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Im sure this has been posted a million need advice.
Old 08-03-2011, 09:05 PM   #1
Confused about dryer sheets
Join Date: Aug 2011
Location: Morongo Valley Ca
Posts: 3
Im sure this has been posted a million need advice.

Hello I'm Steve,

I just turned 26,

I am a systems analyst at a water district here in California. I just started this job and was with a hospital for a number of years. I always thought about retirement and was trying to contribute as much as I could afford.
Currently I have a 403b account with 7k and with the new career I have a pension that at age 55 I will have 75 percent of my highest years earnings. That is if I retire at 55. In 30 years. I most likely wont and will put it off at least 5-10 years so I will have more percentage when I get the pension.

My question is where should I go from here? I have a 457 available to me as well with the company. I don't know if they match any funds. I also could roll my 403 into a Roth IRA.. that sounds the most logical to me.

I don't really know how much to contribute.. I see some people going with 5 and 600 a month and that seems like a lot right now because of student loans etc.. I don't have a lot of debt and will be debt free very soon.

sorry for the novel I appreciate any advice.
Thanks -Steve

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Old 08-03-2011, 11:01 PM   #2
Recycles dryer sheets
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Join Date: May 2008
Posts: 96

Just wanted to wish you well. I am presuming that you work for an affiliate of AWR which is a stock that I own. To have a professional job with a water utility in California is a pretty decent gig for the long term IMO so congrats. The fact that a pension awaits at the end of your professional journey is really the foundation for your retirement planning: The fact that you are an individual who is, nevertheless, still concerned about maximizing other retirement funding avenues is prob more valuable than trying to figure out what exact amounts to save for the time being.

I have no insight or confidence that my advice concerning any details or specific amounts would have any value for you or anyone else but I would suggest that you at least fund and start all the retirement plan options that are available to you. 1) Having a fund already started could only enhance your motivation to maximize it from hereon, and 2) Get the paperwork from HR out of the way.

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Old 08-04-2011, 07:08 AM   #3
Recycles dryer sheets
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Location: Allen Park
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I would save as much pre-tax $ as you can 'afford' and be sure to get your company match if any.

Btw, it's VERY hard to predict what will be in 30 years.
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Old 08-04-2011, 04:04 PM   #4
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Save everything you can and LBYM. That generous pension may or may not materialize.
Every man is, or hopes to be, an Idler. -- Samuel Johnson
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Old 08-04-2011, 05:47 PM   #5
Recycles dryer sheets
Join Date: Apr 2011
Posts: 106
I'd be worried about counting on a pension at such a young age. Seems these days it is a rather large risk for any of the younger generation working for companies that offer pensions. Pension's can't take away vested benefits but you could work at this job another 10 years and then have the penion benefits reduced or frozen and would get no where near the 75% at retirement that is indicated now.
I'm not obsessed with money, I'm obsessed with work! Er, rather the not doing it anymore part...
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Old 08-04-2011, 07:05 PM   #6
Confused about dryer sheets
Join Date: Aug 2011
Location: Morongo Valley Ca
Posts: 3
I understand that this may not be there at retirement which is precisley the reason Id like to branch out. our union votes on the contract that detirmines the pension and its benefits. Recently the contract went up and 26 people up and retired under the old one so they wouldnt loose certain health benefits. So I do know its not going to be a surprise when I retire what I will need, also as the climate changes I can change as well. Better to prepare now then later.
Thanks everyone for the compliments I am blessed as I think anyone can be.
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Old 08-09-2011, 12:08 AM   #7
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Posts: 536
I suggest first finding out about any match on the 457 plan and investing to get that match.

Roll the 403b to a traditional IRA then convert to a ROTH if you want to pay the taxes now so it is tax free in retirement.

Next fund a ROTH with 5K a year. This money can be withdrawn if needed before you are old without additional taxes, you don't want to touch it until you are old but if you do you could. Wait at least 5 years to withdraw the growth in the account or any converted money. Don't take it out you can't put it back later it is limited.

Next I would open a taxable investment account. Like the ROTH it is after tax money and you aren't limited by age or what investments you can have.

Look at your tax situation and find your marginal rate. If your marginal rate is 25% for example money you put in the 457 will defer that much until you withdraw it so you might want to put more in. That money is strictly for your old age don't touch it until you are old.

The taxable is your money you can spend to buy a house, fund college for your future children, start a business or use however you want, it is your freedom fund. When you sell investments you will only have tax on the gains not what you put in.

Roth is great because you don't even pay tax on the gains after the first 5 years. You can start spending it before 59.5 if you for example retire at 50 you will fund it with taxable and ROTH saving 457 for old age.

Don't worry about saving too much if you hit 50 and see you have too much money you can buy a yacht.

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