Here are the basics:
Age: 33 goal is to retire at 51
Salary: $86k
Income taxes: $0 federal (thanks to an abundance of deductions and children), $3500 state
Current retirement savings: About $250k, about 50% IRA, 40% Roth, 5% 401(k), 5% mutual fund
Current 401(k) contributions: about $7200/year (5% + 4% company match)
Right now, we're in negative territory for Federal Income tax, i.e. we pay nothing and get a refund, thanks to the Additional Child Tax Credit. Our taxable income is in the 10% bracket, but the tax credits push our taxes below 0. In other words, if our taxable income goes down by $1000, our refund increases by $100.
Next year, due to various circumstances, we may have several thousand dollars of surplus income that I could put towards retirement. I plan to use a Roth ladder when I FIRE. The question is: Where do I put next year's cash?
Option 1) increase 401(k) or IRA contributions. This would also reduce my income as taxable by the state, so it's really a 15% boost.
Option 2) Roth IRA. Since our current tax rate is low, we could fund our Roth IRAs now and withdraw those contributions in the first few years of retirement while we build the rest of the ladder. IOW, no need for traditional investments.
Option 3) Traditional investments, for filling the 5-year gap while I build my Roth ladder.
Option 4) Spend it on things that have been on our wish list, like finishing the basement :)
I know which option my wife would vote for. What do y'all think I should do?