I am 37, DW is 38, we have 1 home/mortgage, 3 young boys and we are both working. Combined income is around $225k, our assets are:
TSP - 450k (max out each year)
401k - 200k (max out each year)
Roth IRA's - $120k (will both be maxing out each year now)
Post-tax investment - $65k (about $600/month)
Savings - $25k (About $300/month)
Home - Worth around $460k or so, $300k left on mortgage, making aggressive payments, should be done in hopefully 10 years
529 plans - $45k, contribute about $750/month for our 3 boys, should end up being enough to fund most of College but not all
By the time our 1st son goes to college our house should be paid off.
I love looking at finance calculators, and with our current TSP/401k/Roth IRA (we max out all now - and plan on doing so for the rest of our working careers) at 8% interest and not putting another cent into any retirement plan, after 20 years we'll be at like $3.7M at 8% interest. I realize a crash is coming at some point, and we will likely not continue to get 8% the next 20 years, but I have no idea. I like saving and feeling good about our money in retirement, and I currently enjoy my job and don't plan on retiring for another 20 years when our last is out of college, but could end up continuing to work, no clue what I'll be feeling like then. I could retire my DW in 10 years but honestly she's a busy body as well so I could see her wanting to keep working as well.
My plan was for us to retire at 58 (at least her anyways) and then take her 401k money and slowly start doing a conversion to her Roth IRA each year for the next 10-12 years while my TSP continues to build up. I'll have a pension when I retire of maybe $35k/year (if I continue on another 20 years) and that would leave us around 12 years to do slow Roth IRA conversions on some of the money at a lower tax rate, up until age 70 when we'd both have RMD's on the TSP/401k.
I've been so focused on just saving really since I started working that I just started to think maybe we'll have too much in our tax deferred TSP/401k that we'll be in a much higher bracket in our older ages. Even if DW retires in 10 years we may still have that issue, unless we both retired at 50. I personally don't see myself retiring before 58 (30 years in gov't) unless I don't enjoy the work I'm doing, and that is a possibility, all it takes is 1 bad boss. But should I be switching around investment/savings strategy?
Until now I've been maxing out TSP/401k every year of work, my wife just started maxing out the last few years, I've been maxing out Roth IRA since I started working and DW just did her Roth for the first year this year. Should I be focused more on the Roth IRA's and then post-tax investments, or just continue the course knowing that 8% for the next 20 years may be wishful thinking and then have the luxury of worrying about taxes at that point?
Or maybe I need to start embracing the idea of retiring DW sooner, and myself as well?