SkinsFan0521
Dryer sheet aficionado
- Joined
- Nov 17, 2016
- Messages
- 48
Hi,
I recently came across this forum and have been reading all types of threads on here for the past week or so. I've been studying ER for the past year or so and I'm looking for some advice from all of you smart people! My wife & I would like to achieve FI as close to 50 as possible and 55 at the latest. Depending on our work situation at that time, we can decide if we'd like to keep working or go part time, etc.
So, anyway, here's our current financial situation:
In 2016 we both maxed our Roth 401ks for the first time based on the advice of our FA (who we're trying to decide if we think is necessary or if we should just go it on our own). However, I'm wondering if that's a strategy we should be using going forward or if we should be maxing out traditional 401k and then taking that tax savings and investing it in a brokerage account?
In 2017, our finances will allow us to either both max our Roth 401k & max our Roth IRA and invest nothing in a brokerage account. Or we could both max Traditional 401k & max Roth IRA and then take that tax savings $ and invest in a brokerage account.
One of my biggest concerns right now is that I'd like to make sure we have a plan to bridge the years between when we decide to quit working and 59.5 (or whatever the age will be by then!) when we'll be able to start accessing our retirement accounts. So, I'm thinking of changing to max the traditional 401ks and invest the tax savings in a brokerage account. That will allow us to invest in some income producing (thinking dividends?) ETFs now and start to build up that portfolio to bride us for that 7-10 years before we can access our retirement accounts. Thoughts on that strategy?
In retirement we plan to stay within the 15% tax bracket if possible. In 2016 dollars, that's something like $95k of income pre tax before deductions and that would leave us with something like $85k after tax, right? Assuming my math/understanding is correct, that would be no problem for us and is more than we currently live on after taking out savings, retirement investments, mortgage, car payments. Plus, with the flexibility of having money in Roth IRA and some in Roth 401k, we should be able to manage that taxable number reasonably well.
Then, my last question would be about where we should start a brokerage account if we do in fact go that direction? I know that Fidelity and Vanguard are the preferred options on here (and may other places I've read), but keep in mind that we don't currently have one and won't have a large balance (probably adding a total of less than $10k to it in 2017), so the fees will be different than if this were an account with several hundred thousand dollars in it. Also, we'd prefer to contribute little bits at a time to this account monthly (or even weekly), so that factors into the trading fees as well.
There's lots more that I still need to learn and number crunching to determine if we'll be able to retire when we want, but right now I'm focused on investing as much as possible and having it invested in the right spots. My opinion is that with it being at least 17 years away, I don't think there's any reason I should be worried about things like how much healthcare will cost because that's going to change so much between now and then.
Thanks a lot for all your help and let me know if there was any information that I left out that would be useful for you to give some advice!!
I recently came across this forum and have been reading all types of threads on here for the past week or so. I've been studying ER for the past year or so and I'm looking for some advice from all of you smart people! My wife & I would like to achieve FI as close to 50 as possible and 55 at the latest. Depending on our work situation at that time, we can decide if we'd like to keep working or go part time, etc.
So, anyway, here's our current financial situation:
- Tax Bracket: 25%
- Debt: $154k between mortgage and cars. Mortgage will be paid off by the time we're 45. Mortgage @ 3.75%, cars @ 1.99% & 2.8%
- Roth IRA: $20k
- Traditional 401k: $294k
- Roth 401k: $50k
- Cash: 6-9 months expenses
In 2016 we both maxed our Roth 401ks for the first time based on the advice of our FA (who we're trying to decide if we think is necessary or if we should just go it on our own). However, I'm wondering if that's a strategy we should be using going forward or if we should be maxing out traditional 401k and then taking that tax savings and investing it in a brokerage account?
In 2017, our finances will allow us to either both max our Roth 401k & max our Roth IRA and invest nothing in a brokerage account. Or we could both max Traditional 401k & max Roth IRA and then take that tax savings $ and invest in a brokerage account.
One of my biggest concerns right now is that I'd like to make sure we have a plan to bridge the years between when we decide to quit working and 59.5 (or whatever the age will be by then!) when we'll be able to start accessing our retirement accounts. So, I'm thinking of changing to max the traditional 401ks and invest the tax savings in a brokerage account. That will allow us to invest in some income producing (thinking dividends?) ETFs now and start to build up that portfolio to bride us for that 7-10 years before we can access our retirement accounts. Thoughts on that strategy?
In retirement we plan to stay within the 15% tax bracket if possible. In 2016 dollars, that's something like $95k of income pre tax before deductions and that would leave us with something like $85k after tax, right? Assuming my math/understanding is correct, that would be no problem for us and is more than we currently live on after taking out savings, retirement investments, mortgage, car payments. Plus, with the flexibility of having money in Roth IRA and some in Roth 401k, we should be able to manage that taxable number reasonably well.
Then, my last question would be about where we should start a brokerage account if we do in fact go that direction? I know that Fidelity and Vanguard are the preferred options on here (and may other places I've read), but keep in mind that we don't currently have one and won't have a large balance (probably adding a total of less than $10k to it in 2017), so the fees will be different than if this were an account with several hundred thousand dollars in it. Also, we'd prefer to contribute little bits at a time to this account monthly (or even weekly), so that factors into the trading fees as well.
There's lots more that I still need to learn and number crunching to determine if we'll be able to retire when we want, but right now I'm focused on investing as much as possible and having it invested in the right spots. My opinion is that with it being at least 17 years away, I don't think there's any reason I should be worried about things like how much healthcare will cost because that's going to change so much between now and then.
Thanks a lot for all your help and let me know if there was any information that I left out that would be useful for you to give some advice!!