How to maximize my retirement savings

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
Kow
Posts: 24
Joined: Fri May 27, 2016 5:04 pm

How to maximize my retirement savings

Post by Kow » Thu Dec 29, 2016 8:46 am

My wife will stop working in early January (6 months pregnant!) as we've recently moved into a new house that is a few hour commute from her current job. She is not planning on going back to work until at least the end of 2017 but will have 1 paycheck in January 2017.

She has been contributing to her 403B, I will continue to max out my 401K, with generous 6% company match including the profit sharing. We also will max out our family HSA this year. Are there additional areas to max out our retirement savings vs. a regular brokerage account? I expect an additional $50K+ in savings and wonder the best place to put those dollars. We will be in the 33% federal tax bracket this year. We have a new substantial mortgage ($600K) but at a 3.25% interest rate over 30 years, I'm not inclined to pay that off early.

I have read a few posts on backdoor roth, not sure those are appropriate and if they are any benefit in our situation or there are any other options that make sense to check out.

I hope everyone has a happy new year!

qwertyjazz
Posts: 1132
Joined: Tue Feb 23, 2016 4:24 am

Re: How to maximize my retirement savings

Post by qwertyjazz » Thu Dec 29, 2016 8:49 am

See if she can put her whole paycheck (up to 18k) into the 403b in January
G.E. Box "All models are wrong, but some are useful."

User avatar
BL
Posts: 9160
Joined: Sun Mar 01, 2009 2:28 pm

Re: How to maximize my retirement savings

Post by BL » Thu Dec 29, 2016 8:59 am

+1 on asking for max to 401k in January.

You don't mention IRAs. If you have no (non-Roth) IRAs, you could do the "backdoor Roth", which is described in the Wiki.

Vanguard's Total Stock Market fund is very tax-efficient in taxable account; also Total International, which has less qualified dividends but does have foreign tax credit.

Topic Author
Kow
Posts: 24
Joined: Fri May 27, 2016 5:04 pm

Re: How to maximize my retirement savings

Post by Kow » Thu Dec 29, 2016 9:13 am

Yes, we will be contributing 100% to 403b for January. Our brokerage account is split completely between VTI, BND and VEU (@ TD Ameritrade)

I guess with a backdoor Roth, I'm not really understanding the benefits of doing so. Is it only that any earnings on investments would not be taxed until retirement vs. at time of transactions? I'f i'm planning on very limited activity and have my regular brokerage account and an emergency account in case of any cash need, why would i benefit from a backdoor Roth?

User avatar
Epsilon Delta
Posts: 8090
Joined: Thu Apr 28, 2011 7:00 pm

Re: How to maximize my retirement savings

Post by Epsilon Delta » Thu Dec 29, 2016 11:12 am

Kow wrote:Yes, we will be contributing 100% to 403b for January. Our brokerage account is split completely between VTI, BND and VEU (@ TD Ameritrade)

I guess with a backdoor Roth, I'm not really understanding the benefits of doing so. Is it only that any earnings on investments would not be taxed until retirement vs. at time of transactions? I'f i'm planning on very limited activity and have my regular brokerage account and an emergency account in case of any cash need, why would i benefit from a backdoor Roth?
The benefits of a backdoor Roth are the same as the benefits of a normal Roth: Any investment earnings are never taxed.
(A backdoor Roth is just another way of putting money into the Roth. Once the money is in the Roth IRA it's just a Roth IRA)

Aside: Your wife will probably have an opportunity to roll her 403b etc into an IRA. This would interfere with doing the backdoor Roth.

Post Reply