14k left over after max 401k and tIRA. Advice please ?

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Wsantos
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Joined: Sat Aug 05, 2017 3:02 pm

14k left over after max 401k and tIRA. Advice please ?

Post by Wsantos » Sat Aug 05, 2017 3:25 pm

:|
Any advise, big or small please throw it out .
I hope I am on the rite path here. I've used all the wikis and read as much as I could . Am I doing this rite ?
I wish to retire early and be financially independent. My goal is 10 years away. I am 25 wish to
FIRE when 35 At a SWR of 4% 20k yearly, live at a 15% tax bracket to move money over on a lake tax bracket and then see how to grow my wealth.

My spouse and I make the same income and split everything in half. We do not file together nor are we married. We would follow this plan.

I live off of 20k
I make 70k
Place 23,500 into 401k and tIRA

No HSA options, company has Traditional 401k and Roth 401k

Maxed my Traditional 401k and my company matches at 4%
Maxed my Traditional IRA with 5,500 ( I plan to be in a 15% tax bracket so I use a tIRA)
Leaving me with after taxes $14,500

Wife and I each have roughly $14,500 yearly left over after taxes in our bank.

Best use of this money will be in a vanguard index funds?
All in one fund or should I split it up?

Or any other suggestions or misconceptions I have to fix ?
Once 35 instead of retiring early, how would you use this position to build wealth and income ?

jcerickson
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Joined: Sat Aug 13, 2016 11:08 am
Location: Tampa, FL

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by jcerickson » Sat Aug 05, 2017 4:10 pm

Wsantos wrote:No HSA options....
If you have health insurance and it qualifies as a High Deductible Health Plan, you can still open an HSA and fund it personally (as opposed to a payroll deduction). At your age, you can contribute $3,400 for yourself. You may be able to contribute $6,750 for family coverage, depending on your specific situation.

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ruralavalon
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Location: Illinois

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by ruralavalon » Sat Aug 05, 2017 5:33 pm

You could consider two taxable accounts one for each of you, at a low cost provider like Vanguard, and invest in very tax-efficient large-cap or total market type stock index funds. Examples would include Vanguard Total Stock Market Index Fund, and Vanguard Total International Index Fund. Please see the wiki article "tax-efficient fund placement".
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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CyclingDuo
Posts: 1770
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Re: 14k left over after max 401k and tIRA. Advice please ?

Post by CyclingDuo » Sat Aug 05, 2017 5:37 pm

Wsantos wrote::|
Any advise, big or small please throw it out .
I hope I am on the rite path here. I've used all the wikis and read as much as I could . Am I doing this rite ?
I wish to retire early and be financially independent. My goal is 10 years away. I am 25 wish to
FIRE when 35 At a SWR of 4% 20k yearly, live at a 15% tax bracket to move money over on a lake tax bracket and then see how to grow my wealth.

My spouse and I make the same income and split everything in half. We do not file together nor are we married. We would follow this plan.

I live off of 20k
I make 70k
Place 23,500 into 401k and tIRA

No HSA options, company has Traditional 401k and Roth 401k

Maxed my Traditional 401k and my company matches at 4%
Maxed my Traditional IRA with 5,500 ( I plan to be in a 15% tax bracket so I use a tIRA)
Leaving me with after taxes $14,500

Wife and I each have roughly $14,500 yearly left over after taxes in our bank.

Best use of this money will be in a vanguard index funds?
All in one fund or should I split it up?

Or any other suggestions or misconceptions I have to fix ?
Once 35 instead of retiring early, how would you use this position to build wealth and income ?
Our realistic guess is that you're going to need to build a much larger nest egg than you will be able to in just 10 years with your numbers. Health insurance alone will eat your savings alive for the time from 35 until 65.

We would say, up your goal to the "somewhere over the age of 50" category to account for recessions, black swan events, and the ability to sock away money in investments during the low points to build up your capital for retirement so you don't outlive it.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

rob65
Posts: 334
Joined: Mon May 09, 2016 1:30 pm

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by rob65 » Sat Aug 05, 2017 6:47 pm

If you are interested in early retirement, you might check out some of the early retirement sites like mrmoneymustache, rootofgood, and gocurrycracker.

Folks on this site tend to be pretty conservative, maybe a little too conservative when it comes to SWR. Some of the FIRE folks scare me with very aggressive asset allocations and 4% withdrawal rates at age 35. Maybe best to strike a balance between the two viewpoints?

I think healthcare might be a hole in your plan and is an extreme unknown at this point.
Last edited by rob65 on Sun Aug 06, 2017 9:07 am, edited 1 time in total.

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badbreath
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Re: 14k left over after max 401k and tIRA. Advice please ?

Post by badbreath » Sat Aug 05, 2017 8:26 pm

Does your wife have a 401k, if so max it out if not set up a spousal tIRA for the tax deduction and savings.

Next put funds in a taxable fund that is tax efficient. www.bogleheads.org/wiki/Tax-efficient_fund_placement
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx

MotoTrojan
Posts: 2456
Joined: Wed Feb 01, 2017 8:39 pm

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by MotoTrojan » Sat Aug 05, 2017 8:36 pm

ruralavalon wrote:You could consider two taxable accounts one for each of you, at a low cost provider like Vanguard, and invest in very tax-efficient large-cap or total market type stock index funds. Examples would include Vanguard Total Stock Market Index Fund, and Vanguard Total International Index Fund. Please see the wiki article "tax-efficient fund placement".
Just to follow up on this, I would recommend thinking about your total portfolio (Taxable, IRA, 401K, HSA) as one unit. Set your AA across them. Target Retirement or similar funds are okay in 401K if that is cheapest available, but otherwise you should be managing your portfolio of 3 core funds (assuming setting up 3-fund portfolio, for simplicity). Taxable should not have bonds due to tax inefficiency, so fill your taxable account with Total US & Total International.

Also, do some research on Tax Loss Harvesting, and ensure you understand wash sale rules and retirement account impacts on what/when you buy (including dividends). With a fairly substantial taxable account ($14K/yr), you are bound to come across a big enough loss to warrant TLH'ing, and with your fairly low expected yearly expenses, offsetting your gains (or eventually having $3K/yr of losses to counteract any other income) will be a big help.

Wsantos
Posts: 17
Joined: Sat Aug 05, 2017 3:02 pm

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by Wsantos » Sat Aug 05, 2017 8:45 pm

O man :/ can we review the numbers ?
I'm sure I was correct on my math
Let's change it a bit to paint a better picture of my plan.
These numbers reflect household income however we are not married so we don't file jointly
The tax rate we are in is 25%

Pre tax our yearly house hold income is 140k
We Save $37,100 yearly in 401k max and Traditional Ira pre tax max
From the rest of the left over taxed income
we live off of 30-35k a year and are left with placing $42-47kk post tax income into index funds.
With an average return rate of 56% a conservative figure
I estimated a financial independence in 10years with a
At minimum 40k total yearly withdrawal is what we need to take care of our living expense. Running numbers I'm FI at this point.



I have to fix the healthcare issue
My companies plan does not support hsa. I need to find a fix here and we'll in the event of a market crash I'm 25
At age 35
I am fine with waiting it out 5-10 years at most
This still places me below 50 retired

If my information if flawed please give me the details
To better align myself on a realistic goal.
Thank you. !

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badbreath
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Joined: Mon Jul 18, 2016 7:50 pm

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by badbreath » Sat Aug 05, 2017 9:44 pm

Since you are not joined do not think of all the money as yours only what you have put into it.

Relationships brake up.
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx

mega317
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Joined: Tue Apr 19, 2016 10:55 am

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by mega317 » Sat Aug 05, 2017 11:51 pm

Even if you have taken heath care into account, I don't think you can start withdrawing 4% at 35.

Your savings rate is fantastic but why do you want to retire at 35? Maybe you should look for more rewarding/enjoyable work instead.

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ruralavalon
Posts: 14058
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Location: Illinois

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by ruralavalon » Sun Aug 06, 2017 11:34 am

Wsantos wrote::|
Any advise, big or small please throw it out .
I hope I am on the rite path here. I've used all the wikis and read as much as I could . Am I doing this rite ?
I wish to retire early and be financially independent. My goal is 10 years away. I am 25 wish to
FIRE when 35 At a SWR of 4% 20k yearly, live at a 15% tax bracket to move money over on a lake tax bracket and then see how to grow my wealth.

My spouse and I make the same income and split everything in half. We do not file together nor are we married. We would follow this plan.

I live off of 20k
I make 70k
Place 23,500 into 401k and tIRA

No HSA options, company has Traditional 401k and Roth 401k

Maxed my Traditional 401k and my company matches at 4%
Maxed my Traditional IRA with 5,500 ( I plan to be in a 15% tax bracket so I use a tIRA)
Leaving me with after taxes $14,500

Wife and I each have roughly $14,500 yearly left over after taxes in our bank.

Best use of this money will be in a vanguard index funds?
All in one fund or should I split it up?

Or any other suggestions or misconceptions I have to fix ?
Once 35 instead of retiring early, how would you use this position to build wealth and income ?
You can't use a 4% safe withdrawal rate for a retirement at age 35. That rate is based on a retirement at age 65.

Your savings rate is excellent, that's the best part of your plan. A high savings rate when young is the most important thing you can do for portfolio growth. The next most important things are to keep investing expenses low (you don't say what mutual funds you use) and use tax-advantaged accounts as much as possible (you are already doing this).

Why do you want to retire at 35? Can you find some line or work that you enjoy?

If you don't retire at 35 and want to build wealth, continue with the same basic principles: 1) a high savings rate; 2) very low investing expenses; and 3) maximum use of tax-advantaged accounts.

Here is a calculator that you can use in making projections: http://www.firecalc.com .
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Wsantos
Posts: 17
Joined: Sat Aug 05, 2017 3:02 pm

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by Wsantos » Sun Aug 06, 2017 7:03 pm

jcerickson wrote:
Wsantos wrote:No HSA options....
If you have health insurance and it qualifies as a High Deductible Health Plan, you can still open an HSA and fund it personally (as opposed to a payroll deduction). At your age, you can contribute $3,400 for yourself. You may be able to contribute $6,750 for family coverage, depending on your specific situation.

I will call blue shield and see if it qualifies
I doubt it tho. Hopefully !!

Wsantos
Posts: 17
Joined: Sat Aug 05, 2017 3:02 pm

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by Wsantos » Sun Aug 06, 2017 7:05 pm

rob65 wrote:If you are interested in early retirement, you might check out some of the early retirement sites like mrmoneymustache, rootofgood, and gocurrycracker.

Folks on this site tend to be pretty conservative, maybe a little too conservative when it comes to SWR. Some of the FIRE folks scare me with very aggressive asset allocations and 4% withdrawal rates at age 35. Maybe best to strike a balance between the two viewpoints?

I think healthcare might be a hole in your plan and is an extreme unknown at this point.
:|
So about healthcare, what can I do here ?
I will be calling blue shield to ask about high deductible and HSA

Wsantos
Posts: 17
Joined: Sat Aug 05, 2017 3:02 pm

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by Wsantos » Sun Aug 06, 2017 7:07 pm

badbreath wrote:Since you are not joined do not think of all the money as yours only what you have put into it.

Relationships brake up.

Yes she has her own 401k and tIRA and index funds.

You are correct about the break ups!
We have lived together for 7 years so let's hope not, we have a child together.

Wsantos
Posts: 17
Joined: Sat Aug 05, 2017 3:02 pm

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by Wsantos » Sun Aug 06, 2017 7:13 pm

MotoTrojan wrote:
ruralavalon wrote:You could consider two taxable accounts one for each of you, at a low cost provider like Vanguard, and invest in very tax-efficient large-cap or total market type stock index funds. Examples would include Vanguard Total Stock Market Index Fund, and Vanguard Total International Index Fund. Please see the wiki article "tax-efficient fund placement".
Just to follow up on this, I would recommend thinking about your total portfolio (Taxable, IRA, 401K, HSA) as one unit. Set your AA across them. Target Retirement or similar funds are okay in 401K if that is cheapest available, but otherwise you should be managing your portfolio of 3 core funds (assuming setting up 3-fund portfolio, for simplicity). Taxable should not have bonds due to tax inefficiency, so fill your taxable account with Total US & Total International.

Also, do some research on Tax Loss Harvesting, and ensure you understand wash sale rules and retirement account impacts on what/when you buy (including dividends). With a fairly substantial taxable account ($14K/yr), you are bound to come across a big enough loss to warrant TLH'ing, and with your fairly low expected yearly expenses, offsetting your gains (or eventually having $3K/yr of losses to counteract any other income) will be a big help.

Thank you, I'll look into all of this.

Can you elaborate ol the TLH'ing ?
Can the 14k be used any smarter in your opinion ?

All at once in a min 10k index fund or explore various other funds to diversify the cash.

Wsantos
Posts: 17
Joined: Sat Aug 05, 2017 3:02 pm

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by Wsantos » Sun Aug 06, 2017 7:16 pm

mega317 wrote:Even if you have taken heath care into account, I don't think you can start withdrawing 4% at 35.

Your savings rate is fantastic but why do you want to retire at 35? Maybe you should look for more rewarding/enjoyable work instead.

Well mega I should have elaborated
I wish to quit my job at 35 to begin work on what I enjoy doing. Sound engineering. I want to be able to not worry about any entry level income. That's the one thing stopping me rite now. My job i make 70-75k a year
If I switch jobs now. Less money'. So I am using 10years to reach FI and cruise into a new field without worrying about the low income I'd begin with.

I haven't worked in the audio field in 5 years so I will HAVE to begin in a entry level position. 35 still feels young to me
I would like to continue working until 50 but from 35-38 wish to take a break. A breather.

H-Town
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Joined: Sun Feb 26, 2017 2:08 pm

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by H-Town » Sun Aug 06, 2017 7:20 pm

Wsantos wrote:
jcerickson wrote:
Wsantos wrote:No HSA options....
If you have health insurance and it qualifies as a High Deductible Health Plan, you can still open an HSA and fund it personally (as opposed to a payroll deduction). At your age, you can contribute $3,400 for yourself. You may be able to contribute $6,750 for family coverage, depending on your specific situation.

I will call blue shield and see if it qualifies
I doubt it tho. Hopefully !!
If your employer's health insurance plan has a co-pay, it's not a high deductible plan; thus, you won't be eligible for HSA.

You should consider using Roth IRA to diversify your investment vehicles. This will help you planning your withdrawal strategy at retirement so that you don't have to pay tax.

Having money left over after max retirement accounts is a good problem to have. Put it towards taxable accounts after you and your wife enjoys the fruit of your labor, i.e. adventures, experience, etc.

Wsantos
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Re: 14k left over after max 401k and tIRA. Advice please ?

Post by Wsantos » Sun Aug 06, 2017 7:43 pm

thangngo wrote:
Wsantos wrote:
jcerickson wrote:
Wsantos wrote:No HSA options....
If you have health insurance and it qualifies as a High Deductible Health Plan, you can still open an HSA and fund it personally (as opposed to a payroll deduction). At your age, you can contribute $3,400 for yourself. You may be able to contribute $6,750 for family coverage, depending on your specific situation.

I will call blue shield and see if it qualifies
I doubt it tho. Hopefully !!
If your employer's health insurance plan has a co-pay, it's not a high deductible plan; thus, you won't be eligible for HSA.

You should consider using Roth IRA to diversify your investment vehicles. This will help you planning your withdrawal strategy at retirement so that you don't have to pay tax.

Having money left over after max retirement accounts is a good problem to have. Put it towards taxable accounts after you and your wife enjoys the fruit of your labor, i.e. adventures, experience, etc.
Thought so about the health care.

So you would suggest to split contributions between a Roth IRA and Traditional IRA ?
Maxing my IRA 50% in each ?

I was thinking I would be able to backdoor the tIRA into a Roth once I stop working for a year or two to travel a bit.
I would go back to work after however use that time to move funds over while at a lower tax bracket
Bad idea ? Flawed ?

MotoTrojan
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Joined: Wed Feb 01, 2017 8:39 pm

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by MotoTrojan » Sun Aug 06, 2017 7:52 pm

Wsantos wrote:
MotoTrojan wrote:
ruralavalon wrote:You could consider two taxable accounts one for each of you, at a low cost provider like Vanguard, and invest in very tax-efficient large-cap or total market type stock index funds. Examples would include Vanguard Total Stock Market Index Fund, and Vanguard Total International Index Fund. Please see the wiki article "tax-efficient fund placement".
Just to follow up on this, I would recommend thinking about your total portfolio (Taxable, IRA, 401K, HSA) as one unit. Set your AA across them. Target Retirement or similar funds are okay in 401K if that is cheapest available, but otherwise you should be managing your portfolio of 3 core funds (assuming setting up 3-fund portfolio, for simplicity). Taxable should not have bonds due to tax inefficiency, so fill your taxable account with Total US & Total International.

Also, do some research on Tax Loss Harvesting, and ensure you understand wash sale rules and retirement account impacts on what/when you buy (including dividends). With a fairly substantial taxable account ($14K/yr), you are bound to come across a big enough loss to warrant TLH'ing, and with your fairly low expected yearly expenses, offsetting your gains (or eventually having $3K/yr of losses to counteract any other income) will be a big help.

Thank you, I'll look into all of this.

Can you elaborate ol the TLH'ing ?
Can the 14k be used any smarter in your opinion ?

All at once in a min 10k index fund or explore various other funds to diversify the cash.
There's plenty of resources on here that explain it better, so do your research. In a nutshell, if you have a loss you can sell the index and buy a similar but not identical fund. Thus your exposure is the same (both funds would've gone down roughly proportionally) but you can claim it as a loss, saving you taxes.

Wsantos
Posts: 17
Joined: Sat Aug 05, 2017 3:02 pm

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by Wsantos » Sun Aug 06, 2017 7:54 pm

MotoTrojan wrote:
Wsantos wrote:
MotoTrojan wrote:
ruralavalon wrote:You could consider two taxable accounts one for each of you, at a low cost provider like Vanguard, and invest in very tax-efficient large-cap or total market type stock index funds. Examples would include Vanguard Total Stock Market Index Fund, and Vanguard Total International Index Fund. Please see the wiki article "tax-efficient fund placement".
Just to follow up on this, I would recommend thinking about your total portfolio (Taxable, IRA, 401K, HSA) as one unit. Set your AA across them. Target Retirement or similar funds are okay in 401K if that is cheapest available, but otherwise you should be managing your portfolio of 3 core funds (assuming setting up 3-fund portfolio, for simplicity). Taxable should not have bonds due to tax inefficiency, so fill your taxable account with Total US & Total International.

Also, do some research on Tax Loss Harvesting, and ensure you understand wash sale rules and retirement account impacts on what/when you buy (including dividends). With a fairly substantial taxable account ($14K/yr), you are bound to come across a big enough loss to warrant TLH'ing, and with your fairly low expected yearly expenses, offsetting your gains (or eventually having $3K/yr of losses to counteract any other income) will be a big help.

Thank you, I'll look into all of this.

Can you elaborate ol the TLH'ing ?
Can the 14k be used any smarter in your opinion ?

All at once in a min 10k index fund or explore various other funds to diversify the cash.
There's plenty of resources on here that explain it better, so do your research. In a nutshell, if you have a loss you can sell the index and buy a similar but not identical fund. Thus your exposure is the same (both funds would've gone down roughly proportionally) but you can claim it as a loss, saving you taxes.

Thank you, I will dig in deep to expand on this, just needed a basic understanding to branch off of

Thank you very much. Appreciate you.

sailaway
Posts: 404
Joined: Fri May 12, 2017 1:11 pm

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by sailaway » Sun Aug 06, 2017 8:00 pm

If you are currently living on ~$30k, why would your expenses come down to ~$20k in 10 years?
Have you tried making any of the expected changes right now?

Wsantos
Posts: 17
Joined: Sat Aug 05, 2017 3:02 pm

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by Wsantos » Sun Aug 06, 2017 8:04 pm

sailaway wrote:If you are currently living on ~$30k, why would your expenses come down to ~$20k in 10 years?
Have you tried making any of the expected changes right now?
Lol sorry let me clear this up,
30k total is what our household needs to survive.
15k from me 15k from my wife

Well 27k actually but we set 3k yearly for emergencies
Aside from the 6month emergency fund we have for each other.

We want to withdraw 20k each at FI
Meaning household living off of 40k
Atleast for 2years until I return to the workforce to make more and invest more.

rob65
Posts: 334
Joined: Mon May 09, 2016 1:30 pm

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by rob65 » Sun Aug 06, 2017 8:14 pm

Wsantos wrote:
rob65 wrote:If you are interested in early retirement, you might check out some of the early retirement sites like mrmoneymustache, rootofgood, and gocurrycracker.

Folks on this site tend to be pretty conservative, maybe a little too conservative when it comes to SWR. Some of the FIRE folks scare me with very aggressive asset allocations and 4% withdrawal rates at age 35. Maybe best to strike a balance between the two viewpoints?

I think healthcare might be a hole in your plan and is an extreme unknown at this point.
:|
So about healthcare, what can I do here ?
I will be calling blue shield to ask about high deductible and HSA
I was talking more about getting health insurance after you FIRE. Long term it really depends on what happens with the Affordable Care Act or whatever might replace it. That's almost impossible to predict at this point (and speculation about future legislation isn't allowed under forum rules).

Now if you are going to move to a lower paying job that still has benefits, it really isn't a big deal. If you are looking to completely retire or to work for yourself, all you can really do is save as much as possible and wait to see how healthcare evolves over the next decade. It's just a very difficult expense to predict at this point.

Wsantos
Posts: 17
Joined: Sat Aug 05, 2017 3:02 pm

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by Wsantos » Sun Aug 06, 2017 8:18 pm

rob65 wrote:
Wsantos wrote:
rob65 wrote:If you are interested in early retirement, you might check out some of the early retirement sites like mrmoneymustache, rootofgood, and gocurrycracker.

Folks on this site tend to be pretty conservative, maybe a little too conservative when it comes to SWR. Some of the FIRE folks scare me with very aggressive asset allocations and 4% withdrawal rates at age 35. Maybe best to strike a balance between the two viewpoints?

I think healthcare might be a hole in your plan and is an extreme unknown at this point.
:|
So about healthcare, what can I do here ?
I will be calling blue shield to ask about high deductible and HSA
I was talking more about getting health insurance after you FIRE. Long term it really depends on what happens with the Affordable Care Act or whatever might replace it. That's almost impossible to predict at this point (and speculation about future legislation isn't allowed under forum rules).

Now if you are going to move to a lower paying job that still has benefits, it really isn't a big deal. If you are looking to completely retire or to work for yourself, all you can really do is save as much as possible and wait to see how healthcare evolves over the next decade. It's just a very difficult expense to predict at this point.


I see what you mean,
For two years I plan to be free of a job
After which I do plan to return to the workforce and well if all is well it's a job with healthcare.

I see what you mean In regards to the unpredictability
Of healthcare. So maybe saving 1k yearly each in my savings account to tackle this problem in the future

TheHouse7
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Joined: Fri Jan 13, 2017 2:40 am

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by TheHouse7 » Sun Aug 06, 2017 11:42 pm

I understand your situation and math from what your have posted. From what I've read, 4% WR will last about 30 years and why it is a rule of thumb. You should do what you want now. Find a way to create a bridge between your current job and the one you want(side gig).
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.

DSInvestor
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Joined: Sat Oct 04, 2008 11:42 am

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by DSInvestor » Mon Aug 07, 2017 12:35 am

Wsantos wrote:O man :/ can we review the numbers ?
I'm sure I was correct on my math
Let's change it a bit to paint a better picture of my plan.
These numbers reflect household income however we are not married so we don't file jointly
The tax rate we are in is 25%

Pre tax our yearly house hold income is 140k
I just want to make sure you're aware that if you're covered by an employer plan, there is in income limit which may disallow your TIRA deduction. For 2017 tax year, single filers who are covered by an employer plan cannot take TIRA deduction if MAGI exceeds 72K. See IRS page on IRA deduction limits.

If you cannot take the Traditional IRA deduction, you're better off with Roth IRA contributions. You can look into recharacterization of your 2017 TIRA contributions to 2017 Roth IRA contributions.

If your SO is not covered by an employer plan and is a single filer, then full TIRA deduction is allowed no matter how high the income.
Wiki

Wsantos
Posts: 17
Joined: Sat Aug 05, 2017 3:02 pm

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by Wsantos » Mon Aug 07, 2017 12:41 am

DSInvestor wrote:
Wsantos wrote:O man :/ can we review the numbers ?
I'm sure I was correct on my math
Let's change it a bit to paint a better picture of my plan.
These numbers reflect household income however we are not married so we don't file jointly
The tax rate we are in is 25%

Pre tax our yearly house hold income is 140k
I just want to make sure you're aware that if you're covered by an employer plan, there is in income limit which may disallow your TIRA deduction. For 2017 tax year, single filers who are covered by an employer plan cannot take TIRA deduction if MAGI exceeds 72K. See IRS page on IRA deduction limits.

If you cannot take the Traditional IRA deduction, you're better off with Roth IRA contributions. You can look into recharacterization of your 2017 TIRA contributions to 2017 Roth IRA contributions.

If your SO is not covered by an employer plan and is a single filer, then full TIRA deduction is allowed no matter how high the income.
Oh yea I know thank you ! :sharebeer
I make 70k before my 401k deductions
After that I'm at 52k so I qualify for a full deduction


Same with her. Same income same 401k yearly Max
So she gets her full deduction.

Wsantos
Posts: 17
Joined: Sat Aug 05, 2017 3:02 pm

Re: 14k left over after max 401k and tIRA. Advice please ?

Post by Wsantos » Mon Aug 07, 2017 12:43 am

TheHouse7 wrote:I understand your situation and math from what your have posted. From what I've read, 4% WR will last about 30 years and why it is a rule of thumb. You should do what you want now. Find a way to create a bridge between your current job and the one you want(side gig).

Thank you very much. :idea:

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