Californian Conundrum ( 2 simple investment questions)

[wealthviahealth]

2 Ridiculously Naive questions:
I'n in late 20's and moved to California 2 years ago and would stay forever if it were more affordable- should I put most of my money away pretax if I don't picture being here for more than 5 years? The 401k vs Roth IRA scenario as I understand it is through the classic farmer scenario- would you rather be taxed on the seeds up front our the entire yield at the end of the season- The former usually makes the most sense but in my case- I may never be taxed this heavily again.

Second Question- I have an old 403b from a previous employer and the fees/ performance of that fund are terrible. I have been thinking about rolling it over to an inexpensive broad index in my Roth IRA and am wondering if taking the tax hit now to do so makes sense given my above situation as well as the lagging performance and high fee's. Good idea or do I let it sit there?

Bonus Q: In my Roth IRA I also have a vanguard target date fund that was set up before I realized anything about fee's and performance- I would like to exchange this into the cheap vanguard 500 index but am also not sure if this makes sense from a tax and logistics perspective- am I essentially selling high and buying high if I go into that index? Would it be better to just leave it be and fund the Vanguard 500 index with separate funds? ( 10k minimum to purchase)

[MustacheAndaHalf]

Roth vs Traditional typically hinges on your income / tax bracket.  If you are saying things are hard to afford and you started working recently, then I'd have to guess you're in a lower tax bracket and pre-tax would be better... but really you need to estimate your tax bracket now vs retirement.

Poor fees are the worst in investing - I'd move from the 403(b) to a Traditional IRA that you setup.  That lets you keep the tax status the same - just make sure you initiate a "trustee to trustee" transfer, so that you never touch the check.  If you receive a check, they treat it like you liquidated the account and remove taxes (and probably penalties).

Your Roth IRA exchanges do not have tax consequences.  From within your Roth IRA, if you sell the target date fund and buy the S&P 500 fund, there's no taxable event.

[wealthviahealth]

Roth vs Traditional typically hinges on your income / tax bracket.  If you are saying things are hard to afford and you started working recently, then I'd have to guess you're in a lower tax bracket and pre-tax would be better... but really you need to estimate your tax bracket now vs retirement.

Im in the middle- upper bracket but I would of course like to envision a much higher salary later on in life. That said- Im in sales so my commissions are taxed at a stupid rate- I imagine I will not be in a commission based role later in life so I also have to factor that.

[Rockies]

If I were do I'd think about how you can make life in a place you obviously like work. Save everything you can, make a 5 year plan to increase your salary and lower your living costs while staying where you love. I also live in a very high cost of living place but I did the math and figured out how I can live here while meeting my FIRE date even though my rent is double and salary is less than the last place I lived. Just what I would do personally if I was in your situation.

[wealthviahealth]

If I were do I'd think about how you can make life in a place you obviously like work. Save everything you can, make a 5 year plan to increase your salary and lower your living costs while staying where you love. I also live in a very high cost of living place but I did the math and figured out how I can live here while meeting my FIRE date even though my rent is double and salary is less than the last place I lived. Just what I would do personally if I was in your situation.

I love this. This has been where my mindset has been most of the time. Im incredibly frugal with expenses/ things that I am not passionate about which allows me to invest in quality in the areas that mean the most to me- Ie cycling, coffee, travel..
I also remind myself that the experiences I have had in the 2 years I have been in CA would have been near impossible back when I lived in cheaper ( sleepy) part of the country. Not to mention the networking and career opportunities I am exposed to
now as a result of my location. 

[RichMoose]

Check out www.madfientist.com

Really good and detailed info on proper/best use of retirement accounts for Yanks.

[stoaX]

Some other angles to consider: 

First, California is huge, 164,000 square miles or so. There is quite a variety in the cost of living in different parts of the state. 

Second, some things in California are cheaper than other places.  My food costs and heating and air conditioning costs are quite a bit lower than other places I have lived.  My taxes (state income, property, car and sales) are mid to high. All those things need to be considered when looking at the financials of moving.