A little additional information is necessary.
What are your ages?
About how long until your expected retirement?
What is your current tax bracket, both federal and state?
How old are your kids?
Will you be eligible for Social Security benefits?
Are there any decent funds offered in your 403b plan? What are the diversified stock and bond funds offered with the lowest expense ratios? Please give fund names, tickers and expense ratios.
You can simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.
bg5 wrote: ↑Sat Jun 01, 2019 7:08 pm
Hey Gang,
How do you determine if you are investing to much money in tax deferred accounts?
Retirement accounts today are as follows[/u]
Roth IRA - 53K
403B - 147K
Annually we are contributing the following:
19K into 403B
12K into Roth IRA (wife and I)
Another piece of information will be when we retire we both will receive pensions that will be around 100K (50K each) a year with a COLA. Are we currently investing to much in tax deferred ?
bg5 wrote: ↑Sat Jun 01, 2019 7:16 pm
boglenomics wrote: ↑Sat Jun 01, 2019 7:13 pm
Depends on what your goals are. If you want to build long term wealth for retirement / estate, tax deferred is almost always the way to go. It's the "cheapest" of all options for that target from a tax perspective.
Taxable can be better if you intend to use the money prior to retirement so you don't get hit with early penalties.
Remember you can withdraw the Roth principal at any point without penalty and there are options available for early 401k withdraw (72t) to an extent.
Thank you for a reply.....so there is a good chance that my wife and I will be able to easily live off of our pensions alone as we live well below our means and live in a LCOL area. So if we plan to eventually give this money to our kids when we die you are saying a tax deferred account is best? We wont leave it all but a good majority will probably be left for the kids
It doesn't look like you are investing too much in tax-deferred, on the information provided so far. My first guess is that traditional contributions to your 403b plan will likely be better than contributions to a taxable account, as long as any decent funds are offered in the 403b plan.
Here is a general account funding priority that usually works well for many people (when there is no high interest debt or HSA use):
1) Contribute to the work-based plans (401k, 403b, 457, SIMPLE IRA, TSP, etc.) enough to get the full employer match (the match is like free money, your best possible investment);
2) Contribute the maximum to an IRA, traditional or Roth (or backdoor Roth technique), depending on eligibility and personal circumstances;
3) Contribute the remainder of the maximum employee contribution to the work-based accounts; and
4) Contribute to a taxable investing account.
"If the company plan offers good, low-cost funds, it may be preferable to contribute to the company plan before contributing to an IRA." Please see the wiki article
"Prioritizing investments".
You should look at how you might use the "excess" income (now or in retirement) to make life better for you, your children and others. Sometimes we get too used to living below our means and pass up opportunities to enjoy life a bit more.