My husband and I are trying to get our retirement accounts in order, and I have a few basic questions. I am new to finance and investing, and I've been browsing this site and forum for the past month, and plan to read some of the suggested investment books this summer. In the meantime, I wanted to know if I'm on the right track.
salary: 51k (husband is a teacher, I stay home with our toddler)
403b: 23k
Roth IRA: 5k (all college savings)
bank savings (emergency fund, plus a couple others): 10k
only debt is mortgage: owe 93k with 26 years to go
I have a Roth IRA with Franklin Templeton that I plan to switch over to a Vanguard Target Retirement Fund. I plan to use this account both for college savings for our child and as a retirement fund. My husband has a 403b with AXA and also contributes to a pension (which we've never counted towards our retirement). It looks like the 403b choice AXA Moderate-Plus isn't so great, so we are looking into switching it. Apparently, we have to call each vendor to get a list of their options, and we're working on getting this. (The vendors are: AXA Equitable, MetLife, VOYA, Oppenheimer, Security Distributors, VALIC, Lincoln Investment, Aspire, Waddell Reed, Great American, Thrivent Financial, and Horace Mann.) From other threads I've read on here, it seems like 403bs can have crappy options.
I'm interested in the Vanguard Target Retirement 2045 fund -- it seems like that fits with my very basic knowledge (so far!) of what I'd like my asset allocation to be. The 2045 is: 57% US Stocks, 32% International Stocks, 7% bonds, and 3% international bonds. At our current rate, we wouldn't be able to retire for 30 years (we're in our early 30s), but I hope to work full-time again in several years, part-time sooner, and save most of that, so hopefully we're at our slowest savings rate at the moment.
We currently contribute $300 a month to the 403b, split 60/40 Traditional/Roth. We'd like to up it to $450 a month. We also have my husband's two extra paychecks a year, which total around $3800 after taxes. We also plan to start contributing $50 a month to my IRA for the college savings, once I switch it to Vanguard. The current plan is to put the 403b savings into Traditional ($5400/year, though less this year) and put the extra paychecks, plus college savings, into my Roth ($4200/year). I would also like to put any extra savings, as our frugality increases, into my Roth.
On the tax side of things, we're pretty close to the upper limit for the earned income credit.
There's no employer match for the 403b.
My questions:
a) Should my husband also open an IRA with Vanguard -- especially if the 403b options aren't great? Is there any reason not to do this? We have the minimum amount needed to open one. It looks like, based on our AGI, that he can take a full deduction on Traditional contributions even though he has a retirement plan through work. Would a Traditional or Roth be a better choice for him then?
b) Should we not increase the 403b contribution until we switch it to new vendors/funds? I read the recent 403b thread that talks about surrender periods and other fees, so we'd need to find that out. The Kiplinger article posted in that thread also recommends just putting new contributions in a new account, and leaving the old if necessary.
c) Is it weird to use my Roth for both college and retirement? I like this option based on what I've read about it, and I don't mind keeping track of what's what. However, I wasn't planning on using the IRA as much for retirement when I opened it, but now it looks like we will be.
d) What do we need to ask the 403b vendors when we call, besides what are the available funds and their expense ratios? And if they offer a 457?
I hope I'm not the person posting questions that have been answered elsewhere -- every time I read a new thread, I feel overwhelmed, like I just learn about more information that I don't know. I really appreciate any advice, and nothing is too obvious to tell me! I figure we'll read up on things and choose a 403b option for my husband in the next couple of months, but I am eager to get things going in the meantime, too.
Thanks!