warrior327
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Cash: $ 2.80
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All answers and thoughts to my my thread are greatly appreciated. Question at bottom. Below, gives you an idea of what I have.
Currently my wife and I work three jobs.
1st job) 457 plan (which allows you to pull your money from this plan the minute you retire from your job regardless of age). No employer match.
1st job) I also have a pension plan on top of the 457.
2nd job) 401k with a 6% employer match if you put in 2%. I currently invest 2% to get the minimum.
Also have a ROTH IRA on top of these others.
Wife Job) has 401k with 6% employer match if you put in 2%. She currently invests 6% of her own paycheck.
My question is which should I invest more heavily in the 457 plan, 401k plan, or the ROTH IRA? Or does it really matter. The reason we don't put in 15% in all of these investments is because we use that money to pay off what debt we have which is under $10,000. As soon as we have this paid off we will be contributing 15% to all the plans. Currently I am trying to figure out which plan I should invest 15% in because I have the funds to do so. I choose the 457 plan because it gives you the option to pull from it when you retire, and not wait. I have no intentions of retiring early or pulling from this plan, until retirement comes.
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Mon May 16, 2011 2:44 pm |
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warrior327
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Cash: $ 2.80
Posts: 12
Joined: 16 May 2011
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Also, my wife has an IRA through a broker outside of these other plans, that she contributes currently 2% in due to again wanting/needing to pay off debt.
457 has $9000 in it.
ROTH has $1500 in it.
Two 401ks have combined $3400 in them.
Wife IRA has $4500 in it.
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Mon May 16, 2011 2:49 pm |
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coaster
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Location: Wisconsin
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A couple of quick points that popped into mind while reading your posts:
1) if you have no intention of retiring early then the 457 plan has no advantage.
2) Free money is free money; always invest enough to at least get the employer match.
3) It's a good idea to have a combination of before-tax ("qualified") and after-tax ("non-qualified") retirement plans because you have no idea what the taxes will be and committing all your retirement to one or the other assumes you are making a bet on what they will be.
4) having a defined-benefit pension plan is a plus, but don't put too much weight on it. With inflation, the value of the payout may not be as large of portion of your retirement income as you hope.
5) The IRA you have with a broker: is that a full-service broker you're paying commissions and loads? Move it to a no-load mutual fund investment company or a low-commission online broker.
6) What kind of debt? What interest rate? You don't need to be in a hurry to pay off debt that you're servicing for less cost than you could earn by investing the money.
Three jobs ..... wow. Pretty good going in this economy!! 
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Mon May 16, 2011 3:50 pm |
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warrior327
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Cash: $ 2.80
Posts: 12
Joined: 16 May 2011
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Sorry, I did not have the time yesterday to reply. Here are my responses to your
1) I am not sure if I want to retire early, but I like having that option available to me, that is why I invest currently more into that account right now.
2) Both my wife and myself do the minimum to get the extra 6% employer match for each our accounts. Can't pass up on free money.
3) This one seemed to plague me. I had thought about that idea and I like investing heavily into a ROTH, and the 457, because I don't know what tax bracket I will be sitting in come the time I want to retire. But if I do change my mind and retire early I will have the advantage with the 457.
4) I don't rely on the pension plan so much. It is an asset to my portfolio that I hope is around in the future for me to have.
5) The IRA through the broker. He pulls $40/year and that 5.25% off the top of whatever is contributed.
6) We have student loan debt currently at 6.8% Interest does not start accumulating again for another six months due to wife just finishing school. We did have a vehicle loan, and higher student loans, around $20,00 debt, and we have made it a goal to pay off the debt. I would like to invest alot more money per paycheck when the student loan is paid off and then work on mortgage after I get what I want invested.
I have been extremely lucky to be able to work three jobs. With the state of the economy right now I just don't know what the future holds, so that is a reason I would like to have the student loan paid off. Just don't want that extra payment on my family if something happens.
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Tue May 17, 2011 12:10 pm |
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coaster
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It looks to me like you're doing very well. #5 is the only point where I'd make any change if it was me. 
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Tue May 17, 2011 3:32 pm |
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oldguy
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quote:
at 6.8% Interest does not start accumulating again for another six months due to wife just finishing school. We did have a vehicle loan, and higher student loans, around $20,00 debt, and we have made it a goal to pay off the debt. I would like to invest alot more money per paycheck when the student loan is paid off and then work on mortgage after I get what I want invested.
In my opinion, it is far more important to your future wealth to direct your income to investing rather than prepaying low cost debt. I would not prepay any of the mortgage, mortgaers are one of the cheapest sources of long term capital - and rates are currecntly at 40 yr lows - if you have a high rate, it might be a good time to refi and get a 30-yr fixed rate 'keeper'. The 6.8% loan is right on the threshold (when I borrow new money to invest I stay under 6%, but I wouldn't prepay an existing 6.8% loan).
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Tue May 17, 2011 3:53 pm |
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warrior327
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Cash: $ 2.80
Posts: 12
Joined: 16 May 2011
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I will certainly look into #5. I don't know enough about expenses on IRA. I do know that my 457 and ROTH IRA have a no load fee and the commission fee is 1% off of whatever is earned.
With the state of the economy debt is a big worry for me. $7800.00 may not seem like much but my goal was to pay off the student loan debt and then try and contribute heavily into my ROTH and 457. Also have my wife contribute heavily in her 401k or IRA if I switch it elsewhere. Right now we currently invest 12-13% of our gross income, while paying down on debt.
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Tue May 17, 2011 6:18 pm |
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oldguy
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Cash: $ 309.30
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quote:
debt is a big worry for me. $7800.00 may not seem like much but my goal was to pay off the student loan debt and then try and contribute heavily into my ROTH and 457.
As coaster said in his 6), and I mentioned above - it is useful to understand the difference between 'debtfree' and 'wealth building'. Often they are not the same.
The $7800, invested in an Index, would typically grow to about $230,000 in 30 yrs, $700,000 in 40 yrs. So it might be wise to pay $780/yr for the use of that capital for 2 or 3 years - 'money well spent', as they say..
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Tue May 17, 2011 11:33 pm |
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