Investing into taxable while spouse is unemployed

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nwffdiver
Posts: 113
Joined: Mon Oct 01, 2012 9:26 pm
Location: End of the Oregon trail

Investing into taxable while spouse is unemployed

Post by nwffdiver » Wed Jul 11, 2018 2:10 pm

Him 49 Her 51
AGI $165,000
MFJ Fed 24%, St 9%
Oregon
EF in Ally savings MM, VG Prime MM 6-8 months of expenses

My Assett Allocation:

Stocks 70%, FI 30%
international 25% of stocks

Total of Retirement assets high 6 figures

His and her Roth IRAs maxed each year
His 18,500 to 457b
Her was maxing 401k .... currently 19000
His 401a 5% of salary annually
His PEHP $600 annually

He will have a FF pension @ age 55


My wife recently (2 months ago) got downsized by Mega Corp after 18 years. (They closed her whole office). She was given a good severance of 6 months wages. When we found out (60 days prior) to the office closure, I switched her pay to all go into her 401k. However we were only able to get 19000 in(she’s 51). I have been putting the amount she would have put into her 401k monthly into a taxable account. We both have already maxed out our Roth IRAs and I max out my 457b each year. Does this make sense. I realize taxable is not as efficient, but I want to continue our savings rate. Does this sound okay?

Does anyone have another option I should try?

I have been adding all to VFWAX FTSE all world ex-US and VFINX 500 index


Edited to add AA and taxable funds
Last edited by nwffdiver on Wed Jul 11, 2018 6:41 pm, edited 4 times in total.

delamer
Posts: 6089
Joined: Tue Feb 08, 2011 6:13 pm

Re: Investing into taxable while spouse is unemployed

Post by delamer » Wed Jul 11, 2018 3:01 pm

There are ways to make the taxable account more tax efficient, by keeping equities in taxable rather than bonds. This is due to the lower tax rates on qualified dividends and long-term capital gains relative to ordinary income.

mega317
Posts: 2554
Joined: Tue Apr 19, 2016 10:55 am

Re: Investing into taxable while spouse is unemployed

Post by mega317 » Wed Jul 11, 2018 3:06 pm

It sounds totally great that you're going to continue to invest as if your wife was still working even though she's not. Congrats.

Of course that does make me wonder where the rest of her income had been going.

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BL
Posts: 8265
Joined: Sun Mar 01, 2009 2:28 pm

Re: Investing into taxable while spouse is unemployed

Post by BL » Wed Jul 11, 2018 3:13 pm

One possibility for the fixed income portion (bond substitute) is to invest in I-Bonds, which defer taxes until you cash them in or 30 years from purchase, whichever comes first. 10k/person/year, can't withdraw for 1 year, after 5 there is no 3-mo. penalty to withdraw, follows inflation.
https://treasurydirect.gov/

nwffdiver
Posts: 113
Joined: Mon Oct 01, 2012 9:26 pm
Location: End of the Oregon trail

Re: Investing into taxable while spouse is unemployed

Post by nwffdiver » Wed Jul 11, 2018 6:22 pm

I am currently 70 /30 with all of our Bonds in our tax deferred accounts. I am happy with this AA as I will have a pension to cover 55-65% of my needs. We do also have ~$3-4000 in I bonds, but haven’t added there in a few years.

annielouise
Posts: 328
Joined: Wed May 14, 2008 4:11 pm

Re: Investing into taxable while spouse is unemployed

Post by annielouise » Wed Jul 11, 2018 8:34 pm

Is she looking for another job? If yes, keep an eye on Roth eligibility with severance and new salary. Like us, you may have an end-of-year project to do.😀

We are in a similar situation, but will get $24300 in the 401k by the final paycheck (next week).

And yes, taxable sounds fine to me as an alternative.

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