9 Year Age Gap 401k ?

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Jacobvierra
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Joined: Sun Mar 05, 2017 8:42 am

9 Year Age Gap 401k ?

Post by Jacobvierra » Sun Mar 05, 2017 8:48 am

Greetings

My wife and I have a 9 year age difference. I work for a railroad and she stays with the kiddos. I will earn Railroad retirement and the pension...

I know it is stupid to not put money into a 401k especially with a 100% match up to 6%...BUT.. I cannot pull this out until basically 60... this puts my wife nearly 70...

is there a different idea or plan you could help me with considering this situation ?

Thanks for looking

DSInvestor
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Re: 9 Year Age Gap 401k ?

Post by DSInvestor » Sun Mar 05, 2017 11:35 am

The 401k contributions help reduce your fed and state income taxes now. Plus you get a 100% match up to 6%. If you separate from service at age 55 (64 for your spouse), you can withdraw from the 401k penalty free.

Are you maxing out IRA contributions for you and your spouse? Your wife can make spousal IRA contributions if you file joint tax returns. Any money in her Traditional IRA can be withdrawn penalty free when she attains age 59.5. You're covered by an employer plan and if your MAGI exceeds 118K you cannot deduct Traditional IRA contributions. If your MAGI is under 184K, your spouse can deduct Traditional IRA contributions. Roth IRA contributions are also an option. Roth IRA contribution basis can be withdrawn at any time without tax or early withdrawal penalty.

IMO, you should be maxing out your 401k and both IRAs. Maybe max out Traditional 401k and use the tax savings to contribute to Roth IRA.

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simplesimon
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Location: Boston, MA

Re: 9 Year Age Gap 401k ?

Post by simplesimon » Sun Mar 05, 2017 12:48 pm

Read and re-read this: http://www.madfientist.com/how-to-acces ... nds-early/

What tax bracket are you in? How old are you? How old do you need to be to be eligible for retirement pension?

What's your income vs your expenses?

dharrythomas
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Joined: Tue Jun 19, 2007 4:46 pm

Re: 9 Year Age Gap 401k ?

Post by dharrythomas » Sun Mar 05, 2017 2:24 pm

We're in a similar situation and still contribute a significant amount to the TSP. My goal (God willing) is to retire or at least slow down significantly at 62 so we can enjoy some time before the inevitable health declines, but that means saving and investing now.

Good luck whatever your choice. You'll only know what is best in your individual circumstance in retrospect. :? Since my crystal ball is cloudy, I try to minimize potential future regret.

aristotelian
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Re: 9 Year Age Gap 401k ?

Post by aristotelian » Sun Mar 05, 2017 4:42 pm

Even though she will be age 70, you will still be working and supporting her at your current standard of living. This shouldn't be a huge problem.

If you want to do something for her, consider a Roth or Traditional IRA (which you can both have, in addition to your 401k, depending on your income.

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ruralavalon
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Location: Illinois

Re: 9 Year Age Gap 401k ?

Post by ruralavalon » Sun Mar 05, 2017 5:19 pm

Welcome to the forum :) .

You have some common misconceptions about 401ks.

You should definitely be contributing to the 401k enough to get the full employer match every year. The employer match is like free money, never turn down free money.

How much more you should contribute beyond the employer match depends on things we don't know like -- your tax bracket, your expectations about future earnings, what funds (fund names, tickers and expense ratios) are offered in the 401k, and how much it's practical for you to save and invest.

If you want to add that please simply add to your original post using the edit button, it helps a lot if all of your information is in one place.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Nate79
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Location: Portland, OR

Re: 9 Year Age Gap 401k ?

Post by Nate79 » Sun Mar 05, 2017 5:49 pm

I do not understand what your wife's age has to do with whether you use a 401k or not. It only matters when you plan to retire and when you plan to use the money for expenses in retirement.

dharrythomas
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Joined: Tue Jun 19, 2007 4:46 pm

Re: 9 Year Age Gap 401k ?

Post by dharrythomas » Sun Mar 05, 2017 8:05 pm

In my case, having an older spouse drives several decisions based on her desire to enjoy some of the money we've saved and not to wait until I turn 70 when she thinks she may be too old to relax and enjoy traveling together.

If nothing happens to her in the interim, my current thinking is to retire at 62 and draw SS right away. Even with the reductions in my base, her SS will double. If I wait, she'll have less time to enjoy the income.

An older spouse has more impact on decisions than I thought it would, 31 years ago when I proposed. Live and learn.

aristotelian
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Re: 9 Year Age Gap 401k ?

Post by aristotelian » Sun Mar 05, 2017 8:27 pm

dharrythomas wrote:In my case, having an older spouse drives several decisions based on her desire to enjoy some of the money we've saved and not to wait until I turn 70 when she thinks she may be too old to relax and enjoy traveling together.


EDIT Sorry, thought were the OP, please ignore
Last edited by aristotelian on Sun Mar 05, 2017 8:29 pm, edited 1 time in total.

HIinvestor
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Re: 9 Year Age Gap 401k ?

Post by HIinvestor » Sun Mar 05, 2017 8:28 pm

There's more than a decade of age difference between H and me. We had no problems deciding what we both wanted in terms of saving vs spending now. We maxed out all tax advantaged accounts and spent some and saved some. We were very concerned that we gave enough in case we live a very, very long time, and tax-advantaged accounts help ease that worry, as it allows the funds to grow tax free. H wants to be sure we have enough assets so I can continue to live comfortably if he should die before I do.

H is over 70 and we still both enjoy traveling together, flying to various places at least 3-4 times every year. I spent more time raising our kids and H spent more time working full time.

Having money in tax advantaged accounts reduces overall taxes. it sounds like the two of you need to sit together and re-visit your financial priorities to be sure you are both on the same page. As folks age, they may also need more funds for medical and other care as well, plus being sure they can have sufficient assets to be comfortable.

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