To Roth or not to Roth...

[Ladychips]

I'm having difficulty making a decision and am seeking input.  At the end of the day, I'm not sure it makes a ton of difference which way I go.

I am going back and forth on whether or not to fund a Roth this year.  I am ~18 months from retirement.

To Roth:
money grows tax free
lf I actually needed money I could take my contribution back out or borrow it if I REALLY needed it
It will be great to have in the future if/when I need money but don't need income.

NOT to Roth
it makes my 'easy access' stache smaller which causes me a little bit of anxiety (but I'll still have plenty of emergency money unless it's a BIG emergency)
what if I needed it and the market has crashed
conventional wisdom says you should stockpile cash in the months/years closing in on retirement.

I'd love to hear your thoughts!  TIA

[terran]

Do you have 5 years of spending available between Roth contributions and non-retirement accounts? What are your current marginal tax rate and expected marginal tax rate in retirement?

[Ladychips]

You'd think these would be easy questions to answer...but not so much.

1. What we have now and what we will (likely) have in 18 months are two very different things.  In 18 months, I will be eligible for a pension, my husband will be eligible for a pension (and SS), and we will have (depending on the market) about $100,000 more than we do now.

2.  My husband has been diagnosed with terminal cancer.  From the original diagnosis, he has about a year life expectancy.  However, he is doing really well, and my hope springs eternal that his original time frame was grossly underestimated.

So, we don't currently have 5 years of spending in Roth and non-retirement, but it is likely we will in 18 months (especially considering our other sources of income).  And I can't even begin to speculate on our marginal tax rate in retirement because I truly don't know what the future holds for us.

Can you give me any advice without this information or is that a deal-breaker?

[terran]

My question doesn't really matter in your case, actually. I made assumption, as I usually do on this forum, that you're under 59.5, but since that's not the case you can access retirement accounts at any time, so it really doesn't matter if you have 5 years of expenses or not.

Honestly, given your husband's situation and that putting the money in Roth is making you anxious -- just don't. It's not the end of world either way.

If you still want to think about this -- remember that Roth contributions can always be withdrawn, so you're really not locking them up any more than you are otherwise. In fact, withdrawing contributions from Roth would have no implications, while withdrawing invested money from a taxable account would incur capital gains, so in some ways money in Roth is even more flexible.

There is one 5 year thing that comes in to play. Have you had a Roth account open for at least 5 years? If so, and since you're over 59.5 you can withdraw anything (contributions or gains) from Roth at any time without restriction, so it's the ultimate flexible account.

From some of your question is the OP I'm wondering if you're conflating contributing to Roth and investing? Those are independent questions. You can even open a Roth IRA and Ally bank (probably others) and leave the money in a savings account or open a CD and not pay tax on the interest.