What to do with money advice

[bonkers40]

Hello! New reader/poster here and I need some help figuring out what to do with my money. This forum/blog has helped me greatly in the last couple months in which I’ve sold an expensive car and got a cheap commuter, maxed my TSP (government worker), sold about 2k worth of stuff on craigslist so far, bought some clippers and cut my own hair, opened a betterment account to play with, and so on. I’ve always been very frugal and decent with my money, but this blog has helped me step it up quite a few notches!

Anyways, my goal is to retire at 48, I’m at 30 now. I have zero car/credit debt and just bought a house. Put 20% down and did a 15 year loan and of course would like to pay it off sooner. At 48 I should have about 600k in my TSP and when I turn 60 and start collecting 1million maybe? Also I’ll get 25% of my top 3 till I croak. I should have plenty from 60 on.

The question is what should I do for 48 to 60 for money? I could put 1k a month into my betterment and have 500k by 48 which would give me about 3400/month which is plenty but not sure if that’s the best way to go. I’ve been reading about doing the 5 year trick with an ira but need to do more research into that as well. Any input in appreciated, thanks!

[MDM]

Have you seen http://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/ ?

[KisKis]

Another gov't worker here at almost the same age with the same retirement goal.  Do you have access to a 457(b) plan?  That is what I am using, in conjunction with my taxable savings, to bridge the gap between 48 and 60.  Luckily, my pension kicks in right away after 25 years of service regardless of age, but my IRAs are still bound by the Age 60 minimum.  I max everything out, but my order of contributions is:

* Mandatory defined benefits plan contribution - 7.5% of pay
* 457(b) - $18k annual contribution limit in 2016
* Traditional IRA - $5.5k annual contribution limit in 2016 for each spouse
* Taxable savings

DH also has a SIMPLE IRA through his employer.

[neo von retorch]

You'll hear it from someone, if not from me. Don't pay off your mortgage faster.

What's your mortgage rate on that 15 year loan? It's probably around 2.75-3.25%. No rush. You paid your 20% down and aren't paying PMI. Instead of pouring extra money into the mortgage, consider pouring it into your investments. It'll be invested over a nice long timeline (30-48 and beyond!) and will likely reduce your time to FIRE over paying off the mortgage.

[TheAnonOne]

You'll hear it from someone, if not from me. Don't pay off your mortgage faster.

What's your mortgage rate on that 15 year loan? It's probably around 2.75-3.25%. No rush. You paid your 20% down and aren't paying PMI. Instead of pouring extra money into the mortgage, consider pouring it into your investments. It'll be invested over a nice long timeline (30-48 and beyond!) and will likely reduce your time to FIRE over paying off the mortgage.

Not to mention, if the OP itemizes deductions, they can deduct any interest that they DO pay, making the effective rate, much smaller.

[bonkers40]

Another gov't worker here at almost the same age with the same retirement goal.  Do you have access to a 457(b) plan?  That is what I am using, in conjunction with my taxable savings, to bridge the gap between 48 and 60.  Luckily, my pension kicks in right away after 25 years of service regardless of age, but my IRAs are still bound by the Age 60 minimum.  I max everything out, but my order of contributions is:

* Mandatory defined benefits plan contribution - 7.5% of pay
* 457(b) - $18k annual contribution limit in 2016
* Traditional IRA - $5.5k annual contribution limit in 2016 for each spouse
* Taxable savings

DH also has a SIMPLE IRA through his employer.

No 457(b) that I know of, just TSP but I'll look into that more. My pension doesn't kick in till 60 but I was thinking of doing a 72t to start withdrawing from TSP but would rather let that sit till I'm 60. I'll have 25 years at 48. I think the best option would be to roll TSP to IRA and do the 5 year thing. Thanks!

[bonkers40]

You'll hear it from someone, if not from me. Don't pay off your mortgage faster.

What's your mortgage rate on that 15 year loan? It's probably around 2.75-3.25%. No rush. You paid your 20% down and aren't paying PMI. Instead of pouring extra money into the mortgage, consider pouring it into your investments. It'll be invested over a nice long timeline (30-48 and beyond!) and will likely reduce your time to FIRE over paying off the mortgage.

Yup, mortgage is at 2.8%, not in any rush to pay it off but at the same time would be great to not have a mortgage! I have looked into putting more into investments instead of mortgage and it will probably be the way I go. If I put that extra money into a betterment/vanguard account for the next 18 years and still have the house paid off in 15, seems like I'd be in better shape.

[aceyou]

we are in nearly identical situations...teacher, so government worker.  planning on retiring at 48, but I'm 33 now. 

I think that you'll continue to get better at optimizing things over the years, and at the same time will learn tricks like Roth Conversion Ladder, 72T, and other investment opportunities.  Just keep on learning and being awesome, I bet that in 18 years you'll blow your current projections out of the park.