"Should I Do Pre-Tax or Roth If I'm In A High Tax Bracket?"

Early Retirement - Financial Freedom (Investing, Tax Planning, Retirement Strategy, Personal Finance)

Ari Taublieb, CFP®, MBA

Entrepreneurship, Investing, Business, Careers, How To Retire, Retirement Planning, Stock Investing, Real Estate Investing, Retirement, Personal Finance, Save On Taxes, Early Retirement

4.7 • 585 Ratings

🗓️ 29 May 2023

⏱️ 16 minutes

🔗️ Recording | iTunes | RSS

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Summary

In today's episode of the Early Retirement Podcast, Ari discusses how to think through pre-tax or roth for the benefit of your long-term financial and tax strategy. Ari Taublieb, MBA is the Vice President of Root Financial Partners and a Fiduciary Financial Planner specializing in helping clients navigate the nuances of an early retirement (non-traditional retirement). -> Create Your Custom Strategy To Retire Early -> Free E-Book: A Complete Guide To An Early Retirement Let's Connect...

Transcript

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0:00.0	One of, if not, the question I'm asked the most, are a should I invest in Roth or pre-tax?
0:05.7	If I am in a high tax bracket, I am in one of likely the highest tax brackets I will ever be in
0:11.6	because I'm planning on retiring soon and I don't know what to do. Do I do pre-tax? I'm in a high
0:17.2	bracket now. Do I do Roth? What makes most sense for the long term with that tax-free
0:21.5	growth? What about future RMDs? Required minimum distributions? I'm going to get into all of that today.
0:27.7	And I recognize that as I'm going to be going through this, this is going to be one of those number
0:32.3	heavy episodes, if you will. So sometimes it can be difficult to follow through a podcast.
0:37.3	It is my job to make that simple
0:39.0	and for you to understand it. And if I don't, then I haven't done my job well. So that is my goal today.
0:45.1	Before I hop into today's episode, as always, I am doing all of this content and more on YouTube.
0:50.8	And you can check that out there if you are looking for content where you can see
0:55.2	me work through examples like this. If you're listening to this on the road or working out,
1:00.4	then extra credit goes to you because it is difficult to follow along sometimes while doing
1:05.5	some burpees or while driving. I want to make sure that you are absolutely getting the most
1:09.7	out of this content that I work hard to prepare for you all. So hope you are loving it. And as I'm going through this today, please know if you have a question, you can always submit that, early retirement podcast.com. So without further ado, let's hop right in. So the best way I like to go through this conversation is going over a few basic things
1:28.4	that I'm going to hit you with an example that I hope will resonate. So more often than not,
1:32.6	I'm going to pretend that I know what's in your brain right now. I probably do that too much,
1:36.8	but I'm going to pretend right now that you're in a high tax bracket. Let's call it maybe the 24%
1:41.9	bracket. Don't know exact income, but if we're looking at it,
1:46.1	maybe you're between 178,000 to 340, just taxable income. And I'm going to pretend that you've
1:52.5	saved and invested well. So let's say that you've got maybe 2.3 million in pre-tax accounts,
1:59.0	maybe some other accounts, but let's just assume you've saved
	...

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