The Tax Benefits of Retirement Saving
Who doesn't like saving money on their taxes, T. Mann Financial can help you best utilize the tax benefits of retirement savings.
Types & Treatment of Tax Preferenced Accounts
Federal tax law provides several incentives for retirement saving. Understanding which accounts apply to your situation may help you make informed contribution decisions each year.
Contributions
Distributions
Growth in the account
Pre-tax or Tax Deductible
Tax-Deferred
Tax-Free
Traditional Retirement Accounts
Roth Retirement Accounts
Non-Qualified Annuities
Types of Retirement Accounts
Pre-tax or tax-deductible contributions & tax-deferred growth.
SIMPLE IRA
SEP IRA
401(k)
403(B)
457
After tax contribution
Tax-free growth & withdrawals
Roth 401(k)
Roth 403(B)
Roth 457
Individual
Traditional IRA
Roth IRA
Roth vs. Traditional IRA
For 2026, you may contribute up to $7,500 across your traditional and Roth IRAs combined ($8,600 if you are age 50 or older, which includes the $1,100 catch-up contribution). Source: IRS.
Roth IRA
Why choose a Roth IRA?
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If you expect to be in a lower tax bracket now and a higher tax bracket in retirement.
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If you need the flexibility to withdraw your contributions at any time without owing taxes or penalties.
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At age 59½, qualified withdrawals of contributions and earnings are generally tax-free if the account has been open at least 5 years. Other qualifying events also apply.
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Why you might avoid a Roth IRA?
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Roth IRA contribution limits are reduced or eliminated at higher incomes.
Traditional IRA
Why choose a Traditional IRA?
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If you expect to be in a higher tax bracket now and a lower tax bracket in retirement.
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If you need the tax-break today.
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Why you might avoid a Traditional IRA?
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The amount you can deduct for contributions may be reduced or eliminated if you or your spouse is covered by a retirement plan at work.
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There are Required Minimum Distributions
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You may withdraw your Roth IRA contributions at any time without taxes or penalties. Earnings withdrawn before age 59½ or before the 5-year holding period is met may be subject to income tax and a 10% additional tax.
Saver's Credit
The Saver’s Credit is a great way for low and moderate-income people to save for retirement while also earning valuable tax credits.
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The Saver's Credit is a non-refundable federal tax credit available to eligible low- and moderate-income taxpayers who contribute to a qualified retirement or savings account, including:
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Employer-Sponsored Retirement Accounts
Individual Retirement Accounts
ABLE Accounts
Claiming a saver's credit when contributing to a retirement plan can reduce an individual's income tax burden in two ways.
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the saver's credit reduces the actual taxes owed, dollar for dollar.
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you receive either a reduced tax bill today or tax free withdrawals in retirement via a qualified account.
The credit is worth a maximum of $1,000 ($2,000 if you file jointly in 2026).
Calculate your credit with the contribution chart.
Who Qualifies for the Saver's Credit?
Besides falling into one of the income tiers, you'll also need to meet the following IRS requirements to qualify for the credit:
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The Power of Tax Credits Vs. Deductions​
Deductions lower your tax bill by reducing your taxable income, a credit directly reduces your tax bill.
Saver’s credit is not a refundable credit.
Changes coming in 2027
Beginning with tax year 2027 (returns filed in 2028), the SECURE 2.0 Act replaces the Saver's Credit with the Saver's Match, a federal matching contribution paid into eligible retirement accounts. Source: IRS, SECURE 2.0 Act.
Retirement Income
How much income should I expect in retirement?
Social Security Income
Who Qualifies?
Workers 62 and older who earned at least 40 credits by paying Social Security Taxes on earnings.
How Much Will I Receive?
In 2026, the maximum monthly benefit for someone at full retirement age was $4,152, but the average retired worker receives just $2,071. -ssa.gov
When Should I Start?
Social Security Timing may increase or decrease your monthly benefit and the total lifetime amount you receive.
Average Retiree Income by Source
Required Minimum Distributions
The SECURE 2.0 Act raised the required minimum distribution (RMD) starting age from 72 to 73 in 2023 and will raise it to 75 by 2033. This delays the age at which retirees must begin taking RMDs from most non-Roth retirement accounts. Source: IRS, Retirement Topics — RMDs.
Imagine you turn 73 and live well off of your social security and pension and haven't taken any money out of your other retirement accounts yet.
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RMDs from non-Roth accounts are taxed as ordinary income, which can affect your overall tax picture in retirement. Planning ahead may help you understand the timing and potential tax impact.
T. Mann Financial works with Springfield and Eugene clients on retirement income strategies.​
What is excluded from RMDs?
Roth IRAs are not subject to RMDs during the original owner's lifetime.
How Much Should I Be Saving?
T. Mann Financial can help you determine how much you need for retirement.
How much do I need?
The traditional advice is to expect to replace
70 - 85%
of your current income in retirement
A common rule of thumb suggests retirees may need to replace approximately 70% to 85% of their pre-retirement income to maintain their standard of living. Actual replacement needs vary by individual circumstances. Source: U.S. Bureau of Labor Statistics, Consumer Expenditure Survey and industry retirement research.
T. Mann Financial Helps Answer this Question
in an Individualized Data-Driven Approach
T. Mann Financial leverages multiple financial planning tools to make a custom data driven retirement plan for our clients. The output is a data-informed plan you can revisit and update over time.
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We start with your goals and current situation to forecast out to help you think more strategically moving forward.
