I believe I have reached the point where I should be putting any more money in our 401ks. My wife and I are comfortable living on $40,000 in retirement, I use $60,000 as the bar so there's lots of flexibility for travel or whatever. Based on the combined amount in our 401ks already, earning a 6% return after inflation until retirement and 3% after retirement, we would be able to draw roughly $120,000 a year starting at 60 with the funds being exhausted in our mid-90's. So I feel pretty confident that even if our returns were less than that we wouldn't have a problem meeting our income needs.
I'm at my job for 18 more months, during which time we'll be cashflow positive $110,000 per year. A small amount of that money is earmarked for other investment vehicles but the majority of it I want to put into a vehicle to be drawn upon in the years leading up to 60, when we can't withdraw funds from our 401ks without penalty. I'm 31 now, so the money will have 15-20 years to grow. I have a Vanguard brokerage account but our Federal income tax rate is 28%, plus state taxes, medicare, etc. My question is, are there any investment vehicles that would allow us to avoid such a big tax bite now but still withdraw funds later without an age restriction? Or is a brokerage account really the best vehicle at this point and paying the tax man just the price of not needing to put more money in 401ks?
