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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: lampstache on October 25, 2016, 10:16:29 AM

Title: Should DW max 403b ASAP in 2017?
Post by: lampstache on October 25, 2016, 10:16:29 AM

My wife will be graduating nursing school in December and already has a job lined up to start in February (assuming she passes her NCLEX exam).

Depending on her FTE, she'll make approximately 60-65k per year. The hospital she'll be working at has a pension that they automatically contribute to each year based on hours worked during the year and overall time of service. With that said, they're is still an option for her to contribute to a 403b, but there are no matching contributions since they contribute to her pension.

My question is, is it more beneficial to max her 403b as soon as we're able to get the money invested in the market? Or, should we make balanced contributions throughout the year to combat/take advantage of the ebbs and flows of the market during 2017? Hope my questions makes sense! Thanks for your input.

Title: Re: Should DW max 403b ASAP in 2017?
Post by: terran on October 25, 2016, 10:25:46 AM

The usual big reason NOT to max as soon as possible is to get any employer matching funds. Sounds like you've already looked into that and it's not an issue.

The argument in favor of maxing as soon as possible is that on average the markets go up over time, so the longer the money is in the market the better (again, on average).

For me, just for the sake of simplicity I would prefer to just set it and forget it, so I'd probably try to figure it out so I "made up" for the part of the year of that she'll miss, and then reduce it down to $1500/month (or the equivalent depending on her pay cycle) and then just leave it there. If we can assume that any extra income in the household will be invested anyway, then I would be even more in favor of this option since you'll be investing it as soon as you have it anyway so that just means it might be in a tax advantaged account a bit longer, but otherwise the returns should be very similar.

That said, the absolute most optimal strategy, ignoring the simplicity factor, probably is to max it as soon as you can.

Title: Re: Should DW max 403b ASAP in 2017?
Post by: lampstache on October 26, 2016, 12:55:36 PM

Thanks, Terran. I appreciate it.

Doesn't sound like there's a bad option either way. Really depends on what we're comfortable with from the sounds of it.