My DH and I plan to retire in 3-5 years and with pensions and savings, we think that we could retire now (110k in non-COLA pensions, 2mil in savings, mostly tax deferred, but we actually enjoy our jobs). We are considering moving to a high housing cost area when we retire for weather, quality of life, and/or family reasons. We are wondering what savings vehicles would be best these last few years of working to achieve our goal of a paid-off house when we begin retirement (or within the first year of retirement, say). We realize that we can buy a cheaper house in a similar or in an outlying area, but we want to position ourselves to be able to buy what we really desire if we want to (e.g., a house close to the ocean).
Current Ages: DH: 55, Me: 53
Current house value: 500k, paid off
Future House up to 1.2mil
Taxable 200k
Roth IRAs DH: 30k, Me: 210k (all converted many years ago)
401ks: DH: 600k, Me: 270k
Rollover IRAs DH: 560k, Me: 320k
What we are saving per year:
24,500 each in 401ks.
40,000 to taxable
We both work for the same mega-corp which just this year started offering in-plan Roth conversions, so we are contributing up to the 61k limit after tax (DH: 27k, Me 31k). I plan to convert these once per year
Options:
Linda
Current Ages: DH: 55, Me: 53
Current house value: 500k, paid off
Future House up to 1.2mil
Taxable 200k
Roth IRAs DH: 30k, Me: 210k (all converted many years ago)
401ks: DH: 600k, Me: 270k
Rollover IRAs DH: 560k, Me: 320k
What we are saving per year:
24,500 each in 401ks.
40,000 to taxable
We both work for the same mega-corp which just this year started offering in-plan Roth conversions, so we are contributing up to the 61k limit after tax (DH: 27k, Me 31k). I plan to convert these once per year
Options:
- Leave as-is: I'm unclear on the roth conversion rules. Is it basically each conversion must meet the 5 year rule unless you are 59.5 yrs old? If so, we aren't going to have access to much of that unless we wait until DH is 59.5
- Reduce 401k to just what is required to get the company match, which would free-up ~25k/yr total. Put that in 401k roth conversion or taxable?
- Stop 401k after-tax contributions and convert DH's rollover IRA to Roth? We can convert roughly 50k per year before maxing out the 24% tax bracket. Is the 5 year rule the same for this type of conversion?
Linda
Last edited: