Hi guys,
I'm in need of some financial guidance. Specifically I'm trying to develop a strategy to implement dividend paying taxable funds into our retirement allocation. After reading posts here, and other sites, it just makes sense to me to have supplemental income from dividend paying accounts before retirement age. I am 35 y/o and my wife is 30. However, given my situation, maybe I'm being unrealistic. I don't have any magical number as to when I want to retire, but am motivated to make the necessary sacrifices.
Our gross income is $89k, and after deductions/ exemptions we are in the 15% bracket. We can afford to put around $1,500 monthly towards retirement, after my 12% pretax contribution to my 401k. We currently have 2 incomes and I would like to be aggressive as possible in the next year and a half, because after that we plan on having children and will go to one income. Hopefully by then I will be making more $$$.
Our current assets:$20k in savings
$4k in my 401(k) (Fidelity 80/20 stock to bond ratio, index funds)
$14k in my wife's IRA (Vanguard target fund 2050) - I plan on letting this money sit there and am not contributing towards it. Thoughts?
Liabilities:
$43k in student debt at 4.25%. I was going to start paying this down in the next few years after we increase our retirement base. Any thoughts?
Future considerations:We plan on buying a house in a year or two. I qualify for a VA loan which is 0% down. We also plan on having a child in approximately 1.5 years. My wife will prob. not work, so we will have to make due with my income ( currently $53k).
The current 401(k) plan is to contribute approximately 12% of my salary annually ($6,360), which should give me around 600k at age 65, assuming 5% growth, and the same employer match. I used a bankrate calculator to get this number. This strategy is partly based off of MMM "How much is too much in your 401(k) - strategy #1, old man money."
http://www.mrmoneymustache.com/2011/11/11/how-much-is-too-much-in-your-401k/. Does this look good to you guys?
The next part of my plan is where any guidance or feedback would be much appreciated. I'm wondering if I should:1. focus on taxable capital gain dividend paying funds with the remaining money after my 401k contribution.
2. OR allocate remaining money towards Roth contributions.
3. OR do both Roth and taxable accounts.
I get caught up on figuring out how to balance all of these contributions.
I'd like to keep this plan simplified. It seems that many of you use total stock market index funds, or S&P 500 type funds for your taxable accounts. I'm not looking for fancy complicated plans, because I would obsess about them :).
Thanks for the help!
Jeremy