The question of Traditional Vs Roth IRA is always being debated, and on regular timelines I realize that if I'm young and not in my highest earning years then Roth is generally favorable. But I'm looking for advise for my situation which is different than lots of other people because I already have a large chunk saved in a Roth.
I'm not super young anymore and I only plan to work until I'm 45 at most, the goal is to have financial independence by 40, but that's the "goal" the more realistic number is probably 42 then tack on a few years so I can have some lifestyle inflation when I'm done. I'm currently 31 years old, and I'll be making around 85-90k this year.
So far, my whole life I have contributed to a Roth IRA and the balance of that account is about 140k. I do have a 401k which I still contribute to, but after doing my taxes this year I'm wondering if I should put more money into tax deferred accounts by switching to a traditional IRA this year instead of my Roth. 5.5k isn't a ton of tax deferred money but I'm starting to think that I'm now entering my higher money making years lowering my taxes is probably a good strategy. Also since I already have 140k in a Roth if I do nothing with that account until I'm 60, it should be worth somewhere in the area of 1 million by the time I can actually touch it without penalties (at a 7% return rate).
After doing my taxes (and actually owing money this time!) I was thinking of taking more steps to lower my taxes. Last year I started saving more money outside of my retirement accounts in preparation for early retirement (one of my goals is to purchase a new home, a smaller home where I don't have roommates).
Here are some random concerns and thoughts I have had:
I've heard that having money in various types of taxable and non taxable accounts gives you more flexibility in retirement, I'm thinking of beefing up the tax deferred side of things since I actually have more money in my Roth than in my tax deferred accounts at the moment. Does this even matter that much? I'm not retired so I have no idea how much of an advantage this might be to have tax deferred savings and taxed savings. Also I believe I've already saved a large chunk of money in my Roth which is probably the harder type of account to get a larger balance on because you have to pay taxes on all money going in.
I'm starting to make more money now than I plan to have passively in retirement. So wouldn't lowering my taxes now be a good idea? I also know that this depends on how I think tax rates will be in the future and while I think tax rates will be a little higher, I don't think it will be any drastic change.
Basically I'm not sure where I should keep contributing. No matter what I will continue to contribute to my 401k since I have a company match, but outside of that I'm not sure where I should be stashing my money.
Any ideas on which is a better place? Why should I contribute to one or the other?
Thanks!!