Advice on my retirement planning strategy

[FI by 2035]

Hi everyone,

This is my first post ever in a forum, so it's new to me.  I have been reading MMM for about a year and a half. My wife and I are both 26 and have a goal to pay off our student loans by the end of 2016.  After that, we need to decide the best plan for retirement saving, as both of us would like to retire much earlier than 59.5.  A brief summary of our current situation is:

Pre tax Income:~150k
Kevin income: 55k
Kevin 401k: 5% +9% company match
Kevin 457b:10% (accessible at the time I leave current job, no age requirement)
Wife income: 95k
Wife 401k: 18k, no match
Roth IRAs, not contributing currently to pay off student loans faster
Student loans: ~$3500/month
Mortgage PITI $750/month
Living expenses: ~34k/year

My question is about our plan for after our loans are paid off. With both a 401k and 457b, I can put a lot into pre tax investments to reduce our taxable income now. We will continue to max out my wife's 401k and will max out my 457 and both of our Roth IRAs. We both do have Roth options on our 401k, but are contributing only pre tax.

Is it smart for me to put all of our retirement savings into 401/457/Roth IRA and count on doing a 401k-Roth IRA conversion ladder to fund early retirement, using Roth IRA contributions, 457 withdrawals, and part time work to get through the first five years?  Would we be better off investing a into a taxable account (instead of contributing over the match on my 401k)and paying more taxes now?

Feel free to ask for clarification on anything.  I'd appreciate any advice.

Side note: We will loosen up or budget a bit after loans are paid off and we start a family, I expect living expenses to increase to around 50-55k, and my pay to increase to ~70k, over the next 5 years which will help cover higher living expenses.  We're not anticipating any increase in my wife's salary.

[2Birds1Stone]

I would max out both 401k's and tIRA's

You will qualify for the tax deferral on the tIRA.

At your income bracket this would be much more beneficial than Roth IRA or paying off student loans early.

[nereo]

It's (almost) always best to max out your tax advantaged accounts before contributing to taxable accounts. 
Once your SLs are history you'll suddenly have $3,500 extra to put towards investments. AFter maxing out all tax advantaged accounts you still should have quite a bit of money each month to put into taxable accounts. 

Keep up the good work.  A back of the envelope calculation shows that you could be FI before well before your 40th birthday.

[FI by 2035]

Sounds like we're on the right track.

 As far as the 401k/Roth IRA conversion plan to fund early retirement, should I be concerned that this "loophole" might get closed by time we are ready to use it? Some articles I've read mention that it might not be an option in the future, but maybe they're just talking about the backdoor Roth that people with incomes over the limit are using to still contribute to a Roth.

[FLBiker]

I'm a big fan of 457s so long as you've got decent options.  We max the 457s first, then 403bs, then tIRAs  (or Roth IRA, depending on where our income is that year).

What are the interest rates on those student loans?  If they're low, I might not make that such a priority.  My wife has SLs, and we paid off the ones @ 6% immediately.  The ones @ 3% we're just paying the minimum.

[nereo]

Sounds like we're on the right track.

 As far as the 401k/Roth IRA conversion plan to fund early retirement, should I be concerned that this "loophole" might get closed by time we are ready to use it? Some articles I've read mention that it might not be an option in the future, but maybe they're just talking about the backdoor Roth that people with incomes over the limit are using to still contribute to a Roth.

It's certainly possible that our tax code will change.  However, the Roth conversion pipeline is not the only way to access funds from your tIRA and 401(k) accounts.  YOu can also set up SEPP payments. Then there is the strategy of just leaving your tax-advantaged accounts alone until 59 and drawing down from your tax-advantaged accounts (also known as the old man/old woman money strategy).  IN your situation as soon as the student loans are gone you will very likely have a lot of money each month to invest in taxable accounts.  In 10 years that can grow into a sizable chunk as well.

other useful reading:
http://www.mrmoneymustache.com/2011/11/11/how-much-is-too-much-in-your-401k/
There's a sticky on it too but the forum isn't loading right now...

[FI by 2035]

The SL rates vary from 6.55 to 3.15%.  The weighted average is currently around 4.8%.  I know mathematically it probably makes more sense to invest than pay them off, but we want the security of no debt other than mortgage, which is 3.865%.  We haven't decided if we'll pay extra on the mortgage or not after the loans are gone. I know if we pay about 185/month extra on it starting in 2017, we'd be pretty close to paid off by the time were 45 (just got the mortgage June 2015).  My thinking there is that if we can keep saving like we plan to and with a paid off house at 45, we would have the option to leave full time work if we want to.

[nereo]

The SL rates vary from 6.55 to 3.15%.  The weighted average is currently around 4.8%.  I know mathematically it probably makes more sense to invest than pay them off, but we want the security of no debt other than mortgage, which is 3.865%.  We haven't decided if we'll pay extra on the mortgage or not after the loans are gone. I know if we pay about 185/month extra on it starting in 2017, we'd be pretty close to paid off by the time were 45 (just got the mortgage June 2015).  My thinking there is that if we can keep saving like we plan to and with a paid off house at 45, we would have the option to leave full time work if we want to.

I agree that you should pay off the SL(s) that are at 6.55% as fast as possible.  But why would you pay off a loan at 3.15% early but not your mortgage at 3.875%

Also - regarding "if we can keep saving like we plan to and with a paid off house at 45, we would have the option to leave full time work if we want to..." - just realize that you can retire while still carrying a mortgage, and in all likelihood you can retire in better financial shape than if you plow all additional funds towards axing the mortgage.