Julia is age 25. Her income tax rate is now 20%, but will be 15%...
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Julia is age 25. Her income tax rate is now 20%, but will be 15% after retiring at age 65. She invests enough into her 401(k) to reduce her take-home pay by $1600. She receives a 25% match from her employer for 401(k) contributions. If she earns a 4% annual pretax return, and withdraws everything after retiring at age 65, the amount she can spend after taxes will be 7,896 8,760 9,503 8,407 10,344 9,182 10,202 Michelle is age 25. Her income tax rate is now 25%, but will be 15% after retiring at age 65. She invests enough into her 401(k) to reduce her take-home pay by $750. She receives a dollar-for-dollar match from her employer for 401(k) contributions. If she earns a 4% annual pretax return, and withdraws everything after retiring at age 65, the amount she can spend after taxes will be $8,162 $4,801 $7,202 $7,816 $6,121 $5,612 All else equal, a typical DB pension plan will experience an actuarial loss if Market interest rates rise Market interest rates fall
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