I have some slightly odd timetables for spending, and was hoping you fine folks might weigh in on my situation.
I'm 28, with an annual salary in the range of $120K with bonuses and so forth. I've only been working for a year (Ph.D.), have no debts of any kind, and about $125K in savings. Of this amount:
- 10K is in checking/savings accounts for an emergency fund
- 40K is in retirement accounts - 30K in a Roth IRA, 10K in my company's 401k (6%, with 9% match)
- 15K in company stock - this is not yet vested, so the value is preliminary, and I can't really do anything with it for awhile
- The rest (~60K) is in taxable investment accounts (Vanguard, of various flavors)
I have a boyfriend who is in grad school right now, working on a lit Ph.D. Realistically, I will likely be paying off his student loans (~20K) when he gets out, or possibly a little sooner (the M-bomb has been dropped, but we're working on getting a little more settled before going through with it). He's paying into them now, but not much on a grad student salary.
So here is the dilemma: in 5 years, we are likely going to have to move to find the boyfriend a job. (I'm an optimist, but we're trying to get him as much geographic flexibility as possible given his chosen field.) Also in 5 years or less, I am likely going to eat his student loans so the interest on those goes away. Unsubsidized loans won't get touched until he's out of school ($12K) but the remainder is collecting interest ($8K), which seems pointless when I can write a check and make it go away.
Now ideally, I'm also saving up for a down payment on a house. Since I don't yet know where we're going to land, I can't calculate out the rent/buy value, but I am primarily employable in the parts of the country that have ridiculous rents. Because of the location uncertainty, I have no idea how large this down payment will have to be, aside from, well, large. I maxed out my Roths all through grad school knowing that I can withdraw the principal (and earnings in a pinch, as a first-time home buyer). I may run into Roth contribution limits soon, but it's hard to know since a big chunk of my salary comes as a bonus. However, I'm hesitant to go too wild and crazy on the 401K, knowing I have these medium-term big expenses coming up. Downside, sitting in a high tax bracket in a high-tax part of the country (Northeast), it hurts in the short term not having tax protection. The house down payment is invested because, if the stock market takes a big hit and tanks, no big deal, we just rent a few more years.
So - how to balance a known future expense with a high tax hit today? Am I contributing way too much to taxable investments?