| | | Welcome to the group.
One thought is look into ROTH IRAs. I stopped contributing to my regular IRA once I started working for myself and didn't get an employee match. IF you can afford it, contributing after tax money to a ROTH is better in my opinion.
Often you take money out of an IRA in retirement and the income can push you into a level where your Social Security payments are taxed. Get even more successful as many of us here have, and the required RMDs push you into higher Medicare brackets where the government punishes us for saving rather than spending our money when we made it.
Even if you don't reach the levels to lose benefits, Money taken out of regular IRAs are taxed as regular income but if you invest in index funds or individual stocks with taxable funds, then the income years later is taxed at capital gains rates. IF your total income in retirement is low enough, there is no Fed tax on long-term capital gains.
From irs.gov
A capital gains rate of 0% applies if your taxable income is less than or equal to:
- $44,625 for single and married filing separately;
- $89,250 for married filing jointly and qualifying surviving spouse; and
- $59,750 for head of household.
Don't forget that as seniors, we get a bonus to the standard deduction so the total income we can earn and pay zero capital gains tax is significantly higher.
irs.gov
Additional standard deduction – You're allowed an additional deduction if you're age 65 or older at the end of the tax year.
Even if you are successful with your regular IRA and RMDs plus SS push you above the 0% rate, your capital gains tax rate is still significantly lower than the fixed income rate
Again From irs.gov
A capital gains rate of 15% applies if your taxable income is:
- more than $44,625 but less than or equal to $492,300 for single;
- more than $44,625 but less than or equal to $276,900 for married filing separately;
- more than $89,250 but less than or equal to $553,850 for married filing jointly and qualifying surviving spouse; and
- more than $59,750 but less than or equal to $523,050 for head of household.
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