I’m a 31 year old public employee in CA, with a private pension. Our pension is in great shape and I feel as confident as one can that it’ll be there when I need it. I also have access to a fantastic 457B that I max out yearly, and an IRA.
My plan is this, work until 45 and retire early, ride out the 5 years between 45-50 and then start drawing my pension. What I’m trying to decide is whether I should be contributing to a trad 457B or a Roth 457B and the same goes for my IRA. My taxable income is about 65k this year and will increase by 5% for the next 6 years annually.
I know the simple answer is to look at whether I will pay more taxes now or in retirement then choose based on that. My goal is 75k a year in retirement, I’m expecting a 25k-30k annual retirement benefit from my Pension, 18.5k non-taxable retirement income from a separate source, and then I’ll need to make up the difference between my IRA and 457B and taxable brokerage. So, about 26k-31k.
I’ll have 18.5k annual income non-taxable, 25k-30k taxable pension income, and 26k-31k that I need to decide whether to pay the taxes on now or at withdrawal. I’ve been contributing to traditional accounts so far.
The years between 45-50 will only be my 18.5k non-taxable income and the rest will come from my taxable brokerage and my 457B plan. Because I have the temporary 5 year period before my pension kicks in I'm not sure if it’d be better to wholly contribute to traditional accounts or Roth accounts.
Submitted April 19, 2018 at 07:08AM by FIREawaythrow https://ift.tt/2vxmDVG
