A major benefit of accounts that allow pre-tax contributions during your working years is the deduction that comes with those contributions. If you're in a middle to high tax bracket, the deduction is especially meaningful. It is likely (though not guaranteed) that you'll have a lower income in retirement when you pay ordinary income tax…
A major benefit of accounts that allow pre-tax contributions during your working years is the deduction that comes with those contributions. If you're in a middle to high tax bracket, the deduction is especially meaningful. It is likely (though not guaranteed) that you'll have a lower income in retirement when you pay ordinary income tax on withdrawals.
The tax-free growth is a nice benefit that becomes more valuable as you de-risk over time, adding investments like bonds with higher yields, the income from which would otherwise show up on your tax return. Having tax-deferred retirement or HSA accounts also allows the opportunity for tax alpha via tax location optimization.
A major benefit of accounts that allow pre-tax contributions during your working years is the deduction that comes with those contributions. If you're in a middle to high tax bracket, the deduction is especially meaningful. It is likely (though not guaranteed) that you'll have a lower income in retirement when you pay ordinary income tax on withdrawals.
The tax-free growth is a nice benefit that becomes more valuable as you de-risk over time, adding investments like bonds with higher yields, the income from which would otherwise show up on your tax return. Having tax-deferred retirement or HSA accounts also allows the opportunity for tax alpha via tax location optimization.