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Personal savings rate?

Discussion in 'Business, Careers & Education' started by norcaltransplant, Dec 11, 2011.

  1. otc

    otc Well-Known Member

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    Also, luckily everybody can still contribute to a traditional IRA...

    You lose the same-year tax benefits above the income limit, but you still benefit a ton from not paying taxes on the interim gains (or at least you do if you have a little bit of churn or hold some tax disadvantaged assets like REITs).

    I do wish that the income limit on the traditional IRA was a little higher. IIRC, once you hit the income limit to stop contributing to a Roth, you are already at the point where the tax benefits on the Traditional IRA start to roll off.
     
  2. Piobaire

    Piobaire Well-Known Member

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    This is why when people making around 200-350k get accused of being "rich" and having all these tax loopholes I laugh. A guy making 100k has more tax dodges than a guy making 250k.
     
  3. otc

    otc Well-Known Member

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    At the end of the day, the 250k guy is still better off than the 100k guy...and its not like not paying taxes on your 5k IRA contribution and deducting a couple hundred bucks worth of student loan interest is actually that big of a shift in the long run.

    The real tax loopholes don't start until you are making far more than 250k (and it doesn't hurt to have an employer who is willing to play ball as far as wacky compensation schemes go)
     
  4. Piobaire

    Piobaire Well-Known Member

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    But "better off" doesn't mean he has more tax advantaged things to play with. The real tax plays come around 500k or so when you get the attention of people dedicated to wealth management, etc. and have cash flow high enough you can take a long term view on things.
     
  5. AndyMG

    AndyMG Well-Known Member

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    What sort of % interest can you get on personal savings in the USA?

    Over here in the UK, savings rates were poor for several years, however they're now starting to slowly increase despite the base rate remaining low.

    3% is now easily available on an ISA (Individual Savings Account - a tax free limited savings account), rising to about 4.5% for a 5 year bond.
     
  6. Quadcammer

    Quadcammer Well-Known Member

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    shit on a regular old savings account, you're lucky if you see 15bps. High yield, 100bps give or take.

    2 year cd, maybe 1.5%
     
  7. norcaltransplant

    norcaltransplant Well-Known Member

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    Wrong.

    Backdoor Roth IRA
     
  8. thenanyu

    thenanyu Well-Known Member

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    I dropped a chunk of change 5 years ago into a 10-year 5% CD. I wish I had done more.
     
  9. Piobaire

    Piobaire Well-Known Member

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    No idea what this is. Please share.
     
  10. otc

    otc Well-Known Member

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    Since they removed the income limits on roth IRA conversions, you can technically still get one every year.

    Basically you max out a traditional IRA and then pay the taxes and convert it to a Roth. Of course if you are also at the point where you lose the traditional IRA tax benefits, you are paying a hefty tax bill up front to avoid ever paying taxes again.
     
  11. Piobaire

    Piobaire Well-Known Member

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    Oh yeah, that sucks. Pay in with post tax dollars then pay more money to convert to Roth?

    Been thinking about buying some sort of annuity lately but just something about annuities I don't like.
     
  12. Quadcammer

    Quadcammer Well-Known Member

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    yeah, no joke.

    I remember i got a 5.60% rate on a Wamu CD right before jpm acquired them. 3 days later, rate dropped to like 3%
     
  13. blahman

    blahman Well-Known Member

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    In Australia right now you get about 4.5% on a pretty normal savings account. Goes up to about 5.5% for special accounts if you don't withdraw. House prices are still crazy high here now with a pretty ordinary house in an ordinary suburb costing at least $550K. Saving for a house, but it's tough enough to save to get a deposit on one let alone thinking about the mortgage repayments when I take out the loan.
     
  14. thenanyu

    thenanyu Well-Known Member

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    Are those accounts government insured?
     
  15. norcaltransplant

    norcaltransplant Well-Known Member

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    You cannot avoid paying taxes on any retirement contributions beyond the 17k alloted for 401k/403b employee contributions or 49k SEP contributions. For people in the 33% & 35% marginal tax brackets, contributing an extra 5k to a traditional IRA and then converting it to a Roth IRA makes a minuscule impact on front-end tax liability, but permits tax free growth on the basis. Just make sure to fill out form 8606 and keep it in a safe place.
     
  16. blahman

    blahman Well-Known Member

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    Yes.
     
  17. Piobaire

    Piobaire Well-Known Member

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    Thanks. I will talk to my tax CPA about this. My main thing in the last two years has been the deferred comp.

    Married couple can make this 10k?
     
    Last edited: Apr 23, 2012
  18. mikeman

    mikeman Well-Known Member

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    Might be strange but, but as a savings/ investment I try to buy some physical silver each paycheck. Adds up quickly, plus has possible potential for great % gains. especially in these very uncertain times. Not to mention rates suck for someone like me with little income. Oh yeah, it keeps up or beats inflation at the least.:satisfied:

    oh yeah, I also contribute 7% to my 401k, as I have plenty of time to let that go up and down.
     
    Last edited: Apr 24, 2012
  19. SkinnyGoomba

    SkinnyGoomba Well-Known Member

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    I would be hesitant to consider something like that when you can turn about 3% in interest payments from a reasonably stable bond fund like PIMCO total returns.
     

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