How do you plan to pay for post-retirement long-term care/medical expenses? You may be thinking that you will use your pre-tax retirement investment account. This is quite common. But is it a good strategy?
Example: Let’s assume you have $500,000 in your pre-tax NYCE IRA and you have medical/health-care bills of $100,000. The $100,000 debt is paid with after-tax dollars, so your taxable withdrawal from your IRA needs to be larger than your $100,000 debt. Assume a tax of $40,000. You must withdraw $140,000 in order to pay off a $100,000 debt. You now have a pre-tax $360,000 balance working for you. Ouch!
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