Paying taxes
So I fI was going to put 30,000 in retirement can I use that as collateral or finance a toyhauler?
Forum Discussion
You want to put everything you can, IRS permitting, into your retirement savings.
That has nothing to do with avoiding taxes, now or later, it is all about having enough there to live on. When you retire, you will have to live on SSI retirement and earnings or scheduled withdrawals from those savings.
Whether you save pretax, after tax, that is up to you, (and IRS limits on pre-tax savings). Saving pre-tax, you are taking chances on your tax rates now vs what those rates will be when you take the money out. FWIW, 10 years after retirement, my marginal income tax rate on withdrawals from retirement saving are somewhat higher than the marginal rates I was paying most of the time when I was working, so tax deferral turned out not to work so well for me.
Can you use your retirement savings as collateral? I haven't found lenders willing to do that, they make their loan decisions based on you ability to pay back and want collateral that they can seize. They can't seize your retirement savings in IRAs or 401K plans.
What you can do, with some plans, is borrow the money from yourself. Interest rates may be higher than market rates, but you are paying the interest back to yourself. This is not a wise thing to do if you don't have time to pay back the loan before retirement.
That has nothing to do with avoiding taxes, now or later, it is all about having enough there to live on. When you retire, you will have to live on SSI retirement and earnings or scheduled withdrawals from those savings.
Whether you save pretax, after tax, that is up to you, (and IRS limits on pre-tax savings). Saving pre-tax, you are taking chances on your tax rates now vs what those rates will be when you take the money out. FWIW, 10 years after retirement, my marginal income tax rate on withdrawals from retirement saving are somewhat higher than the marginal rates I was paying most of the time when I was working, so tax deferral turned out not to work so well for me.
Can you use your retirement savings as collateral? I haven't found lenders willing to do that, they make their loan decisions based on you ability to pay back and want collateral that they can seize. They can't seize your retirement savings in IRAs or 401K plans.
What you can do, with some plans, is borrow the money from yourself. Interest rates may be higher than market rates, but you are paying the interest back to yourself. This is not a wise thing to do if you don't have time to pay back the loan before retirement.
