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michaelc wrote: ↑Mon Jan 23, 2023 6:45 pm Hello,

I am 60 male, single, no kids and ZERO debt. My current retirement savings is right at 800K. However, these assets are the total for my 403(b) and my Roth. My 403(b) has 625K and my Roth has 175K. I DO NOT have a taxable account for retirement and now I am wondering if this is a mistake. I have 2 plans in my employer's 403(b), which is with TIAA. The Defined Plan is what my employer voluntarily contributes, which is 9.5%. The Deferred Plan is the supplemental plan that the employee contributes, which I do at 13%. I was thinking about stopping contributing to my Deferred Plan, and use that 13% to open a taxable account for retirement with Vanguard. It comes out to $725 a month. I have 5-7 more left till retirement, so that can add up and than I will have 3 sources for retirement savings...My 403(b), Roth and Vanguard taxable account.
My current health insurance continues in retirement at my current premium, which is a HUGE plus, but I must stay employed there to 65 and have 25 years of service, which is will have 32 years at 65.

So my question is how important is it to have a 3rd source for retirement in a taxable account?

Also, I do have 2 Ally Bank online savings account at $55,000.

Would this be a wise move?

Thanks
Michael in NJ

steadyosmosis wrote: ↑Mon Jan 23, 2023 6:55 pm

michaelc wrote: ↑Mon Jan 23, 2023 6:45 pm Hello,

I am 60 male, single, no kids and ZERO debt, in great health. My current retirement savings is right at 800K. However, these assets are the total for my 403(b) and my Roth. My 403(b) has 625K and my Roth has 175K. I DO NOT have a taxable account for retirement and now I am wondering if this is a mistake. I have 2 plans in my employer's 403(b), which is with TIAA. The Defined Plan is what my employer voluntarily contributes, which is 9.5%. The Deferred Plan is the supplemental plan that the employee contributes, which I do at 13%. I was thinking about stopping contributing to my Deferred Plan, and use that 13% to open a taxable account for retirement with Vanguard. It comes out to $725 a month. I have 5-7 more left till retirement, so that can add up and than I will have 3 sources for retirement savings...My 403(b), Roth and Vanguard taxable account.
My current health insurance continues in retirement at my current premium, which is a HUGE plus, but I must stay employed there to 65 and have 25 years of service, which is will have 32 years at 65.

So my question is how important is it to have a 3rd source for retirement in a taxable account?

Also, I do have 2 Ally Bank online savings account at $55,000.

Would this be a wise move?

Thanks
Michael in NJ

No mention of marginal tax rates for the OP,
but I saved 22+% on taxes while maxing-out tax-deferred accounts,
and I'm now withdrawing some of it at no more than 12% tax cost.
Glad I did not put those dollars into a taxable account.

michaelc wrote: ↑Mon Jan 23, 2023 7:16 pm My salary is 72K so 22% tax bracket, I believe.

livesoft wrote: ↑Mon Jan 23, 2023 7:19 pm

michaelc wrote: ↑Mon Jan 23, 2023 7:16 pm My salary is 72K so 22% tax bracket, I believe.

But what is your taxable income? With your standard deduction you could be deferring enough of your earned income to be in the 12% tax bracket.

Triple digit golfer wrote: ↑Mon Jan 23, 2023 7:22 pm How can it be a mistake? What's the alternative, to forego tax advantaged investments?

sailaway wrote: ↑Mon Jan 23, 2023 7:31 pm What other sources of income will you have in retirement?

What are your expenses?

Do you have a Roth option for your 403b?

If your salary is $72k and you are deferring 13% and then you have standard deduction, it sounds like you might just barely be in the 22% bracket, but if you have other deductions, like an HSA, it might be less. (ETA, yep looks like you are just inside the 22% bracket). Might be worthwhile to keep deferring, unless you are awaiting a large pension you haven't mentioned.

JD101 wrote: ↑Mon Jan 23, 2023 8:10 pm My understanding is you need taxable account to pay for the taxes due on non Roth accounts. Roth accounts may be used to pay taxes on IRA/401k accounts but generally Roth account is the last to be drawn out. I'm not sure if there is a little problem here, your taxable account will generally have stock funds to avoid ordinary gains and this can be down at the time you need to withdraw money to pay taxes. Someone more knowledgeable can comment on this.

Longdog wrote: ↑Mon Jan 23, 2023 8:04 pm Is your employer's contribution of 9.5% tied in any way to your own contributions? If you stop contributing entirely, will they continue to put in 9.5%?

bsteiner wrote: ↑Mon Jan 23, 2023 7:52 pm Your taxable account is what’s left after you fund your retirement accounts. That could be a great deal or nothing or anything in between, depending on your income and expenses.

Makefile wrote: ↑Mon Jan 23, 2023 8:28 pm

bsteiner wrote: ↑Mon Jan 23, 2023 7:52 pm Your taxable account is what’s left after you fund your retirement accounts. That could be a great deal or nothing or anything in between, depending on your income and expenses.

Agreed. High-income investors have taxable accounts not because of some shrewd calculation of taxable vs. tax deferred vs. Roth but because their tax advantaged space is full. Sometimes the 59 1/2 rule comes up in discussion in FIRE areas as a reason to have taxable assets prior to that, but the OP here is 60.

michaelc wrote: ↑Mon Jan 23, 2023 8:42 pm

Makefile wrote: ↑Mon Jan 23, 2023 8:28 pm

bsteiner wrote: ↑Mon Jan 23, 2023 7:52 pm Your taxable account is what’s left after you fund your retirement accounts. That could be a great deal or nothing or anything in between, depending on your income and expenses.

Agreed. High-income investors have taxable accounts not because of some shrewd calculation of taxable vs. tax deferred vs. Roth but because their tax advantaged space is full. Sometimes the 59 1/2 rule comes up in discussion in FIRE areas as a reason to have taxable assets prior to that, but the OP here is 60.

What assets would make one a "high income investor"?