You’ve probably been told at least a few times in your life that you should be putting money aside “for a rainy day”, but perhaps it hasn’t yet crossed your mind to begin planning, specifically, for your future retirement. If you think it’s too early, or if you feel you’re not yet ready, financially … think again.
Sooner or later, people decide to start saving and investing for retirement. When that starting point arrives, taking that “first step” can seem like a big deal. Opening an Individual Retirement Account (IRA) amounts to an easy “first step” in retirement saving for many.
Will you pay higher taxes in retirement? Do you have a lot of money in a 401(k) or a traditional IRA? If so, you may receive significant retirement income. Those income distributions, however, will be taxed at the usual rate. If you have saved and invested well, you may end up retiring at your current marginal tax rate or even a higher one. The jump in income alone resulting from a Required Minimum Distribution could push you into a higher tax bracket.