The Retirement Tax Mistake Many Working Women Don’t See Coming

carmen29018
1 day ago
2 min read

Why Overfunding a 401(k) for a Tax Write-Off Can Limit Your Future Income and Flexibility

The Reality for Working Women

I spoke with a woman last week she's 46 and has been working for the government for 23 years. She makes over $215,000 per year, owns a home and has 13 year old twins and she still needs write offs desperately. She thought it made sense to max out her 401k contributions to receive the deduction until I had her think about two things.

Are taxes going up in the future or down? And do we know what the IRS is going to charge us 2o years from now? See many of us know what our tax bracket is today but not when we are 63 which is usually the age retirees begin to take their distributions.

Most working women are doing exactly what they were told to do: max out the 401(k), take the tax deduction, and repeat every year.

What often goes unseen is how this common strategy can quietly create challenges later—especially for women.

Women face financial realities that traditional retirement plans were never designed to handle:

Career pauses for caregiving
Longer life expectancy
Rising healthcare costs
The need for flexibility, not rigidity

Because of this, how and where you save for retirement matters just as much as how much you save.

The Hidden Risk of Overfunding Qualified Plans

While tax-deferred accounts offer upfront deductions, they come with long-term trade-offs:

Tax deductions today turn into taxable income later
Future tax rates are uncertain and may be higher
Access to your money is restricted until age 59½
Required Minimum Distributions (RMDs) can force income you don’t need
Large qualified balances may increase Social Security taxation and Medicare premiums