As Tax Day approaches, many Americans will be making investment decisions for retirement. Conventional wisdom holds that young investors in lower income brackets benefit the most from investing in post-tax retirement vehicles such as
“Our analysis emphasizes two aspects of the
For example, O'Doherty pointed out that the tax rate for married taxpayers with inflation-adjusted income of
“The most important thing is that people are saving for retirement,” he said, noting that recent research shows one in four American workers has less than
How you save counts too, O'Doherty said. The exact “right” mix of investments depends on the individual, their age, income and tolerance for risk. Except for those investors in the lowest tax brackets, most individuals should split their retirement savings between traditional and post-tax investments, O'Doherty said.
“For retirement contributions, a good rule of thumb is to invest 20 percent plus your age into traditional, tax-deferred accounts,” he said. “Applying this rule, a single 40-year-old investor with at least
According to the
O'Doherty's co-authors are