I have the option through my employer to choose to invest in either a Roth 401k or Traditional pretax 401k plan through Fidelity. I already max out my Vanguard Roth IRA, but I sometimes find myself struggling with the decision on where to draw the line on when I switch over to Traditional, or go 50/50 or some other split. My current salary is 92,000 base, with a possibility for 13,000 in annual bonuses. I also make about 10-15k on the side from AirBnB rentals.
When I last made my investing decisions, I was making around 75,000 with 8k in bonuses, and about 6k a year in AirBnB rentals.
My current reasoning for staying 100% Roth is that I believe we are experiencing the lowest income tax we ever will in the US, and with our huge deficit it is likely that this will increase at some point. This might be stupid reasoning and I'm happy to listen to anyone who thinks that's a terrible line of thinking. I also know that the pretax accounts have required distributions when you reach a certain age, and that those distribution percentages increase with time. I'm currently 27, and as my name suggests, I believe we'll experience a technological singularity at some point within my lifetime. With this comes the possibility of greatly extended lifespans. If my life expectancy goes from 80 to 150 for example, I don't want to be forced to take my money out of the a tax free growth environment.
So those are my two main reasons for doing what I'm doing. First, I'd love to have some criticism on why these are bad reasons, as well as hear from all of you what your reasons are for choosing one way or the other.
Submitted November 02, 2018 at 07:58AM by MrSingularitarian https://ift.tt/2OfkVwd
