Wow, this is a really great response, and exactly the kind of guidance I was looking for. Thanks!
$2.5 million is an aggressive goal. You're new at this, so I'd bet you'll be able to adjust that downward over the years as you re-evaluate your spending habits and realize you can probably be quite happy spending less than $100k during retirement.
We've reduced our monthly expenses from $12k/month down to $6800/month so far this year, $3300 of which is our NYC apartment. So, we're technically down to $42k/year in non-housing related expenses now. I think we could retire at $2MM, or even less, but we need to do some long-term thinking and soul-searching as to what our FIRE life will look like, especially in terms of housing (ex. buy a place outright and stop renting).
My guess is that your income is high enough that direct Roth IRA contributions are not going to be an option for you ($183k max AGI for a full contribution), and deductible IRA contributions are right out ($98k max AGI for a full deductible contribution since you both have retirement plans at work).
While I knew about the Roth limit, I really wasn't aware of "Why" someone would use an IRA till now... for tax reasons! It's actually really good to know that an IRA is effectively useless for us, because it simplifies the field greatly.
I'll have to see tonight if my wife's 403(b) allows for IRA rollovers. I'm pretty sure it does, which will help considerably.
This is, by far, the takeaway I'm most excited about.
Don't necessarily be fooled by good performance. The market has been doing great lately in general, so even a bad set of stock funds should be giving pretty good returns. Instead take a look at the expense ratios of the funds in this plan. How high are they? If they're under 0.2%, you have a pretty nice set of funds and should be in no hurry to roll it over.
We only consider investments that have low expense ratios like this. Her old 401(k) was originally set up with a ton of random funds, so we rebalanced it all into the Vanguard Target 2040 Fund (
https://personal.vanguard.com/us/funds/snapshot?FundId=0696&FundIntExt=INT), which is a mix of VTSAX and VTIAX. It's actually better than her 403(b) in that respect. I think, given your advice, we'll keep it where it is for now.
After-tax 401(k) contributions are a nice option. The limit on these contributions is not $52k, it's ($53k - your pre-tax/Roth contributions - your employer's matching contributions). I would go with that first. That should give you some time to roll your IRAs into your work plans to prepare for backdoor Roth IRA contributions.
Great! Now I just need to re-read that whole guide on how to do the backdoor Roth. I remember it seeming really complicated and intimidating when I read it a few months back. I've got to do it, though, so I guess it's time to just push through.
Principal in a Roth account can be withdrawn tax-free at any time. Earnings can only be withdrawn before age 59½ if you're willing to pay income tax on the full amount plus a 10% early withdrawal penalty, therefore you should avoid getting into a situation where you would have to withdraw this money early. There are some theoretical edge cases where an early retiree could be using the Roth pipeline strategy and exhausts all of their money except for Roth earnings.
Ahhhh... gotcha. So in FIRE, we would theoretically focus on leaving Roth withdrawls till "last", and if need be we would draw down on the principal before ever touching the earnings, unless we had already hit 59 1/2 (we're planning on FIRE in 10 years, so we'll only be 45-ish).
Come up with an asset allocation that you're comfortable with. Decide what percentage of your money (if any) that you want to have in domestic stocks, international stocks, domestic bonds, international bonds, real estate, etc.
Is it "wrong" that I'm comfortable with 90% stocks and 10% bonds/REIT? I'm comfortable with the risk since our timeframe is longer, but I also don't want to make intentionally dumb decisions.
Ditch Betterment.
Based on the results I've seen others have, it seemed roughly analogous to what folks were seeing from Vanguard. Is VTSAX preferable just for the more predictable growth (since it's a pure market index fund) and predictably-lower expense ratio?