This came up in another thread and I thought I'd see everyone's opinion.
My husband and I are both graduate students, I just moved from a Master's (Dec) to a PhD program (Mid Jan) and my husband is finishing his PhD up and moving to a post-doc in Julyish.
I earn $25,000 a year and pay $10.39/two weeks for decent health insurance, my husband makes $26,000 and pays $36.39/2 weeks for himself and our daughter. When he graduates they will move onto my insurance for a total of 65.10/ 2 weeks. Because we are graduate students we don't pay FICA during the school year, only the summer. So I can stay and finish my PhD he found a post-doc near by, well an hour drive is close by I guess. That plus the FICA (and the increased retirement contributions) should eat up the increase in pay, because we have been a one car family until now.
I put away $4995 in a daycare FSA and I also put 3% into a state pension pre-taxed so our gross pay this year should be about $48,750, but we also have a duplex that we rent half out and because we just replaced the roof in 2013, I think we will still take a loss or a very minimal gain.
I realized that meant we were really close to being in the 10% bracket, given the standard deduction, and the 3 personal deductions. Depending on the house I expect to put $4000-$6000 in a traditional IRA and then the rest in a Roth. At this point we have about $9000 in a Roth and $7000 in a traditional.
However, the next 2 years as with my husband as a post-doc and me as a grad student will mean we are smack dab in the middle of 15%. Even once I graduate and do a post doc myself, unless he finds a tenure track job instead of another post doc, we will be in the 15% bracket.
But 6 years from now, if we both have decent jobs we will be in the 25% bracket and I will be maxing out the 401ks (and 457 if we have access) so I kind of want to take advantage of the Roths now. Does this make sense to everyone?
Oh, and we don't plan to do early retirement because we plan to have a second kid at the end of grad school and pay for both private school and cash flow college so I expect to retire in 25 years (I will be 54 and my husband will be 57) as soon as college is done.