Holy Macaroni! Just learned that my company offers a 403b plan. This is in addition to a generous defined benefit (pension) plan, and a 457. Our HR department sucks balls when it comes to disseminating information; we’ve had exactly one retirement seminar in my entire time with the organization, and that was ages ago. Though, in their defense, we are a weird little offshoot of the main organization, several hundred miles from the HQ. Just recently they overhauled their website and now we can’t even log in, so I have no idea what options are available via the 403b. Let’s assume that the investment options are fair for this exercise.
Current scenario:
Age: 39
Pension: 2% @ 55 up to 2.5% @ age 63*
457: Maxed out at $17,500/yr (this little guy is AWESOME. Pre-tax investing that is readily available at the time of separation from service, so rad.)
Post tax investments: $37,000/yr
Estimated available funds (excluding pension) @ age 45: $540,000 (always lived beneath my means, failed HARD at investing)
Plan: Pretire** in about 5 years with 20 years vested in the retirement system. Will need to coast for 10-18 years on the readily available funds (457 and post tax investments) until the pension kicks in.
Questions:
1. Does it make sense to take advantage of the 403b now, knowing that my taxable income will be much smaller in retirement? This would require switching up my game plan with the after tax investments as I cannot afford to do both at the current rate. And the 403b funds wouldn’t be available until age 59.5 without jumping through oodles of hoops.
2. Is there a calculator out there that would help me compare the difference of post tax investments vs the 403b?
*Not paying into social security, so this will be the only defined benefit coming into play.
**There will most likely be a part time, low paying gig doing something I love in this phase.