I'm currently in my early thirties and plan to retire at around age 50 with a paid off house.
Conventional wisdom says I should contribute to a traditional 403(b) [or 401(k)] in order to get the full employer match, then to contribute to a Roth IRA, then to continue contributing to the 403(b) or to an after-tax account. That's exactly what I've been doing.
However, my employer recently started offering a Roth 403(b).
At first glance, it seems that I should contribute to the new Roth 403(b) instead of the traditional 403(b) in order to take advantage of my current low tax rate and because I plan to retire early. If I choose this option, my employer's matching contributions will continue to be pre-tax.
So here's my question: upon retirement, what percentage of my nest egg should I have in each type of account: pre-tax, Roth, and taxable?
For simplicity, let's assume that I'll be in the same tax bracket as I am today (though I personally believe that future tax rates will be higher due to significant unfunded government liabilities).
What other issues should I consider?
Thanks.
Conventional wisdom says I should contribute to a traditional 403(b) [or 401(k)] in order to get the full employer match, then to contribute to a Roth IRA, then to continue contributing to the 403(b) or to an after-tax account. That's exactly what I've been doing.
However, my employer recently started offering a Roth 403(b).
At first glance, it seems that I should contribute to the new Roth 403(b) instead of the traditional 403(b) in order to take advantage of my current low tax rate and because I plan to retire early. If I choose this option, my employer's matching contributions will continue to be pre-tax.
So here's my question: upon retirement, what percentage of my nest egg should I have in each type of account: pre-tax, Roth, and taxable?
For simplicity, let's assume that I'll be in the same tax bracket as I am today (though I personally believe that future tax rates will be higher due to significant unfunded government liabilities).
What other issues should I consider?
Thanks.