treeofpain
Recycles dryer sheets
Hi Gang,
I am 50 and have targeted retirement at 60. I have no debt and have a net worth around $750k. Current annual expenses are around $50k, and expected expenses in retirement are $40k.
I currently have $250K in 401k and 403b accounts - about $125k in each. The 401k is from a previous job, and I'm actively contributing to the 403b. There is $25k in an emergency fund and the kids' college accounts are complete. House is paid off and no other debt.
The wrinkle: As an ordained minister, the funds in the 403b can be disbursed as a minister's housing allowance, up to the actual costs of housing (clearly defined in the IRS tax code, so I won't bore you w/ the details). This is a TAX-FREE disbursement. So if my housing costs are $20k per year, I can withdraw this amount tax-free. Right now I am directing all of my retirement savings to the 403b - currently at $15k/yr and hope to be at the max in the next year or so. If I have $500k in the 403b when I retire, I can pull $20k/yr using the 4% WR.
However, I am also wondering if I should have some taxable investments. If for some reason I want/need to retire at 55, I don't have a "bridge" until I can access the 403b at 59-1/2. I am familiar with diversification of investments across asset classes, but should I also have "diversification" between taxable and non-taxable? I don't expect to be in a high tax bracket in retirement, even when SS kicks in, and the housing allowance distribution is non-taxable anyway. So my main question is about having "buckets" based on my age in case I choose to retire earlier than expected. Or do I initiate Roth IRAs once I max out the 403b?
Sorry this is so wordy, but I wanted everyone to have enough info to make constructive comments.
I am 50 and have targeted retirement at 60. I have no debt and have a net worth around $750k. Current annual expenses are around $50k, and expected expenses in retirement are $40k.
I currently have $250K in 401k and 403b accounts - about $125k in each. The 401k is from a previous job, and I'm actively contributing to the 403b. There is $25k in an emergency fund and the kids' college accounts are complete. House is paid off and no other debt.
The wrinkle: As an ordained minister, the funds in the 403b can be disbursed as a minister's housing allowance, up to the actual costs of housing (clearly defined in the IRS tax code, so I won't bore you w/ the details). This is a TAX-FREE disbursement. So if my housing costs are $20k per year, I can withdraw this amount tax-free. Right now I am directing all of my retirement savings to the 403b - currently at $15k/yr and hope to be at the max in the next year or so. If I have $500k in the 403b when I retire, I can pull $20k/yr using the 4% WR.
However, I am also wondering if I should have some taxable investments. If for some reason I want/need to retire at 55, I don't have a "bridge" until I can access the 403b at 59-1/2. I am familiar with diversification of investments across asset classes, but should I also have "diversification" between taxable and non-taxable? I don't expect to be in a high tax bracket in retirement, even when SS kicks in, and the housing allowance distribution is non-taxable anyway. So my main question is about having "buckets" based on my age in case I choose to retire earlier than expected. Or do I initiate Roth IRAs once I max out the 403b?
Sorry this is so wordy, but I wanted everyone to have enough info to make constructive comments.