mountainsoft
Thinks s/he gets paid by the post
We are planning to retire in five years. We'll have my wife's pension, and I'm currently maxing out my traditional IRA contributions. We have a little extra money coming in, so I'm trying to figure out the best place to stash it while we wait.
Currently we're just moving the extra to our online savings account. It's FDIC insured, we can get to it any time we need it for emergencies, but it currently only pays 1.8% interest.
I have another 30K in a one year CD that pays 2%. Again, it's FDIC insured, but it's basically unusable till it matures in May unless we pay an early withdrawal fee. I don't expect to need the money, but unplanned emergencies happen and I would prefer something more flexible without penalties.
I've thought about starting a Roth IRA for my wife. But we'll only have five years to contribute. I might work a little part time after we retire for further contributions, but it's not something I'm planning for. We couldn't contribute more than 6500 per year, though I doubt we could afford that anyway. Of course, we wouldn't be able to move that 30K CD to the Roth when it matures.
Another option is to open an individual or joint taxable brokerage account. The main disadvantage to this is taxes, but it would give us higher returns than a simple savings account and would offer the most flexibility. We could contribute to it after retirement if we wish, move the 30K CD balance there when it matures, and it would be a place to park RMD's when the time comes.
With only five years to go, which would you choose and why?
Currently we're just moving the extra to our online savings account. It's FDIC insured, we can get to it any time we need it for emergencies, but it currently only pays 1.8% interest.
I have another 30K in a one year CD that pays 2%. Again, it's FDIC insured, but it's basically unusable till it matures in May unless we pay an early withdrawal fee. I don't expect to need the money, but unplanned emergencies happen and I would prefer something more flexible without penalties.
I've thought about starting a Roth IRA for my wife. But we'll only have five years to contribute. I might work a little part time after we retire for further contributions, but it's not something I'm planning for. We couldn't contribute more than 6500 per year, though I doubt we could afford that anyway. Of course, we wouldn't be able to move that 30K CD to the Roth when it matures.
Another option is to open an individual or joint taxable brokerage account. The main disadvantage to this is taxes, but it would give us higher returns than a simple savings account and would offer the most flexibility. We could contribute to it after retirement if we wish, move the 30K CD balance there when it matures, and it would be a place to park RMD's when the time comes.
With only five years to go, which would you choose and why?