Taxes, Uuuuugh!! (Marginal vs. Effective Tax Rate)

Should you care? Yes.

There are marginal tax rates and effective tax rates. Why do I care? Because it gives me hope that I’m not paying as much in taxes as I thought. Sadly, I’ll still be paying out far more than I want to.

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Where to start?


Photo from Pixabay


Why is there not a simple book that tells you the basics on how to read your 401K prospectus, invest in the stock market, find all the deductions and changes in your taxes as your status and income change?

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401K warning?


Photo from Pixabay


This NPR story — Retirement account pioneers regret what they started — seems a bit disconcerting.  The way 401Ks were presented to me, I thought this was the way to prepare for retirement. No one mentioned it was supposed to be a part of a three-part plan that also included savings and a pension.

The savings part makes perfect sense. You need to have savings before retirement anyway. But the pension …? I’ve only had one job that offered a pension and that benefit ended about six months after I joined the company. You know that pension will be literally a penny if anything.

I hate to end on such a sad note, so here’s a laugh from Dilbert.




I’m about to turn 40 and I realized I lacked certain crucial financial knowledge. Sure, I know about saving money and paying down debt. I have a 401K, actually several. But here’s the thing:

I ran into a tax problem last year and could not understand from the documents sent why my tax assessment had gone up. Thankfully, my tax lady did and was able to fix the problem.

I decided to consolidate my 401K plans after a change in a couple of jobs. When I talked with a salesman about it, he couldn’t tell me anything about products he was selling and basically tried to sell me the same product I already had. Obviously, I left my money where it is, for now.

I am a journalist, who is used to researching to find answers. So, I’m going to do just that on this journey. Feel free to join me!