Author Topic: You only max your 401(k) because you don't have kids  (Read 11436 times)

10dollarsatatime

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Re: You only max your 401(k) because you don't have kids
« Reply #50 on: July 14, 2018, 09:12:22 PM »
I hate this... I used to mention things at work like...

Me, "My thermostat in the winter is set at 65.  Keeps the bill down and I'm better acclimated to the cold."
Boss, "You can only do that because you don't have kids."

Me, "I'm maxing my 457, and thinking about upping my 401k contribution as well."
Boss, "You can only do that because you don't have kids."

Me, "I went with the high deductible health plan so I can have access to the HSA."
Boss, "You can only do that because you don't have kids."

I don't discuss life with him anymore.  It ticks me off that everything I accomplish is discounted because I don't have kids.

Still Being

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Re: You only max your 401(k) because you don't have kids
« Reply #51 on: July 16, 2018, 09:35:33 AM »
Quote
Most of my friends who have kids are cool, but I got a couple of those who think now that they have a kid, that I don’t understand anything anymore. You know those people? The most basic shit. “Hey, man, it’s kind of cold out today.” “Dude, you don’t understand. You don’t understand cold till you got a two-year-old with a mitten up his ass and you’re trying to get chocolate off the other one’s face.” “All right, all right, I get it, you have a more complex life, but I still understand being cold, teeth chattering. Kind of lets me know. Right?”

“Mine just turned six.” “Mine just turned seven.” I just feel hopelessly behind. So what I’m actually thinking of doing, I’m thinking about adopting. Yeah. Absolutely, recycle. You know? Think globally, act locally. Everything doesn’t have to be brand-new. You know? It’s like when you redo your kitchen. You got custom up top, you got IKEA down the bottom, right? I’d love to adopt. It’s a great thing to do.

 But if I do it, I’m not telling any of my friends. I’m just gonna show up with the kid one day, just to piss ’em off. “Mine just turned six.” “Mine just turned seven.” I’d love to just show up with an eight-year-old, like, “Dominoes! Yeah, now I get to tell you what you don’t understand. Seven-year-old? Wait till they turn eight, eight is such a funny age. Terrible twos? Try the instant eights! Bam!

From Bill Burr "I'm Sorry You Feel That Way"

jinga nation

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Re: You only max your 401(k) because you don't have kids
« Reply #52 on: July 16, 2018, 10:06:27 AM »
To be honest, I started maximizing my 401K and other pre-tax income reduction vehicles once I had my first kid. No more time to drink and party till dawn. Also started buying properties during the recession with leftover cash. Less cash in hand means increasing my immunity to impulsive frivoulous purchases.

jlcnuke

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Re: You only max your 401(k) because you don't have kids
« Reply #53 on: August 08, 2018, 12:04:19 PM »
You're able to max out your 401(k) because you don't have kids.  Kids are expensive.

Yet, single people with no kids have to pay far more taxes while married couples with kids get big tax breaks.

In an example I posted in a previous comment, the single woman making $70K/yr paid over 7 times as much tax as a family of four with the same household income.   So kids are expensive to single people who never had them also.

You are really letting your bitterness regarding taxes get to you, and posting this in just about every thread. 

I call double BS.    I've never said once that I was "bitter" about it, and I'm simply pointing out the facts.   In fact, I specifically stated that I wasn't bitter in this thread days ago, prior to your post here, and you had posted to that thread afterwards before you post here, so you clearly aren't understanding, which is why I have to repeat myself:
https://forum.mrmoneymustache.com/welcome-to-the-forum/social-security-will-not-be-bankrupt/msg2056201/#msg2056201

And to help drive this home for you, I'll point you again to where I stated that I didn't have a problem with the current tax situation of families with kids getting a tax break:
https://forum.mrmoneymustache.com/off-topic/i-wonder-why-healthcare-is-so-expensive-in-the-us/msg2055618/#msg2055618

Hmmm.... that sure doesn't sound like something a bitter person would say.

Quote
Wouldn't you feel better if you stopped ignoring the fact that you are comparing the income for one person to the income for four people

I'm comparing household income.  It's couples filing jointly with kids as a household using current tax law that gives them the big tax breaks.  But, if you think it would make me feel better if I break down the tax paid "per person" in the comparison, the difference is even more stark.  As I've posted before:

Quote
Exactly.  I was surprised to see some of the other responses that missed the point that it wasn't about paying taxes in general, but unfair share of the tax burden for those that use the most resources compared to those who use less.

I posted this in a previous thread as an example, and it applies here and should clarify what my original comment was referring to when I stated I was subsidizing families with kids.

Here are some figures I calculated with the Dinkytown 2018 tax calculator using a simple comparison:

Household income of single woman with no kids $70,000
Total federal income tax $8700
Total federal income tax per person $8700

Household income of married couple with 2 kids $70,000
Total federal income tax $1139
Federal income tax per person $284.75

The single woman household pays over 7 1/2 times as much tax in this example.  She is subsidizing the family with kids by paying many more times in federal income taxes despite the family utilizing far more $ in public resources.  If you divide the tax by each person in the household, the difference in tax burden per household member is even more stark at over 30X!

And the part about posting that in almost every thread.  I've posted it in maybe 3 or 4 threads out of the dozens I've posted to and the thousands of threads.  How about sticking to the facts?

The problem with facts is that people are selective about which facts they wish to use.

If we analyze the same type of situation differently, a very different conclusion can be reached. For instance, instead of choosing to analyze the finances of 4 people with a matching income of 1 person, let's do the opposite. We'll analyze 5 people making the same amount, with 4 of them in a single household.

So, 4 people each making $70,000/year as part of a family vs 1 single person making $70,000/year. Now, the 4 people only get 2 standard deductions between them because they're one tax unit, and so the other two don't get as much. So they get fewer tax deductions and have overall effective tax rate with the same per capita income.

It's all how you want to perceive the situation. In any of the methods (yours or the one I just showed), it really doesn't matter because they're not apples-to-apples comparisons anyway. They're just arbitrary examples thrown together and fairly meaningless in the grand scheme of things.

DreamFIRE

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Re: You only max your 401(k) because you don't have kids
« Reply #54 on: August 09, 2018, 04:50:44 PM »
You're able to max out your 401(k) because you don't have kids.  Kids are expensive.

Yet, single people with no kids have to pay far more taxes while married couples with kids get big tax breaks.

In an example I posted in a previous comment, the single woman making $70K/yr paid over 7 times as much tax as a family of four with the same household income.   So kids are expensive to single people who never had them also.

You are really letting your bitterness regarding taxes get to you, and posting this in just about every thread. 

I call double BS.    I've never said once that I was "bitter" about it, and I'm simply pointing out the facts.   In fact, I specifically stated that I wasn't bitter in this thread days ago, prior to your post here, and you had posted to that thread afterwards before you post here, so you clearly aren't understanding, which is why I have to repeat myself:
https://forum.mrmoneymustache.com/welcome-to-the-forum/social-security-will-not-be-bankrupt/msg2056201/#msg2056201

And to help drive this home for you, I'll point you again to where I stated that I didn't have a problem with the current tax situation of families with kids getting a tax break:
https://forum.mrmoneymustache.com/off-topic/i-wonder-why-healthcare-is-so-expensive-in-the-us/msg2055618/#msg2055618

Hmmm.... that sure doesn't sound like something a bitter person would say.

Quote
Wouldn't you feel better if you stopped ignoring the fact that you are comparing the income for one person to the income for four people

I'm comparing household income.  It's couples filing jointly with kids as a household using current tax law that gives them the big tax breaks.  But, if you think it would make me feel better if I break down the tax paid "per person" in the comparison, the difference is even more stark.  As I've posted before:

Quote
Exactly.  I was surprised to see some of the other responses that missed the point that it wasn't about paying taxes in general, but unfair share of the tax burden for those that use the most resources compared to those who use less.

I posted this in a previous thread as an example, and it applies here and should clarify what my original comment was referring to when I stated I was subsidizing families with kids.

Here are some figures I calculated with the Dinkytown 2018 tax calculator using a simple comparison:

Household income of single woman with no kids $70,000
Total federal income tax $8700
Total federal income tax per person $8700

Household income of married couple with 2 kids $70,000
Total federal income tax $1139
Federal income tax per person $284.75

The single woman household pays over 7 1/2 times as much tax in this example.  She is subsidizing the family with kids by paying many more times in federal income taxes despite the family utilizing far more $ in public resources.  If you divide the tax by each person in the household, the difference in tax burden per household member is even more stark at over 30X!

And the part about posting that in almost every thread.  I've posted it in maybe 3 or 4 threads out of the dozens I've posted to and the thousands of threads.  How about sticking to the facts?

The problem with facts is that people are selective about which facts they wish to use.

If we analyze the same type of situation differently, a very different conclusion can be reached. For instance, instead of choosing to analyze the finances of 4 people with a matching income of 1 person, let's do the opposite. We'll analyze 5 people making the same amount, with 4 of them in a single household.

It's a very different situation if you are analyzing a household income of $70,000 vs a household income of $280,000.  I never tried to make any claims regarding such a comparison.  So yes, if you analyze a completely differently scenario from the one I laid out, you of course, get a different result.  I could come up with many other examples with various results, but that's beside the point.  The fact that different household incomes can exist in no way changes the example or the conclusion that I laid out based on identical household incomes, which is the original premise of my comparison.
« Last Edit: August 09, 2018, 04:52:51 PM by DreamFIRE »

ixtap

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Re: You only max your 401(k) because you don't have kids
« Reply #55 on: August 09, 2018, 06:48:15 PM »
We get it from family. One SIL pulled it out the day after buying a new car to replace the two year old car, five months after buying a brand new house. If the other SILs ever try it, I will free to point out that having 6 or more kids is very much a lifestyle choice.

Undecided

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Re: You only max your 401(k) because you don't have kids
« Reply #56 on: August 09, 2018, 08:30:48 PM »
OP got it right the first time. No outrageous debts to drag you down regardless of your disposable income.  Having a high enough income to max it without thinking too much about it doesn't hurt either.

Getting into the child/no child debate: besides the $1000/year child tax credit, is there another tax savings I'm missing?

The cost per year for my son appears to be about $10,000 which includes:
-difference between 3 bedroom rental house or 2 bedroom apartment
-utilities of house vs apartment
-food
-entertainment
-saving for college
Well there's that small $4,050 exemption per child.

Right. One of these days I'll do my taxes by hand and remember that. It doesn't seem quite a break-even point though. I could raise a second child within my current household for less than $4000/year, but that tax credit gets eaten up once they're a teenager.  I also suck at math so I'm not seeing where the difference is between paying more taxes upfront is difference from a tax credit and increased cost of living.

So having your children's expenses "mostly" subsidized by other taxpayers isn't good enough, you think they should be "completely" subsidized???

As someone with kids, but who doesn’t get any tax break for them, I don’t have a problem with that particular “subsidy.” Somebody’s got to make and raise the future sources of social security payments. It’s easy to take a single issue and complain about it being unfair, but it often seems myopic.

Wexler

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Re: You only max your 401(k) because you don't have kids
« Reply #57 on: August 13, 2018, 02:55:41 PM »
OP got it right the first time. No outrageous debts to drag you down regardless of your disposable income.  Having a high enough income to max it without thinking too much about it doesn't hurt either.

Getting into the child/no child debate: besides the $1000/year child tax credit, is there another tax savings I'm missing?

The cost per year for my son appears to be about $10,000 which includes:
-difference between 3 bedroom rental house or 2 bedroom apartment
-utilities of house vs apartment
-food
-entertainment
-saving for college
Well there's that small $4,050 exemption per child.

Right. One of these days I'll do my taxes by hand and remember that. It doesn't seem quite a break-even point though. I could raise a second child within my current household for less than $4000/year, but that tax credit gets eaten up once they're a teenager.  I also suck at math so I'm not seeing where the difference is between paying more taxes upfront is difference from a tax credit and increased cost of living.

So having your children's expenses "mostly" subsidized by other taxpayers isn't good enough, you think they should be "completely" subsidized???

 Just wanted to point out that personal exemptions are going away in the new tax law that is in effect for 2018 taxes.  No more 4k child exemption.  The increase in the standard deduction to 12k/24k joint and the increase in the tax credit is supposed to make up for it.  And that increase is applied to filers with and without children.  I haven't done the math in a while, but I think that a family of four who wasn't itemizing came out slightly behind. It all depend the number of kids and whether the filer was itemizing.  People who do the best under the elimination of personal exemptions are joint filers, nonitemizers with no kids. So, all in all, this should make you happy, DreamFIRE.

Methods of Escape

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Re: You only max your 401(k) because you don't have kids
« Reply #58 on: August 13, 2018, 08:19:50 PM »
OP got it right the first time. No outrageous debts to drag you down regardless of your disposable income.  Having a high enough income to max it without thinking too much about it doesn't hurt either.

Getting into the child/no child debate: besides the $1000/year child tax credit, is there another tax savings I'm missing?

The cost per year for my son appears to be about $10,000 which includes:
-difference between 3 bedroom rental house or 2 bedroom apartment
-utilities of house vs apartment
-food
-entertainment
-saving for college
Well there's that small $4,050 exemption per child.

Right. One of these days I'll do my taxes by hand and remember that. It doesn't seem quite a break-even point though. I could raise a second child within my current household for less than $4000/year, but that tax credit gets eaten up once they're a teenager.  I also suck at math so I'm not seeing where the difference is between paying more taxes upfront is difference from a tax credit and increased cost of living.

So having your children's expenses "mostly" subsidized by other taxpayers isn't good enough, you think they should be "completely" subsidized???

 Just wanted to point out that personal exemptions are going away in the new tax law that is in effect for 2018 taxes.  No more 4k child exemption.  The increase in the standard deduction to 12k/24k joint and the increase in the tax credit is supposed to make up for it.  And that increase is applied to filers with and without children.  I haven't done the math in a while, but I think that a family of four who wasn't itemizing came out slightly behind. It all depend the number of kids and whether the filer was itemizing.  People who do the best under the elimination of personal exemptions are joint filers, nonitemizers with no kids. So, all in all, this should make you happy, DreamFIRE.

Not quite... while there is no 4k child exemption there is:
"The Child Tax Credit under 2018 tax reform is worth up to $2,000 per qualifying child"

And while I made too much for the previous exemption under the new tax law we will be able to claim for both our children this year.

"It's also important to emphasize that this is a credit, not a tax deduction. While a deduction reduces the amount of your income that is subject to tax, a credit reduces your tax bill dollar-for-dollar. If you owe the IRS $5,000 for the year, and have a $2,000 tax credit, your tax bill drops to $3,000."
« Last Edit: August 13, 2018, 08:21:48 PM by Methods of Escape »

ShoulderThingThatGoesUp

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Re: You only max your 401(k) because you don't have kids
« Reply #59 on: August 14, 2018, 05:20:23 AM »
As a non-itemized with three kids I come out ahead with the new tax bill.

clarkfan1979

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Re: You only max your 401(k) because you don't have kids
« Reply #60 on: August 27, 2018, 02:37:57 AM »
My wife and I would save a lot and travel a lot. We would be told by others this is only possible because we don't have any kids. Then we had a kid and ramped up our travel to parade the kid around. Our savings did go down a little with the increased travel but our saving is probably still higher than our peers.

My kid flew 34,000 miles before his 1st birthday. Now we are told that this is only possible because we only have one kid. Once we have two kids we won't be able to save money or travel. Once we have a 2nd kid, I wonder what the next round of comments will be.

talltexan

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Re: You only max your 401(k) because you don't have kids
« Reply #61 on: August 27, 2018, 07:47:16 AM »
I notice that you're from Hawai'i/Denver. In a nice coincidence, two of our big trips with our daughter during her first year were to those places (she also got to the magic 30,000 mile figure before her first birthday, but we've scaled back on air travel significantly during the two kids era).

ice_beard

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Re: You only max your 401(k) because you don't have kids
« Reply #62 on: August 27, 2018, 07:49:17 PM »
How on earth is bowhunting expensive?

I bowhunted when I was a kid.  If it was expensive, I wouldn't have been doing it.   If you are getting new gear every year it could be really expensive, but I had a used bow and homemade treestands. 

clarkfan1979

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Re: You only max your 401(k) because you don't have kids
« Reply #63 on: August 28, 2018, 01:42:53 AM »
As a non-itemized with three kids I come out ahead with the new tax bill.

Are you saying that the tax savings is more than the cost of the kids? I thought that might be the case for some. We are probably breaking even.

MishMash

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Re: You only max your 401(k) because you don't have kids
« Reply #64 on: August 28, 2018, 07:30:51 AM »
How on earth is bowhunting expensive?

Hahaha. I'm assuming you don't know many bowhunters, or if you do, they're not the kind I know. Most spend thousands per year on local hunting leases to chase whitetail deer, or take excursions out West for $5,000 or more to hunt elk or mule deer. They spend ungodly sums of money on licenses, camo, trail cams, scent eliminators, calls, binoculars, etc., not to mention the taxidermy charges when they actually kill something that they want to put on the wall. I don't know a single serious hunter who doesn't spend thousands of dollars per year on their hobby. I know frugal hunters exist, but it is not the norm by any stretch of the imagination.

We are frugal hunters.  We barter for land to hunt on.  DH and I have a shitty boat, so we fish, a lot.  We trade fish, and work, for the ability to hunt on others lands, we have the ability to hunt 6 properties across the US, 3 within a short drive, and one of which is a commercial farm with a year round hunting permit.  When he gets a deer or boar we do all our own processing, make our own sausage, burgers, roasts, smoked meats etc and then give a hunk of it back to the land owners as well.  Then we also barter fish and venison for other things like eggs, chickens, other fish etc.  We are largely meat hunters, not trophy.

I also have a no taxidermy law, nothing dead will be looking at me from a wall....ever. 

That said, yea, A LOT of the hunters we know spend a ton. 

Rife

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Re: You only max your 401(k) because you don't have kids
« Reply #65 on: September 02, 2018, 02:45:55 PM »
I have to comment on the married tax thing. The perception depends on the situation. There is no real tax break cause you got married. Our first year married we owed 5000 at tax time cause if you put married the employer assumes your spouse is unemployed. This works great if your unemployed girlfriend, who you are supporting, becomes your wife.

If you both make about the same income, your taxes can drop if she quits her job. So, less taxes and half the income. Otherwise, you don’t get the huge break if you both keep working. I would think in most cases the cost of supporting your unemployed wife isn’t worth it just for the tax break. In our case, we pay plenty in taxes. It is not universally true that married people pay far lower taxes though.

Gone_Hiking

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Re: You only max your 401(k) because you don't have kids
« Reply #66 on: September 08, 2018, 10:06:25 PM »
OP got it right the first time. No outrageous debts to drag you down regardless of your disposable income.  Having a high enough income to max it without thinking too much about it doesn't hurt either.

Getting into the child/no child debate: besides the $1000/year child tax credit, is there another tax savings I'm missing?

The cost per year for my son appears to be about $10,000 which includes:
-difference between 3 bedroom rental house or 2 bedroom apartment
-utilities of house vs apartment
-food
-entertainment
-saving for college
Well there's that small $4,050 exemption per child.

Right. One of these days I'll do my taxes by hand and remember that. It doesn't seem quite a break-even point though. I could raise a second child within my current household for less than $4000/year, but that tax credit gets eaten up once they're a teenager.  I also suck at math so I'm not seeing where the difference is between paying more taxes upfront is difference from a tax credit and increased cost of living.

So having your children's expenses "mostly" subsidized by other taxpayers isn't good enough, you think they should be "completely" subsidized???

As someone with kids, but who doesn’t get any tax break for them, I don’t have a problem with that particular “subsidy.” Somebody’s got to make and raise the future sources of social security payments. It’s easy to take a single issue and complain about it being unfair, but it often seems myopic.
THIS

A parent of one here.  A childless colleague of mine insists on tax breaks for pets.  The person has three cats that are treated like children and doesn't seem to comprehend why there are tax break for human kids but none for kittens.  I refuse to engage on this topic: while my kid can meow at will, colleague's cats can't speak one word in English.

Fomerly known as something

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Re: You only max your 401(k) because you don't have kids
« Reply #67 on: September 09, 2018, 06:59:01 PM »
I get a tax break for my cats, well I get a tax break for donating to charities that involve cats so close enough.