Money at 30: Retirement and Taxes

Surely you’ve heard it said that, in this world, nothing is certain except death and taxes. Of course, before you get to the death part, you have to go through retirement first (well… hopefully). Thus, while this idiom finds a humorous and true connection between the two, I can’t help but associate retirement with taxes as well — especially during this time of year.

A few weeks ago I wrote on how I was preparing for tax time early. Since then my wife and I have not only been thinking about our impending tax bill overall but also considering where our retirement contributions factor in. With that, here’s a look at our tax and retirement dilemma.

Making up for my lack of 401(k)

One of only a handful of negatives that come with being self-employed is that I can no longer take advantage of employer 401(k) matching programs like I did at my old gig. In fact I no longer have a 401(k) of my own (or at least not one I regularly contribute too — there’s is still an old one floating around). Because of this, my wife and I have looked for ways to make up these funds elsewhere.

Our first step was to ensure that we were taking full advantage of the employer 401(k) matching offered by her work. Sadly her company’s matching scheme isn’t the greatest, but it is certainly something… and free. Additionally we scaled her contribution percentage way up so that it could essentially act as contributions from both of us. So far this method has worked well, but that’s not all we’ve been doing.

Our other retirement accounts

The 401(k) my wife now has is actually relatively new — only about seven months at this point. Luckily we also have a Roth IRA my wife has been keeping for several years as well as a rollover IRA I have from my movie theatre days. While my IRA admittedly sits lonely most of the time, our Roth IRA has been getting some love in recent months.

During the last tax season, my wife and I took note of how underwhelming her IRA returns were for the year. As it turns out, back when she first opened the account, she chose the ultra-conservative money market account, meaning her money wasn’t actually invested. We rectified that last summer by moving the savings to a mutual fund instead. While this did mean some extra fees upfront and some financial risk overall, it has led to much greater gains from that account.

Comparing the accounts for our tax time move

Now comes the real question: where do we put out extra money ahead of the April tax deadline? In case you weren’t aware, you can contribute to your IRA up until tax day (April 18th this year) and have it count toward 2016’s taxes. This leaves us with a few options:

Option 1 – Add money to my IRA

Even though my IRA is the one we contribute to the least, it might actually make the most sense to contribute to now. That’s because our contribution would help bring down our tax bill, which could come in handy.

Option 2 – Add it to the Roth IRA

Since we haven’t hit our contribution limit for the Roth IRA yet, getting us closer to the number might be a good goal. Then again, since it is a Roth, it won’t benefit our taxes immediately and could really be done anytime during the year (as long as we’re below the $5,500 limit of course).

Option 3 – Up the 401(k) contribution instead

The last option would be to forgo a last-minute tax time contribution and simply adjust the percentage we contribute to my wife’s 401(k) once that opportunity comes around in July. Since we are already maxing out everything we can get from employer matching, this might not make the most sense but it is still an option.

The big decision

When you get down to it, perhaps the best way for us to make our final choice is to run the numbers. This could prove difficult since our accounts have different amounts in them and have been opened for various lengths of time, but it would ultimately behoove us to contribute more to the account getting us the best return. I’m inclined to think that’s probably the Roth IRA since there are also tax benefits down the road, but couldn’t honestly tell you for sure just yet.

That said, there is more to the decision that just the dollars and cents. For example 401(k) contributions come straight out of your paycheck, making saving a forced habit. Then again, there are plenty of ways we could arrange to make regular contributions to our other accounts as well. In the end, it seems my wife and I have a lot to think about as we approach the April tax deadline — but that’s why you get started early!  

Tax time can be a stressful event but it also serves as a great time to really dive into your finances. As part of that, perhaps it’s time you considered your retirement savings and determining where there’s room for improvement. Instead of just turning over your account earning statements to your tax guy, be sure to take the time to give them a good look over. Even if you don’t end up making money moves directly intended to affect your taxes, it’s at least worth carving out a plan for the rest of the fiscal year.


Kyle Burbank

Kyle is a freelance writer and author whose first book, "The E-Ticket Life" is now available on Amazon. In addition to his weekly "Money at 30" column on Dyer News, he is also the editorial director and a writer for the Disney fan site and has recently starting publsihing his own personal finance blog at

Other Articles by Kyle Burbank

Best Dining Rewards Credit Cards

When it comes to credit card rewards, there are plenty of cards each covering its own purpose. However, among the most common categories featured is dining — and why not? Who doesn't love a family dinner out, date night delight, or a foodie tour of a new town? In turn, there's no shortage of cards that can reward diners in different ways. For those looking to earn more rewards while...

Money at 30: What it Was Like Purchasing My First Life Insurance Policy

A few weeks back, I reviewed a platform called Everplans that helps you organize important documents and info for your loved ones lest anything happen to you. On the heels of that, I penned a post all about preparing your finances for after your death. During the process of writing these articles, I couldn't help but think about how I had yet to purchase a life insurance policy of my...

Robinhood Cryptocurrency Wallet Overview

For years — pretty much from the moment Robinhood introduced support for cryptocurrencies — users have clamored for a way to send their assets off-platform via wallets. Finally, after literal years, the app began rolling out such a function in late 2021, with the roll-out continuing into the new year. Now, in addition to buying and selling select crypto assets, Robinhood customers can also send and receive coins. But how...