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Where to save extra retirement money?
Old 03-30-2007, 11:44 AM   #1
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Where to save extra retirement money?

We will be maxing out 2 Roth accounts this year. We also contribute 20% and 12% of salaries to 401k accounts.

Once, I build up my emer fund to where I want it, where should I put the extra monthly funds? Bump up the 401k percents or start some taxable investments of which I have none right now? I'm already paying extra on mortgage to be done when I retire and have no other debt.

If I plan to retire at 50, seems like I should have some money that I could easily draw on to live off of. I know about rule 72T, but at age 50, that could be difficult to plan.

Any thoughts? Thanks.


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Re: Where to save extra retirement money?
Old 03-30-2007, 11:53 AM   #2
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Re: Where to save extra retirement money?

Does your company match?

I am of the opinion to keep increasing your 401K until you "max out" the plan, then go from there...........
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Re: Where to save extra retirement money?
Old 03-30-2007, 12:05 PM   #3
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Re: Where to save extra retirement money?

Both of us far exceed the contribution amout to received the maximum match.

I believe I am allowed to contribute 25% of my salary and the wife 20% into hers. So we are no quite there yet as far as maximum contribution.
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Re: Where to save extra retirement money?
Old 03-30-2007, 12:33 PM   #4
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Re: Where to save extra retirement money?

My DH is planning on retiring in 2 years when he's 55. He does not want to go the 72t route, so we are putting extra cash into cds. The rates are pretty good now. So we will live off of a pension and cash for 4 1/2 years.
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Re: Where to save extra retirement money?
Old 03-30-2007, 12:42 PM   #5
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Re: Where to save extra retirement money?

Quote:
Originally Posted by bbbamI
My DH is planning on retiring in 2 years when he's 55. He does not want to go the 72t route, so we are putting extra cash into cds. The rates are pretty good now. So we will live off of a pension and cash for 4 1/2 years.
Don't forget sometimes you can w/d from a 401k if you retire from a company the yr in which you turn 55...or something similar to that. Someone can correct me on the exact rule.
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Re: Where to save extra retirement money?
Old 03-30-2007, 12:51 PM   #6
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Re: Where to save extra retirement money?

I'd probably toss the money into an after-tax brokerage account. You get a lot more flexibility and you can invest in tax-efficient stuff so as not to get too badly dinged.
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Re: Where to save extra retirement money?
Old 03-30-2007, 12:53 PM   #7
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Re: Where to save extra retirement money?

Yes, I do believe that's true (on the 55 rule). Right now our comfort level is 50/40/10. Since we plan on 35 years of retirement funds, we need to have our tax deferred accounts untouched for as long as possible.

That's the plan anyway.
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Re: Where to save extra retirement money?
Old 03-30-2007, 01:03 PM   #8
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Re: Where to save extra retirement money?

How many years out are you?

DH and I also hope to retire well before 59 1/2, and we have some money in taxable accounts that I recently decided to stop adding to, in favor of going the tax-deferred route. This way we'll have enough cash in the taxable accounts to smooth the transition if we need it, without having to make big decisions like 72t withdrawals the first couple years of FIRE.
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Re: Where to save extra retirement money?
Old 03-30-2007, 01:18 PM   #9
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Re: Where to save extra retirement money?

I'm in a similar situation, but less than 3 years from ER at 55. I have been putting into VG Wellesley to cover the 4.5 years before I can get at 401(k) and IRA's. (Do pay taxes on dividends but a very stable fund so soon to RE).

I also have funds in I-bonds as they grow tax-deferred but you can wihdraw after 1 year. (I inend to have a 5 year ladder so i get no penalties at all.
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Re: Where to save extra retirement money?
Old 03-30-2007, 01:39 PM   #10
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Re: Where to save extra retirement money?

Quote:
Originally Posted by WM
How many years out are you?
13 years out. 37 hoping to retire at 50. That might be alittle agressive at my current savings rate but only time will tell.
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Re: Where to save extra retirement money?
Old 03-30-2007, 04:54 PM   #11
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Re: Where to save extra retirement money?

Ok, now that I know your age, my advice was probably not so hot. You have a longer time frame to accumulate.

So....I agree with Brewer.
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Re: Where to save extra retirement money?
Old 03-31-2007, 06:43 AM   #12
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Re: Where to save extra retirement money?

I agree with Brewer... Once you max out the normal tax deffered accounts put it in an after-tax account. Try to keep the equity in that after-tax account. If the tax laws on cap gains remain the same... you are likely to be better off.

It might help to run some projections. This is something I wish I had done earlier.
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