Author Topic: What's the breakdown of the stash between taxable and IRA accounts?  (Read 4432 times)

decessus

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Since mustachians are dedicated to retiring at an early age (say 40 or below) but you can't touch your IRA without a 10% penalty before 59.5 years of age, what percentage of your financial independence "stash" needs to be in taxable accounts and what percentage of your stash needs to be in IRA/Roth/401K/etc plans?

It seems like you'd be withdrawing from your taxable accounts first until you're at least 59.5.  Does Money Mustache cover this somewhere? 


NICE!

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Since the second poster already quickly dispelled the notion that you can't access retirement accounts early, I'll just answer the question regarding the stash split:

47% IRAs
39% 401k
14% Taxable Savings/Investments

Hey It's Me

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NICE how do you have such a large % in IRAs? Is that mostly rollovers?

I just started my first "real" job out of college like you, OP, so here is my current breakdown:

- 57% 401K
- 30% IRA
- 13% Taxable (ESPP, though haven't made up mind on whether I'll keep this taxable or divert this money into my IRA/HSA to max early)
« Last Edit: May 04, 2015, 06:11:59 AM by moe_rants »

NICE!

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NICE how do you have such a large % in IRAs? Is that mostly rollovers?

A couple of reasons...and no, DW only has one very small rollover (like $2k).

I started college in 2002, but I worked in HS and ended up saving about $1500 that sat in a savings account (I know, dumb). My parents knew enough about investing and IRAs to encourage me to start one at age 18.

So, I had an IRA with $1500 in it before I even started college that year.

I had income in college and ended up filling my IRA every year from 2002-2005. I was stupid and a spendthrift in 06 and 07, so I had virtually no contributions those years. In hindsight, those were good years to be a saver and not a spender because I resumed saving in...wait for it...

2008. I resumed contributing the max then and haven't missed a beat. I've already filled the IRA for DW and I this year, meaning I should have at least 54,500 in contributions throughout my working career. The rest is earnings.

I didn't get really aggressive with the 401k until a couple of years ago because I don't have a match. The 401k will slowly overtake the IRAs and the taxable should grow a little bit, but it is hard to compete with 2 IRAs and 1 401k, along with that much of a head start for the tax-sheltered accounts.

Does that make sense or does it still seem weird?

ShoulderThingThatGoesUp

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71% taxable, going down all the time. Didn't direct money wisely for a while.

TexasStash

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Thankful for this thread, as I wasn't really seriously considering my taxable/tax-deferred ratio as I should have until now.

My current fund split:

Tax-deferred: 78%
Taxable: 22%

My current monthly contributions:

Tax-deferred: 65%
Taxable: 35%

But I'm thinking of shifting more to tax deferred due to the Roth pipeline option. I do like the ready availability of taxable account funds (no 5 year wait or penalty), but will probably care less about that as the nominal amount in taxable increases.

Exflyboy

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About a third of my money is in taxable savings.


seattlecyclone

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We have about a 50/50 split right now. I'd love to have more in tax-sheltered accounts, but we earn enough that we fill up the retirement accounts and still have money left over to save -- a very good problem to have, I know.

Numbers Man

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93% tax deferred
7 % non tax deferred

MDM

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Re: What's the breakdown of the stash between taxable and IRA accounts?
« Reply #10 on: May 04, 2015, 11:52:09 AM »
what percentage of your financial independence "stash" needs to be in taxable accounts and what percentage of your stash needs to be in IRA/Roth/401K/etc plans?
The needed percentage will change depending on retirement age and projected longevity. 

What we happen to have now: ~70% tax-deferred, ~30% taxable.

Hey It's Me

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Re: What's the breakdown of the stash between taxable and IRA accounts?
« Reply #11 on: May 04, 2015, 07:42:26 PM »
I'm assuming those mentioning "tax deferred" accounts mean tax deferred (traditional IRAs + 401ks) and tax advantaged (Roth IRAs/401Ks) - is that correct?

MDM

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Re: What's the breakdown of the stash between taxable and IRA accounts?
« Reply #12 on: May 04, 2015, 07:46:12 PM »
I'm assuming those mentioning "tax deferred" accounts mean tax deferred (traditional IRAs + 401ks) and tax advantaged (Roth IRAs/401Ks) - is that correct?
That's how we answered.  Although, we currently have very little in Roth compared with traditional.

kpd905

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Re: What's the breakdown of the stash between taxable and IRA accounts?
« Reply #13 on: May 04, 2015, 07:49:08 PM »
Zero in taxable right now.

Currently about 80% traditional and 20% Roth across accounts.  All future contributions will be traditional for tax deductions.