A few thoughts as the year comes to a close:
Fairmark has updated to reflect the 2009 rates, and it’s worth a look. Quite a few updates to note, personal exemption and standard deduction have both gone up, as expected, creating an $18,700 “zero bracket” amount. If you retire today with no other taxable income this represents a 4% withdrawal rate from a sum of $467,500 saved pretax. I’ve written a bit about the pre tax vs post tax investment discussion and this adds to that.
Next, each tax bracket has shifted, so inflation won’t add to your tax burden. See the charts.
Last item I’d point out – 401(k) limits have gone up, $16,500 for under 50 yrs old, and $22,000 for those 50 and older in 2009. IRA limits have not changed, $5,000 and $6,000 respectively.
One more post, and we say goodbye to 2009.