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Old 10-31-2018, 11:58 AM
 
Location: Censorshipville...
2,673 posts, read 6,237,402 times
Reputation: 1543

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How do you all decide on how you split up your retirement contributions? So far this is what I contribute, but should I have different ratios if my goal is to do an early retirement at 56? 56 because I will be qualified for a 25 year pension with work subsidized healthcare. Estimated pension at 56 will be around 50k.

Contributions:
75.91% Work retirement account fully funded including 5% match
22.23% Brokerage account
1.85% ROTH-IRA
* rounded numbers so I know it's not equaling 100%

My retirement account breakdown - As you can see I'm weighted heavily on my work account (probably like most people)
82.89% Work retirement - Estimating 1.3 million by 56 using 6% return
9.28% Taxable Brokerage account - Only have had this account since 3/2017
7.83% ROTH-IRA

I think my ROTH contributions are too low so I'll have to find it in the budget to increase contributions or to reallocate from another category. Or should I put more in brokerage to get me through when I can access tax deferred accounts or should I just do the 72t instead? Or should I put enough to get the match into my retirement account, fully fund ROTH-IRA and the rest into brokerage? Only debt I have is mortgage and I'm hoping to have that paid off in the next 2-3 years. Mortgage is about 94k @ 3.875% on a 20 year with about 17 years left. Some say keep the mortgage and invest instead, but I'm leaning on paying off just to not have debt. No debt is a priority for my wife and I.
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Old 10-31-2018, 01:03 PM
 
Location: Denver, CO
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I would definitely max out Roth right now; I don't think tax rates will be any lower in the future.
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Old 10-31-2018, 01:05 PM
 
Location: Central IL
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How old are you now or in how many years do you intend to retire?
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Old 10-31-2018, 01:42 PM
 
Location: Censorshipville...
2,673 posts, read 6,237,402 times
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Quote:
Originally Posted by reneeh63 View Post
How old are you now or in how many years do you intend to retire?
I'm 38 now and hope to retire at 56.
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Old 10-31-2018, 01:44 PM
 
4,536 posts, read 4,709,193 times
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I always try to max out tax deferred accounts first because we live on such a small portion of our income. I strongly doubt I will be spending the equivalent to our current gross income in retirement considering that with 2 kids in daycare we only spend a fraction of it now anyways.

Ours is actually like this:

1. HSA
2. 401ks
3. Roth IRAs
4. FSA (for childcare)
5. Brokerage
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Old 10-31-2018, 01:52 PM
 
Location: Censorshipville...
2,673 posts, read 6,237,402 times
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Quote:
Originally Posted by mizzourah2006 View Post
I always try to max out tax deferred accounts first because we live on such a small portion of our income. I strongly doubt I will be spending the equivalent to our current gross income in retirement considering that with 2 kids in daycare we only spend a fraction of it now anyways.

Ours is actually like this:

1. HSA
2. 401ks
3. Roth IRAs
4. FSA (for childcare)
5. Brokerage
I do have an HSA but since I no longer have a HDHP I can't contribute to it any longer. It just sits there and accrues interest I've thought about using the investment part of it, but the program has high fees and investment choices have really high ERs.

I do FSA too and use that predominantly to pay healthcare items, and have HSA as backup for any catastrophes.

I do the tax deferred stuff too because I like how it lowers my taxable income.
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Old 10-31-2018, 01:56 PM
 
Location: Censorshipville...
2,673 posts, read 6,237,402 times
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Quote:
Originally Posted by Moonwalkr View Post
I would definitely max out Roth right now; I don't think tax rates will be any lower in the future.
How does anyone really know that though? I guess I'm just skeptical that they'd really increase the tax rates for the middle class to the point where it's painful. The push seems to tax the heck out of high income earners instead.
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Old 10-31-2018, 02:27 PM
 
8,682 posts, read 5,056,652 times
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What is your workplace plan? If you separate at age 55 or older, you can access your 401k without penalty. If you separate at any age, you can access your 457 plan without penalty.

I plan to retire before 59.5. I will use 72t rules if I must, but I will avoid them if possible. Just simpler that way.
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Old 10-31-2018, 04:57 PM
 
6,819 posts, read 7,209,439 times
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Re: "I don't think tax rates will be any lower in the future."
Quote:
How does anyone really know that though? I guess I'm just skeptical that they'd really increase the tax rates for the middle class to the point where it's painful.
What's "painful" is relative.
All I know is as long as current rates are in force, I'm moving money from my rollover tIRA to my Roth -- while I am in the painfully low salary-wise 12% bracket. (Fed, of course)

I was previously in the 25%, bumping up against the 28%. So 12% is a steal, IMO.
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Old 10-31-2018, 06:12 PM
 
Location: Florida
4,309 posts, read 3,644,056 times
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The type of account controls the amount of income taxes you will pay. I would max out the ROTH.


The type of retirement account has nothing to do with how much you will earn over its life. You need to tell us the investments or at least the type. If you are not sure try a retirement fund close to the year you want to retire. I think you should avoid bond funds for now but you may not with my suggestion.
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