Tatka75 wrote:Current standing:
Emergency funds: 3-4 months of expenses
Debt: Mortgage - 3.75% 30 fixed, 1% PMI, LTV 95%
Tax Rate: 28% Federal 5% State State of Residence
Age: 37 yo both
Desired Asset allocation: don't know just yet
Taxable : none
His 401k - ~ $80-90K
Her 403b $80-90K
New annual Contributions
$12K his 401k (including matching contributions) - Schwab Max out with new $
$5K Her 401k - new job, funds selections not available just yet Max out with new $
Pennstateclj1 wrote:Hello Tatka, welcome to the forum.
Might I make a suggestion rather than focus solely on the kids college funds with the extra money, that you first devote most of it to both of your 401k's in order to max each out for the year-$17k each. You'll also get a nice tax break, maybe even get into the 25% bracket?
If you list the state you're in, others can tell you if you get a tax break for contributing to a 529 in your state or if you should just do the Vanguard Plan. For the child that goes to school in 3 years, you can't take much risk, so the amount you contribute is more important at this point than what it's in. For the other children, just go with the age-based option or something pretty conservative (40/60 stock/bonds?) since you also don't have too much time to risk that money.
Again, I would consider maxing out all of your available retirement assets before the children's 529s- especially given your account balances and ages. My stance might change if you are going to have substantial pensions, but you didn't list any expected so I didn't assume that.
Also, if you're looking for comments on the other accounts you'll need to list them and all available options in them.
ilmartello wrote:Both of you can invest a maximum of $17k each in 401k's plus another 5k a piece in IRA;s.
Objectively you have a low amount of savings. To exact discipline on yourself you ought to devote all future increases in income to your savings, not dragging yourself down with further expenses. You shouldn't be upset about not having investments in taxable accounts, it's preferable to have them in investment accounts.
You should list all the current options in yours and your husband's 40xx accounts. Include the name of the fund ticker, and expense ratio. Although it's no substitute for increasing your savings rate, you should optimize your asset allocation and minimize investment expenses.
fidelity's target retirement is a hideous mix of terrible investment choices with high expense ratios. You ought to so if there is a better alternative.
You said your company matches your 401k, up to what dollar amount?
I would recommend looking long and hard at your expenses in a monthly format in a basic excel sheet. Amortize all the payments you make annually, so even if you pay property tax or certain insurance once or twice a year, divide into 12 and include an excel sheet. There may be some painless ways to reduce expenses, while some may be pain-free. Bundling and shopping around for insurance , threatening to cancel some services to drive down prices (think telephone,cable, internet company) is another one. I notice you don't have any auto loans, or didn't list them. Driving your cars into the ground and not getting new cars is another good money saver..
Best of luck.
Tatka75 wrote:Right now, a lot's going on (new job, property sale pending, and other life-changing events might happened in near future), so I prefer to have some flexibility.
So, basically I would like to build "second row" safety net/big future expenses.
Ideally -low/medium risk, earnings enough to protect from inflation, diversified allocation that would allow occasional withdrawals.
Where should I go?
Tatka75 wrote:Thank you!
Looks like I have to educate myself more before I can decide what to do...
Roth IRA - great idea, I didn't know about back-door.
What's a best lace to open one? Can't decide between Vanguard (duh!) and Schwab (my husband's choice)?
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