My wife and I are 25 years old and live in Charleston, SC, USA. We both work full-time. I work as a loan officer and earn about $200,000-250,000 in commissions and she manages a retail store and earns $60k salary with bonuses bringing her to $70k-ish. Our goal is to retire, or at least have the flexibility to retire, by 40.
Our ideal income would be about $120,000 in retirement. We currently spend about $75,000/yr now and would like to maintain+boost lifestyle marginally in retirement. We have no debts, so our expenses are about $2500 for housing and the rest are lifestyle expenses.
My biggest goal is put put as much money as possible into tax-free accounts so there’s no tax equation later in life. When I call it quits, I want it to be SIMPLE and predictable (not worrying about tax fluctuations and stuff) haha.
Given that we earn anywhere between $260k-$310k we cant contribute directly to a Roth IRA. I’ve heard of back-door Roth, but am not entirely sure on how it works. It seems that the maximum I could put into an IRA is about $6k for each of us, leaving with $12k to convert to after-tax money.
Is there any magic after-tax vehicle I am missing or a way to put more after-tax money in a tax-advantaged account or is the limit pretty much $12k if you make over Roth contribution limit?
Some stats if they are important:
$260k-$300k household income
$75k expenses
$120k target retirement income
Assets: - $24,000 in my 401k - $8,000 in her 401k - $30k savings - $25k home equity that we should walk away with when we close on the sale of our past home in a month. We think we will rent in the near-term and expenses include that rent. - Saving about $7-10k/month now that all debts are paid off
Submitted August 14, 2020 at 09:00PM by Amartin22 https://ift.tt/3fYZSvB
