Age and Accounts—Taxes
There are three different types of accounts we can put money in. One is taxed, one is tax-deferred, and the other is tax-free. Each type of account has its advantages and disadvantages. However, as both employees and employers add years to their Driver’s Licenses they all seem to become less inclined to continue paying taxes. After years of paying the taxman, they and their wallets want more tax-free income.
Here is an example of a very intelligent individual that understood this concept:
When former NFL quarterback Steve Young signed a contract to play professional football he requested tax-deferred income. He was one of the smartest professional athletes: he wanted to grow his finances tax-free and enjoy his money down the road.
Knowing what our short-term and long-term goals are can help us to make the right decision on which type of account to use. Just remember, as you get older you will be more inclined to have your money be tax-free.