Are You Optimizing Your Savings Strategy?

by Timothy R. Boyle, AAMS®, CRPC®

November 5, 2018


Where you save your money matters. It determines not only how the money grows, but equally — if not more significantly — how you can withdraw your money. When and how often Uncle Sam gets his hands on your money can make a huge difference in how much you actually get to keep when it comes time to withdraw the money.

Are you deferring today’s tax rate to pay tomorrow’s?

Are you paying taxes today but never again?

Or are you planning to pay taxes now and again when you withdraw the money?

Let’s look at the basic tax implications of popular types of savings strategies:

401k/403b/IRA

  • Contributions need to stay in the plan until age 59 ½ to avoid early withdrawal penalties

  • Contributions are tax-deferred (no taxes until withdrawn)

  • Contributions have the potential to grow while taxes are deferred

  • Contributions are taxed as income when withdrawn

  • Mandatory withdrawals required at age 70 ½

Brokerage & Banks Accounts

  • Money is invested after taxes

  • Interest and dividends are taxed annually

  • Investments that are sold may be taxed as capital gains or treated as losses

Roth IRA

  • Contributions are made after taxes

  • Money grows potentially tax-free*

*dividends and interest withdrawn before age 59 ½ could have taxes on earnings plus a 10% penalty

Diversified Savings

  • Spreading assets among different savings strategies gives the ability to choose which money is taxable, which is tax-deferred and which is tax-free

Are you optimizing your savings strategy or curious how this applies to your situation?

Click here to schedule a 15 minute phone call or email us at info@boylegroup.com

We can evaluate how you are saving now, and we will let you know if your savings strategy could be improved.

If you’re already retired, don’t worry. It’s not too late! There are strategies available to help you, too.