We are on track to pay off my student loans by September. That will make us debt free, except for our 3.75% mortgage. Hooray! Now it's time to start focusing on retirement. We are aiming for flexibility more than true early retirement but I would like to have the freedom to walk away from our office jobs by 45 (we are 30 now).
Roughly $2,000 will be freed up monthly when the loans are paid off. I want to quickly ramp up our various retirement savings by $1000, and use the remaining $1000 to build back up an emergency fund, do a little traveling and get some work done on the house before increasing further. Although now that I'm listing all the other things we want money for I am wondering if $1,000 is too aggressive. But let's stick with the $1,000 for now - so that's $500/biweekly we have to allocate.
Currently we have the following (paltry) accounts:
$35,000 in my TSP
$5,000 in my husband's 403b.
The 403b is with AXA and the fee is a 1.2% charge on money invested (0.3% charged quarterly). I assume this is higher than TSP but pretty standard for most accounts. Does this seem reasonable or concerning?
I am leaning towards also opening a 457(b) with AXA (same fees) and probably a Roth IRA - not sure of the fees on that one.
So with the new $500/biweekly we will have to allocate I am considering the following plan:
(All biweekly amounts)
TSP - Existing $216 -- add $270 -- total $486/biweekly, or 15.7% (plus 5% match)
403b - Existing $70 -- add $30 -- total $100/biweekly (no match)
457b - Existing $0 -- New $150
So my husband's retirement contributions would be $250/biweekly, or about 14% (no match)
Roth IRA - Existing $0 -- add $50
Rationale behind this:
1) TSP has the lowest fees and is easiest to temporarily cut back on to increase cash flow. Seems to make sense to put most of our eggs in this basket.
2) 403b is already opened, so I dunno, increase it a little to diversify?
3) 457 is accessible upon retirement, no matter how young we are, so it aligns with flexibility goals (still feel like I'm missing something here, these accounts seem too good to be true - how are they tax advantaged with almost no strings attached?)
4) We're in a high tax bracket now so I don't want to put too much into this, but I like that we could access our contributions if needed.
The implementation plan will be to immediately open/increase funding for the 403b, 457 and Roth IRA when the loans are paid off, and then slowly kick up my TSP contributions over several months as our emergency fund builds (we will likely wipe it out on the final loan payment).
Thoughts on this?