Disclaimer - This spreadsheet is intended for 2016. My 2015 numbers are different because I am contributing 57% for the remainder of the year to TSP to get to max contribution. I'm not 100% confident that I used the spreadsheet correctly. For example, cells 37B and 38B have a SS deduction of $280.8 and $65.67 while I'm actually paying $255.75 and $59.81 respectively. I'm an E7 in the military, will have 16 years of service at the beginning of 2016 (small base pay increase) and plan to retire at 20 years. Cell 137B is an estimate, but will have an annual COLA adjustment and may increase should I promote to E8. I also picked a random percentage for 142B. I'm not all that tax savvy.
I plan to max out TSP for the remaining four years and beyond if I continue to serve. However, I'm not sure if I should be using Traditional, Roth or a combination of both given my tax situation. Any advice is very much appreciated.
I'm also confused about what to do with the remaining income in terms of investing once I begin a normal TSP deduction of $1500 per month. I've read about back door something, something 401k, Traditional and Roth IRAs and Taxed accounts. But I'm not really sure how I should prioritize my investments.
I realize we have a lot of expenses that we could greatly reduce (including the clown car payment). But I'm asking for investment advice to best shelter my investments from taxes both now and in the future. I don't plan to work any longer than I have to. However, my wife (SAHM) plans to begin working once we return to the continental US in two years or so. Beyond that, I don't know what I'll be doing when I retire or any other specifics aside from my pension in terms of future income/investments.
I am 35, wife is 30 and we have a 5 and 2 year old.
Thank you for taking the time to read this and for any advice you may have!
blue| Category | Monthly |
| Salary/Wages | $4,563 |
| Pretax Health Ins. | $0 |
| Pretax Vision/Dental Ins. | $34 |
| Healthcare Flex Savings Acct. (FSA) | $0 |
| Daycare FSA | $0 |
| HSA/Pension | $0 |
| Pretax Commuter costs | $0 |
| FICA base salary/wages | $4,529 |
| | |
| Traditional IRA | $0 |
| 401(k) / 403(b) / TSP / etc. | $1,500.00 |
| 457 plans | $0.00 |
| Employer Match | $0 |
| Income subject to IRS tax | $3,029 |
| | |
| ESPP/After-tax 401k | $0 |
| Union dues | $0 |
| Life/LTD Insurance | $34 |
| Paycheck income before tax | $2,995 |
| | |
| Schedule C net profit | |
| Other ordinary income | |
| Qualified dividends | |
| Alimony | |
| Foreign Income Exclusion | |
| | |
| Rental income | $1,100 |
| Rental real expenses | $1,100 |
| Rental depreciation expense | $606 |
| Rental taxable income | ($606) |
| | |
| Federal Total Inc. | $2,423 |
| | |
| Federal tax | ($406) |
| State/City tax | $0 |
| Soc. Sec. | $281 |
| Medicare | $66 |
| Self-employment Tax | $0 |
| Total income taxes | ($59) |
| | |
| Add Daycare reimb. | $0 |
| Add Health care reimb. | $0 |
| Add Excluded Foreign Income | $0 |
| Untaxed Income | $2,500 |
| Income before other expenses | $5,554 |
| | |
| Monthly Expenses: | |
| Mortgage | $0 |
| Rent | $1,400 |
| HOA | $0 |
| Property Tax | $0 |
| Mortgage Insurance | $0 |
| Home/Rent Insurance | $20 |
| PMI | $0 |
| Beauty Shop | $10 |
| Bicycle Maintenance | $5 |
| Cable TV | $20 |
| Car Insurance | $160 |
| Car Maintenance, Registration, etc. | $20 |
| Charitable contributions | $25 |
| Child activities | $50 |
| Childcare | $0 |
| Christmas/Holidays | $50 |
| Clothing/Shoes | $200 |
| College costs | $0 |
| Computer (paper/software/etc.) | $0 |
| Credit card fees | $0 |
| Dental Insurance | $34 |
| Dentist | $0 |
| Dining (Pizza, Restaurant, etc.) | $250 |
| Donations/Gifts | $25 |
| Dry Cleaning | $10 |
| Electricity | $100 |
| Emergency Fund | $0 |
| Entertainment | $100 |
| Financial Fees | $0 |
| Fuel/Public Transport | $100 |
| Gas/Oil for heating | $35 |
| Groceries | $350 |
| Hair Care | $10 |
| Home Alarm System | $0 |
| Household; Maintenance | $0 |
| Internet | $60 |
| Landscaping/Yard work | $0 |
| Life Insurance | $34 |
| Lunches | $25 |
| Medical (Doctor, Hospital, etc.) | $0 |
| Medical Insurance | $0 |
| Medicine (OTC + Prescription) | $0 |
| Miscellaneous | $25 |
| Parking | $5 |
| Pets | $20 |
| Phone (cell) | $30 |
| Phone (landline) | $0 |
| Recycling/Trash | $25 |
| School Tutition/Books/Etc. | $25 |
| Sports/Recreation | $50 |
| Subscriptions (paper/magazines/etc.) | $0 |
| Travel/Vacation | $150 |
| Water/Sewer | $20 |
| Wine/Beer/Tobacco | $0 |
| Work/Professional fees | $0 |
| Non-mortgage total | $3,443 |
| | |
| Loans: | |
| Student Loan | $0 |
| | $450 |
| | $0 |
| | |
| Other tax-advantaged investments: | |
| Roth IRA | |
| Roth 401k/403b | |
| 529 plan/ other college | |
| | |
| Total Expense | $3,893 |
| | |
| Total to invest | $1,662 |
| Additional Mortgage Principal | |
| Additional Loan payments | |
| Available for taxable investment: | $1,662 |
| | |
| Summary: | |
| "Gross" income | $7,063 |
| Income taxes | ($59) |
| After-tax income | $7,122 |
| | |
| IRA+401k/403b/TSP/457 (Savers' credit) | $1,500 |
| ESPP+529/other | $0 |
| Living expenses | $3,511 |
| Non-mortgage loans | $450 |
| | |
| After-tax investable | $1,662 |
| Time to FIRE?: | |
| Extra income after RE (pension, SS, etc.) | $24,000 |
| Time to FIRE | 15 |
| Safe Withdrawal Rate | 4% |
| Real return on tax-deferred investments | 7.00% |
| Real, after tax, return on taxable investments | 5.95% |
| Expected retirement total tax rate | 2% |
| | |
| Current Savings | |
| Taxable | $0 |
| Tax-deferred (e.g. trad. IRA/401k) | $15,000 |
| Roth | $1,500 |
| | |
| Projected Savings at Retirement | |
| Taxable | $462,396 |
| Tax-deferred (e.g. trad. IRA/401k) | $493,708 |
| Roth | $4,139 |
| Total projected stash | $960,242 |
| | |
| Projected Expenses in Retirement | |
| Non-loan, non-work expenses | $41,316 |
| Income taxes | $598 |
| Change in spending after RE | -$12,000 |
| Total | $29,914 |
| | |
| Total loan principal due | $16,327 |
| | |
| Stash needed for retirement @4.0% SWR | $164,184 |
| | |
| | Have $796,058 extra. |
