Not a stupid question .... your right in your thinking ...... the Fed hasn't cut rates for the reason you stated .This may be a stupid question, but here goes..
Why would the Fed be planning to cut rates when inflation is still above 2%, and consumer spending ( excluding purchase of homes) is still very strong?
It would seem if you take out the crazy years of close to zero interest rates, that current rates are in the “normal” range.
I’m learning but the financial system is pretty complicated.Not a stupid question .... your right in your thinking ...... the Fed hasn't cut rates for the reason you stated .
My guess? To impact the cost of home ownership. If folks start blaming the cost of RE and mortgages, then they can show the mortgage cost dropping going into an election cycle, and say how they did this and that.This may be a stupid question, but here goes..
Why would the Fed be planning to cut rates when inflation is still above 2%, and consumer spending ( excluding purchase of homes) is still very strong?
It would seem if you take out the crazy years of close to zero interest rates, that current rates are in the “normal” range.
Very good point. 401k/IRA distributions (regular or RMD) are fully taxed as ordinary income. All the capital gain tax advantages on dollars you earned in those accounts are lost. There are some financial planners that recommend only funding a 401k with enough to get the company match, and saving the rest in an IRA (up to the annual max) or a normal brokerage account (which can take advantage of the capital gains rate).Is there some retirement thought process to using long term capitol gains (more than a year holding) on a stock sale (15%? taxable)?? If one profits $100,000 on a stock sale then only 15,000 is included as ordinary income. Is that better than taking RMD's from one's 401K or regular IRA?
There are a number of reasonably well respected economists who think that you do. I’ve heard more than one of them say they are likely won’t be any cuts this year. So certainly not a stupid question.This may be a stupid question, but here goes..
Why would the Fed be planning to cut rates when inflation is still above 2%, and consumer spending ( excluding purchase of homes) is still very strong?
It would seem if you take out the crazy years of close to zero interest rates, that current rates are in the “normal” range.
So if one were to keep working to 70 and wait as late as 70 to collect SS how late could one wait to fund a Roth IRA or Roth 401k? Assuming here that income would be much less.Very good point. 401k/IRA distributions (regular or RMD) are fully taxed as ordinary income. All the capital gain tax advantages on dollars you earned in those accounts are lost. There are some financial planners that recommend only funding a 401k with enough to get the company match, and saving the rest in an IRA (up to the annual max) or a normal brokerage account (which can take advantage of the capital gains rate).
I'm a big proponent of getting as much as possible into a Roth 401k or Roth IRA through funding or rollover as early as feasible. You have to pay the ordinary income tax on the rollover, but any gains in the Roth after that aren't taxed at all. That's even better than being taxed at the capital gains rate.
Better, I think, to get your funds into the Roth (401k or IRA) as early as possible. That way all your gains would be tax free, and over a long time those gains would be a lot. Plus, after retiring at 70, you probably wouldn't have the earned income to fund retirement accounts.So if one were to keep working to 70 and wait as late as 70 to collect SS how late could one wait to fund a Roth IRA or Roth 401k? Assuming here that income would be much less.
Some things to consider:Is there some retirement thought process to using long term capitol gains (more than a year holding) on a stock sale (15%? taxable)?? If one profits $100,000 on a stock sale then only 15,000 is included as ordinary income. Is that better than taking RMD's from one's 401K or regular IRA?
Difficult part to that strategy (401K up to company match, then IRA then brokerage) is you lose the option to roll to the Roth account at some point in the future. I don't have an opinion on what is "right" necessarily just something for people considering where to put the next dollar to keep in mind.Very good point. 401k/IRA distributions (regular or RMD) are fully taxed as ordinary income. All the capital gain tax advantages on dollars you earned in those accounts are lost. There are some financial planners that recommend only funding a 401k with enough to get the company match, and saving the rest in an IRA (up to the annual max) or a normal brokerage account (which can take advantage of the capital gains rate).
I'm a big proponent of getting as much as possible into a Roth 401k or Roth IRA through funding or rollover as early as feasible. You have to pay the ordinary income tax on the rollover, but any gains in the Roth after that aren't taxed at all. That's even better than being taxed at the capital gains rate.
Move to a state that doesn’t tax ssBetter, I think, to get your funds into the Roth (401k or IRA) as early as possible. That way all your gains would be tax free, and over a long time those gains would be a lot. Plus, after retiring at 70, you probably wouldn't have the earned income to fund retirement accounts.
My company offered a Roth 401k, but I thought my tax rate while working was higher than it would be after retirement so I funded my regular one instead. As it turned out, with inflation, waiting till 70 to collect SS, RMDs, and other income my tax rate will be much higher than I expected. If the tax cuts expire as expected, I'll be paying more income taxes in retirement than when I was working.
I have. Trouble is the Feds now tax 85% of Social Security payments.Move to a state that doesn’t tax ss
Yep no getting around federal taxes. If you need a write off, I’m available for adoption.I have. Trouble is the Feds now tax 85% of Social Security payments.
What? Your federal taxes on SS are 85%? How?I have. Trouble is the Feds now tax 85% of Social Security payments.
It that’s at the top of you marginal rate. So your likely still paying less than when you were working.85% is taxed, not an 85% tax rate. I think the rate is around 22%, so the tax is 22% of 85%.of the total SS payments.