We're a family of four, my wife and I late thirties, and in relatively good financial shape. We're currently maxing out the tax-sheltered contributions to my 401(k), her 403(b), and the state maximum for the two kids' 529 plans ($10,000), along with a decent 401(k) match for me (about 8%).
However, I think there's a non-zero chance that circumstances in my job will change in the next two years and I may have to make a jump to a lower-paying job (About 4/5 of our income is from my job). As such, I'm trying to reconfigure my savings so that if we need to draw on savings for a period, the money is as accessible as possible. However, the most likely outcome is that nothing will change...just trying to hedge my bets. My gut is that I should start bulking up the emergency fund balance just in case something goes sideways, but with current spending needs, I'd have to pull back the 401(k) contributions to add to the taxable account buffer.
I have a Roth IRA that's been open since 2010, which was just rolled over in a trustee transfer to a different provider. We incomed out a few years ago and haven't been able to contribute recently. My employer has a Roth 401(k) option, so my thought is this:
- Stop contributing to the 401(k) ($18,500)
- Contribute as much as possible (i.e. don't reduce take-home pay) to come as close to max to the Roth 401(k) as possible (let's say about $14,000), and at least enough to maintain maximum employer match
- If nothing changes at my job, then reassess in a few years whether contributing to the 401(k) or Roth 401(k) is better, but otherwise maintain status quo.
- However, if I have to leave my job and need cash, rollover Roth 401(k) after separation to Roth IRA and then withdraw principal as absolutely necessary (to avoid that split between earnings and contributions that I'd face a penalty on from the Roth 401(k)).