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Maximize Tax Benefits
- Invest tax savings from traditional 401(k) contributions in a Roth IRA.
- This gives you tax diversification and tax-free growth.
FICA's Impact
- FICA taxes are paid on both traditional and Roth 401(k) contributions but not on withdrawals.
- This fact influences our perception of needed retirement income.
Retirement Tax Brackets
- Higher earners are less likely to be in a higher tax bracket in retirement than during their working years.
- This is because their spending would have to exceed peak earnings, which requires an enormous nest egg.