New retirement withdrawal rule could backfire in costly way

[Jeff S.]

I know all you youngsters think you won't get older but it happens. So what you say.

For those of you that are socking money away in tax deferred accounts planning on taking it out in old age. If you have a lot and your distributions are really big like you hope, the tax man will have his day with you. Think that financial planner can tell the future about tax rates later? 

[V.G Jason]

Quote from @Jeff S.:

@V.G Jason the article that this heading came from is referring to Biden allowing people to not have to start RMD (required minimum distribution) until 73 supposedly making it easier to save for retirement.

The kicker is you save when young and that money sits wherever accumulating future tax burdens without you knowing what your income might be like when you are 73 or 75 or whatever. 

The plan is to have lots of income from rentals or dividends or all of it and even though there is no w2 you are in a high tax bracket so cashing in those deferred accounts pushing you into higher brackets.

To top it off your SS gets taxed at higher rates and your medicare premiums goes through the roof. Consequently many folks try to put off cashing in the deferred accounts only to pay big time later.

 Retirement will be interesting to see it play out. It's hard to speculate, I think the best things we can do is minimize all debt by the time we enter it. That's been my strategy. I always get asked why I don't retire young, and people who do that never realize they're going to be behind the 8 ball within 3-7 years. If they're lucky, maybe a decade. I think the safe assumption is to assume SS won't be there, taxes will be higher, and you need to eliminate debt but have 3-5 sources of income. Taxes will be what they are we really cannot control that. RMDs are a trick.