tax Rate. We believe this concept is easier to understand using a simple hypothetical example vs. explaining a layered example using the real tax brackets.
Sorry if this created any bit of confusion
I agree. In his example, he should have stated ROTH IRA, not Traditional IRA. This is very confusing, particularly to those that are new to TRIA/ROTH tax issues.
Thanks for clarifying.
Great info, thank you!
Thanks Pedro!
80% tax free means you are assuming a couple not an indivdual? You should make this clearer.
I find the treatment of social security tax here to be kind of misleading. Saying that 50% of your social security income is taxable is not equal to saying you pay 50% tax rate on your social security income. I think your graphics and discussion make this very easy to confuse.
Very well explained.
Thanks Amyla!
Let's stick with real life examples