The Chance of a Lifetime


The federal government just gave you a gift. What gift, you ask? If Oprah Winfrey were unveiling it, it might sound something like this: “You get a tax deduction! You get a tax deduction! You get a tax deduction! Everyone gets a tax deduction!”

That’s right, if you haven’t heard, the federal government decreased income tax rates. In general, tax rates were lowered across the board. The new, lower rates go into effect in 2018.

With the stroke of a pen, the vast majority of Americans have been dealt a rare opportunity. And that opportunity is the chance to save more money for retirement while at the same time taking home more money from each paycheck. It may be a once-in-a-lifetime opportunity.

How can you take advantage of it? Read on.

Starting in February, your employer should begin using the updated tax withholding rates. For most workers, that will mean less money being withheld from their paychecks. The lower withholding rates are a result of the lower income tax rates. This is where the opportunity lies.

Because less pay is needed to cover taxes, most Americans will have more money available for other things, like saving. Remarkably, you will likely have the chance to save one percentage point more in a retirement plan and benefit from more take-home pay. The following chart provides the details.


As you can see, with the savings created by the new tax rates, you are able to keep back more for retirement and still enjoy more money in your pocket each pay day. It is an unbeatable proposition.

For those interested in maintaining current levels of take-home pay and simply banking all tax savings in a retirement plan, the last line of the chart provides a guideline as to how much extra you could save. Keep in mind, your ultimate tax rates and tax payments may differ from the chart above, but it should serve as a reasonable approximation.

It is not an exaggeration to say this opportunity may never come again in your lifetime. Don’t let this precious gift go to waste. It absolutely can make a difference in your life.

By choosing to save, as only Oprah could say, “You get a better retirement! You get a better retirement! You get a better retirement! We all get a better retirement!”


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