Reducing taxes

[Tlrussell]

So I was looking through my paystubs and realized I have paid a lot in taxes this year. I have a pension but have started to put money in a 401K. I am new to investing and have a few questions. My 401K isn't matched at all by my employer. Should I be maxing out my contibution pre tax and will that lower my tax liability? Also should I put money in after tax if I max out the $23K we can put in next year?

Start a YouTube channel and lay off all your hunting expenses

 

[mxracer317]

So I was looking through my paystubs and realized I have paid a lot in taxes this year. I have a pension but have started to put money in a 401K. I am new to investing and have a few questions. My 401K isn't matched at all by my employer. Should I be maxing out my contibution pre tax and will that lower my tax liability? Also should I put money in after tax if I max out the $23K we can put in next year?

See if you can do a Roth 401k. Taxes are on sale right now. They’re only gonna go up later with a +$33 trillion current deficit.

 

[AlaskaHunter]

Another consideration is health insurance policy costs if retiring before age 65 and Medicare kicks in.
I retired at 62 and we saved over $25k per year in health insurance premiums by
keeping our income below the threshold required for Obamacare subsidy.

That also helped keep us in the 12% tax bracket and more savings invested in the 401k to grow for the future.
We could do this easily because we have no major expenses (house paid off, no car payments, no debt, no kids)
and enough in Roth and savings to limit our withdrawal from 401-k until age 65.

 

[sigpros]

Thanks guys. I just hate paying all these taxes. I don't know a lot about investing etc, i understand a roth is pay the taxes now not when you with draw it. But my regular 401K i put into it pre tax so isn't it reducing my tax liability now? I'm putting 22% in at the moment and I do not have a match of any kind.

 

[Trial153]

I am going to get overly simplistic for the sake of conversation taking place on a forum


If your primary concern is limiting your current tax liability then you should be making a contribution up to the maximum 2024 limit of 23k into your current 401k.
At that point you should adjust your employer withholding and/ if you make quarterly payments to an appropriate amount.

 

[Mallardsx2]

Another consideration is health insurance policy costs if retiring before age 65 and Medicare kicks in.
I retired at 62 and we saved over $25k per year in health insurance premiums by
keeping our income below the threshold required for Obamacare subsidy.

That also helped keep us in the 12% tax bracket and more savings invested in the 401k to grow for the future.
We could do this easily because we have no major expenses (house paid off, no car payments, no debt, no kids)
and enough in Roth and savings to limit our withdrawal from 401-k until age 65.

Do what he did. If possible.

I'll be doing a version of this but starting at age 54.