How Your Future Tax Bracket Can Save You Money Today

Every so often, a client question comes up that’s worth sharing more broadly because it highlights how small decisions can meaningfully affect long‑term outcomes.

A client recently asked whether she should shift more of her 401(k) contributions into Roth based on advice she’d heard elsewhere. On the surface, it sounded reasonable — Roth contributions can be a great tool in the right circumstances.

But in her case, the actual math told a very different story.

Today, she’s in the 22% marginal tax bracket (and in strong bonus years could briefly touch the 24%). In retirement, however, her mix of assets, Social Security timing, and income sources is projected to keep her almost entirely within the 12% tax bracket.

That difference — paying 22% today versus 12% later — is meaningful. On a full 401(k) contribution, it’s thousands lost to unnecessary taxes.

Looking at your expected tax brackets over time — not just today’s — can make a big difference. Many people naturally fall into lower brackets later in life, and understanding that path helps avoid paying higher taxes now when it isn’t necessary.

By keeping her contributions pre‑tax today (aside from the required Roth catch‑up), she avoids paying higher taxes now and instead takes those withdrawals later at a much lower rate. It’s a simple example of how personalized planning can create real savings over time.

The takeaway:
A helpful way to think about Roth vs. pre‑tax is to compare two numbers: the tax rate you’re paying on contributions today and the tax rate you’re likely to pay on withdrawals later. When those two numbers are far apart, the better choice usually becomes obvious.

If you ever want to talk through something you read here or have a question about your own situation, you’re welcome to schedule a brief, free Q&A conversation: CLICK HERE

Take care and, as always, stay the course.

Colburn Wealth Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve