Are you on target for retirement?

[Deleted]

Oct 17, 2019 10:29:34 GMT -5 buystoys said:

DH is in his 60's and we had less than 10X our annual salary when we retired.  (We both were retired through disabilities.)  We did have a bit more than 25X our expenses, though.  I was saving a lot and DH worked sporadically, so our incomes weren't really good to use as a measure.  I prefer the expenses side as a comparison.

I agree on the expenses.  DH and I were saving a high % of our income (his SS and my earnings) before I retired so we were spending a lot less than we brought in.  And, as others have noted, pensions can affect the calculation.  I get two non-COLA pensions of about $900 each.  From what I see on annuity calculators, each would cost about $200,000 if I were to buy one that started at age 65.


When I retired at 61, 5 years ago, we had about 20X my earnings in savings- IRAs and after-tax combined.  Some real estate sales (marital home from my first marriage, the house I bought after that, DH's house before we married) were very profitable- that's partly luck, although we had the sense not to blow it on round-the-world cruises and Italian sports cars.  I've been driven my entire life by a fear of being old and poor.  I think I'm OK.  

[svwashout]

Oct 17, 2019 14:49:34 GMT -5 obelisk said:

Oct 17, 2019 14:21:54 GMT -5 azucena said:

Obelisk - I don't think I know much about you, but based on this stat, I think I'd like to.  Would you care to share any details on how you've made this happen?

Started working at 14, no parental help with education and money support. Undergrad in engineering while working 30 hrs/week.  No student loan debt.  Started investing in the SP 500 in my mid 20's.  Always maxed out 401K.  Lived below my means, delayed gratification when compared to coworkers and friends.  Married in my mid 40's.  One child. Stay at home spouse.  The key for me is to have your investments growth exceed your salary.  I made a conscientious decision when young and asked myself, which group of people do I want to emulate and started reading the financials in my local paper. The key is knowing when to let go of the purse strings and enjoy!!!!!!!!!!!

I think working in engineering is particularly conducive to a high rate of accumulation. Wages tend to be high especially right after career start, and spending pressure isn't as strong as in other professions like medicine and law. Comfort with numbers also helps with the analytical side of financial decisions.

The two main risk factors I've seen around me are (1) not realizing early on that rapid and large salary gains probably won't go on indefinitely and (2) excessive risk aversion driving an underallocation to equity investments. Engineers with a handle on these two issues have a high likelihood of joining the expanding roster of FIRE bloggers.

There's a sizeable collection of detailed interviews at esimoney.com/category/millionaires/

[travelnut11]

Oct 17, 2019 15:31:53 GMT -5 Tiny said:

Oct 17, 2019 15:22:30 GMT -5 tskeeter said:

One thing that can bite you in the backside in retirement is taxes.  If you are fairly aggressive about contributing to 401K accounts, and the like, it is very likely that your income tax rate in retirement will be higher than when you were working (our effective federal income tax rate increased by nearly 85% after we retired).

I second the taxes in retirement part of this.   If you have an above median income income - and expect to end up with a large pre tax balance in your  Retirement Account at retirement - you may wind up in the same or a higher tax bracket than while working.    I was also saving under the assumption my "income" and therefore my tax rate would be much lower in retirement - but it's not looking that way.   I am NOT complaining.  It's a good problem to have.   

Just wanted to put a bug in the younger folks ears - that including Roth savings is not a bad idea - especially if you have other 'tax breaks' like kids or whatever married with kids get in the way of deductions.     It's tougher for singles... 

We're on track at age 42 at about 4.5 times our annual salary.

I am concerned about our tax diversification though because I've heard many retirees say they wish they had less in pre-tax and more in Roth and/or taxable. Our taxable investments (outside of cash) are negligible and Roth is about 25% of our retirement balance. I want to work on evening this out even though conventional wisdom seems to be more in pre-tax is better so it's hard to know if this is the right thing to do.

[MN-Investor]

DH and I had 6x our combined earnings saved in 1999, in our mid-40s, when I quit working.

We didn't do anything more than live within our means and invest well so we were much more than 10x my DH's income when he retired in 2016. It sure helps when your investments are increasing more in one year than what a person is earning in that year!

[alinal]

39 and have 6.7x my salary invested.

I’m at 27x my current expenses, though, which is a better measure for me. Planning to quit this year and may or may not get a job at some point in the future.

My investments are 20% Roth, 55% tax-deferred, and 25% taxable. Hoping to mix-and-match to minimize my taxes, and get some Roth conversions in the 10% bracket.

[alabamagal]

Oct 18, 2019 9:46:33 GMT -5 travelnut11 said:

Oct 17, 2019 15:31:53 GMT -5 Tiny said:

I second the taxes in retirement part of this.   If you have an above median income income - and expect to end up with a large pre tax balance in your  Retirement Account at retirement - you may wind up in the same or a higher tax bracket than while working.    I was also saving under the assumption my "income" and therefore my tax rate would be much lower in retirement - but it's not looking that way.   I am NOT complaining.  It's a good problem to have.   

Just wanted to put a bug in the younger folks ears - that including Roth savings is not a bad idea - especially if you have other 'tax breaks' like kids or whatever married with kids get in the way of deductions.     It's tougher for singles... 

We're on track at age 42 at about 4.5 times our annual salary.

I am concerned about our tax diversification though because I've heard many retirees say they wish they had less in pre-tax and more in Roth and/or taxable. Our taxable investments (outside of cash) are negligible and Roth is about 25% of our retirement balance. I want to work on evening this out even though conventional wisdom seems to be more in pre-tax is better so it's hard to know if this is the right thing to do.

IMHO, I think people are way too concerned about paying taxes in retirement. The reality of life is that if you make money you have to pay taxes. If you are currently in one of the higher tax brackets, money you save pre-tax is tax deferred and you don’t have to pay taxes until you use it, so maybe 20 years later. Tax rates in future are of course unknown. Could be higher, not many people think they will be lower. But in my mind it is better to pay later. You also have the fact that the money that is not taxed now is invested and is hopefully growing, vs paying your taxes now.

Some people don’t like paying taxes in retirement, but if their option was basically to prepay their taxes they would have less money going into retirement.

Also you have some control over how much taxes you pay on your savings based on your withdrawal rate. If you have some low spend years and live off SS, and defer withdrawals at least until you reach RMD age.

[Tiny]

Oct 18, 2019 13:07:35 GMT -5 alabamagal said:

Oct 18, 2019 9:46:33 GMT -5 travelnut11 said:

We're on track at age 42 at about 4.5 times our annual salary.

I am concerned about our tax diversification though because I've heard many retirees say they wish they had less in pre-tax and more in Roth and/or taxable. Our taxable investments (outside of cash) are negligible and Roth is about 25% of our retirement balance. I want to work on evening this out even though conventional wisdom seems to be more in pre-tax is better so it's hard to know if this is the right thing to do.

IMHO, I think people are way too concerned about paying taxes in retirement. The reality of life is that if you make money you have to pay taxes. If you are currently in one of the higher tax brackets, money you save pre-tax is tax deferred and you don’t have to pay taxes until you use it, so maybe 20 years later. Tax rates in future are of course unknown. Could be higher, not many people think they will be lower. But in my mind it is better to pay later. You also have the fact that the money that is not taxed now is invested and is hopefully growing, vs paying your taxes now.

Some people don’t like paying taxes in retirement, but if their option was basically to prepay their taxes they would have less money going into retirement.

Also you have some control over how much taxes you pay on your savings based on your withdrawal rate. If you have some low spend years and live off SS, and defer withdrawals at least until you reach RMD age.

I don't think it's the "paying taxes" so much - as the life long ideal of managing one's taxes.  Why pay full price? when there's a way to get it on sale?  

I think it's that RMD age...  I don't think most people know about it.  I will most likely have way more than 1million in my 401K well before I'm 65.  I will have a substantial pension and SS.  If I don't pay attention and don't draw down the 401K until the first RMD, the RMD could put me into a higher tax bracket than when I was working!  that would suck... I saved that money pretax with the ideal that it would eventually NOT be taxed at the level it would have been when I was working. 

I think a possible problem might be working/saving into one's 60's without ever really figuring out if they have "enough" retirement income or how they will withdraw/spend it.   

I also think the "tax" issue is more for high earners and/or retirees with way more yearly retirement income than median income. 

[thyme4change]

I set myself back in the past couple of years. I had a couple friends die and my boss had a bad stroke. So, I went out and did a bunch of stuff that was pricey. My fear of dying is always calmed a little when I check off a bucket list item.

[giramomma]

Oct 18, 2019 9:46:33 GMT -5 travelnut11 said:

We're on track at age 42 at about 4.5 times our annual salary.

I am concerned about our tax diversification though because I've heard many retirees say they wish they had less in pre-tax and more in Roth and/or taxable. Our taxable investments (outside of cash) are negligible and Roth is about 25% of our retirement balance. I want to work on evening this out even though conventional wisdom seems to be more in pre-tax is better so it's hard to know if this is the right thing to do.

We try to split half our money between pretax and Roth.

It's a crap shoot. We don't know how the tax laws are going to change in the next 20 years or so. I'm not sure there is a right thing to do.

That said, if we could afford it, is get on an HDHP plan, fully fund the HSA, and then let that money sit and grow (by paying for medical expenses out of the normal budget).

The HSA is a beautiful thing.

[Rukh O'Rorke]

Oct 18, 2019 15:29:05 GMT -5 thyme4change said:

I set myself back in the past couple of years. I had a couple friends die and my boss had a bad stroke. So, I went out and did a bunch of stuff that was pricey. My fear of dying is always calmed a little when I check off a bucket list item.

well - good for you!!!

I don't find this particular metric at all useful. I was going along, right on track according to this, took a job with a 47k salary increase - and now I'm behind!

[Miss Tequila]

Oct 18, 2019 9:46:33 GMT -5 travelnut11 said:

Oct 17, 2019 15:31:53 GMT -5 Tiny said:

I second the taxes in retirement part of this.   If you have an above median income income - and expect to end up with a large pre tax balance in your  Retirement Account at retirement - you may wind up in the same or a higher tax bracket than while working.    I was also saving under the assumption my "income" and therefore my tax rate would be much lower in retirement - but it's not looking that way.   I am NOT complaining.  It's a good problem to have.   

Just wanted to put a bug in the younger folks ears - that including Roth savings is not a bad idea - especially if you have other 'tax breaks' like kids or whatever married with kids get in the way of deductions.     It's tougher for singles... 

We're on track at age 42 at about 4.5 times our annual salary.

I am concerned about our tax diversification though because I've heard many retirees say they wish they had less in pre-tax and more in Roth and/or taxable. Our taxable investments (outside of cash) are negligible and Roth is about 25% of our retirement balance. I want to work on evening this out even though conventional wisdom seems to be more in pre-tax is better so it's hard to know if this is the right thing to do.

I’ve maxed out my 401k for years but always in pre-tax. This is the first year I’ve done post-tax. With how low the tax rates are and the fact that if dems get control they will go up, I figured it made no sense to do pre-tax this year. So I will be maxing my Roth 401k until the tax rates jump back up.

[stillmovingforward]

Not even close. I didn't make much money until 4 years ago and then it more then doubled. Used my 401(k) to keep my family fed during the recession, and had 3 of the 4 kids end up with disabilities that needed expensive treatment. Then I got sick. So I save for retirement but also spend on trips now (nothing extravagant but I love to wander) . Which I save for. Because I might not last to retirement.

[Miss Tequila]

Oct 17, 2019 9:45:33 GMT -5 Mrs. Dinero said:

Using this rule of thumb:

In 30s: 1-2x salary
40s: 3-4x salary
50s: 6-7x salary
60s: 8-10x salary

Using this benchmark we are. I am constantly checking though. Biggest fear is missing out on compounding during our wealth building years. Also hoping we live long enough to enjoy the fruits of our labor. We do enjoy ourselves but also deny ourselves plenty of toys/extra trips.

Are you on track?

I’m either behind, on-track or ahead...

My 401k is 4x salary but I’m only 2 years from needing 6x so I feel like that’s behind

But if I treat my current rental income like an annuity and assume an 8% rate over 30 years, I’m at 10x salary.

And my gross salary really means nothing to me since I max my 401k and use some to invest. My base living expenses are pretty low

But health insurance is the great unknown

[tallguy]

I am another who doesn't put a lot of stock into these guidelines.  They may be marginally useful for people who are many years from retirement, but mean little when you are approaching retirement.  And I better be on track, considering I retired early a couple years ago.

When I left, I was well above their scale.  The relevant statistic though is that I was at about 35x expenses.  I plan to limit my income for tax purposes, but my income will still be double what my basic and necessary expenses are going forward.  Retirement security is not simply a function of income or savings.  It is entirely about how many years your income and savings can support.  Your expenses are the denominator in that equation.

[msventoux]

Oct 18, 2019 15:29:05 GMT -5 thyme4change said:

I set myself back in the past couple of years. I had a couple friends die and my boss had a bad stroke. So, I went out and did a bunch of stuff that was pricey. My fear of dying is always calmed a little when I check off a bucket list item.

Same. Some people close to me died and looking at my family history, the odds of me making it to a ripe old age are slim. I’m in my early 40’s and have about 3.5X my salary in retirement accounts, so by this metric I’ll be fine. By another, who knows?

I’ve spent quit a bit more than usual the past couple years. I’ll still contribute the max to my 401(k), but I’m less worried about savings beyond that. My focus is turning to enjoying myself more.

[Deleted]

Oct 19, 2019 0:31:03 GMT -5 tallguy said:

I am another who doesn't put a lot of stock into these guidelines.  They may be marginally useful for people who are many years from retirement, but mean little when you are approaching retirement.  And I better be on track, considering I retired early a couple years ago.

When I left, I was well above their scale.  The relevant statistic though is that I was at about 35x expenses.  I plan to limit my income for tax purposes, but my income will still be double what my basic and necessary expenses are going forward.  Retirement security is not simply a function of income or savings.  It is entirely about how many years your income and savings can support.  Your expenses are the denominator in that equation.

The times income ones don't make a lot of sense to me because they don't take savings rate into account.  If you have two people meeting the guideline for savings amount, but one is saving 10% of income and one is saving 50% are they really comparable? 

X expenses seems a lot more logical to me.  

[Deleted]

Oct 18, 2019 19:07:02 GMT -5 Miss Tequila said:

Oct 18, 2019 9:46:33 GMT -5 travelnut11 said:

We're on track at age 42 at about 4.5 times our annual salary.

I am concerned about our tax diversification though because I've heard many retirees say they wish they had less in pre-tax and more in Roth and/or taxable. Our taxable investments (outside of cash) are negligible and Roth is about 25% of our retirement balance. I want to work on evening this out even though conventional wisdom seems to be more in pre-tax is better so it's hard to know if this is the right thing to do.

I’ve maxed out my 401k for years but always in pre-tax. This is the first year I’ve done post-tax. With how low the tax rates are and the fact that if dems get control they will go up, I figured it made no sense to do pre-tax this year. So I will be maxing my Roth 401k until the tax rates jump back up.

Do you use the Roth IRA?  That's how I diversify between pre and post tax.  I think I'm going to add an HSA for next year as well.  

[Lizard Queen]

Oct 17, 2019 10:10:33 GMT -5 ners said:

No. Thus my name. Not enough retirement savings.

Oh, I wondered what it meant!

[Lizard Queen]

Yes, we're on target.

[thyme4change]

Oct 19, 2019 9:49:10 GMT -5 minnesotapaintlady said:

Oct 19, 2019 0:31:03 GMT -5 tallguy said:

I am another who doesn't put a lot of stock into these guidelines.  They may be marginally useful for people who are many years from retirement, but mean little when you are approaching retirement.  And I better be on track, considering I retired early a couple years ago.

When I left, I was well above their scale.  The relevant statistic though is that I was at about 35x expenses.  I plan to limit my income for tax purposes, but my income will still be double what my basic and necessary expenses are going forward.  Retirement security is not simply a function of income or savings.  It is entirely about how many years your income and savings can support.  Your expenses are the denominator in that equation.

The times income ones don't make a lot of sense to me because they don't take savings rate into account.  If you have two people meeting the guideline for savings amount, but one is saving 10% of income and one is saving 50% are they really comparable? 

X expenses seems a lot more logical to me.  

True. Expenses are a little harder. Most people know their income, but you have to do some calculations to get to expenses. The basic is income minus savings plus new debt. Granted, if you have a variable income (freelance, own a small business, commission or bonus based, etc.) what number should you use?

The other problem I have with x Income is that I'm trucking along and our situation changes and suddenly, we aren't right anymore. I mean, if I lose my job tomorrow, we will look like our saving rate and progress is frickin' amazing. But, in reality, our situation would have just gotten worse. On the other hand, if I get a new job that pays more, we are behind again, when in reality things just got easier.

[Miss Tequila]

Oct 19, 2019 9:51:17 GMT -5 minnesotapaintlady said:

Oct 18, 2019 19:07:02 GMT -5 Miss Tequila said:

I’ve maxed out my 401k for years but always in pre-tax. This is the first year I’ve done post-tax. With how low the tax rates are and the fact that if dems get control they will go up, I figured it made no sense to do pre-tax this year. So I will be maxing my Roth 401k until the tax rates jump back up.

Do you use the Roth IRA?  That's how I diversify between pre and post tax.  I think I'm going to add an HSA for next year as well.  

I wasn’t until this year because I pay a lot in taxes. So I was trying to minimize my current tax hit. But taxes are going to get much worse when the political change happens so I am being very short sighted. This is the first year that the bulk of my 401k contributions will go to a Roth. $15k to Roth versus only $4k to pre-tax. I just had to increase my quarterlies.

ETA: I can’t do a Roth IRA because of Income limitations. But we have the option in the 401k so that is where I’m contributing

[Miss Tequila]

Oct 19, 2019 13:02:12 GMT -5 thyme4change said:

Oct 19, 2019 9:49:10 GMT -5 minnesotapaintlady said:

The times income ones don't make a lot of sense to me because they don't take savings rate into account.  If you have two people meeting the guideline for savings amount, but one is saving 10% of income and one is saving 50% are they really comparable? 

X expenses seems a lot more logical to me.  

True. Expenses are a little harder. Most people know their income, but you have to do some calculations to get to expenses. The basic is income minus savings plus new debt. Granted, if you have a variable income (freelance, own a small business, commission or bonus based, etc.) what number should you use?

The other problem I have with x Income is that I'm trucking along and our situation changes and suddenly, we aren't right anymore. I mean, if I lose my job tomorrow, we will look like our saving rate and progress is frickin' amazing. But, in reality, our situation would have just gotten worse. On the other hand, if I get a new job that pays more, we are behind again, when in reality things just got easier.

Exactly. I know what my exepenses are and current healthcare costs if I were self employed (assuming mine would by the same as BFs and also assuming I hit the $6k deductible). That is what I’m using to forecast how I’m doing. My current rental income compared to my monthly expenses is my gauge. The 401k is just the cherry on top

[Deleted]

Oct 19, 2019 13:08:17 GMT -5 Miss Tequila said:

Oct 19, 2019 9:51:17 GMT -5 minnesotapaintlady said:

Do you use the Roth IRA?  That's how I diversify between pre and post tax.  I think I'm going to add an HSA for next year as well.  

I wasn’t until this year because I pay a lot in taxes. So I was trying to minimize my current tax hit. But taxes are going to get much worse when the political change happens so I am being very short sighted. This is the first year that the bulk of my 401k contributions will go to a Roth. $15k to Roth versus only $4k to pre-tax. I just had to increase my quarterlies.

ETA: I can’t do a Roth IRA because of Income limitations. But we have the option in the 401k so that is where I’m contributing

Yeah, I meant IRA so you can still contribute to pre-tax in the 401K.   You can do a backdoor Roth IRA regardless of income.   

[Apple]

I'm on target, and that's not including my pension (currently worth 19% of my high three average, but will be 24 to 36% of my high three average depending on when I get to retire.)  The pension should cover my expenses.

I wish I'd known about the Roth option years ago, when I was young, not earning a lot, with a lot of deductions (HoH, mortgage, child, etc).  By the time work offered it, I had so much in my traditional account that it wasn't really worth changing when you looked at the compounding my main account could do.

And now, I do put a little in a Roth, but wonder if it's worth it because I plan to move to a no-income tax state in the very near future, which automatically reduces my tax burden by a large margin (9%).  So, I just continue to put a little in my Roth.

I'm pretty sure my taxes in retirement will be higher than my working taxes once I move, but right now, I have no idea because of the big state tax.

However, along with the higher taxes, I will no longer be putting a large percent of my paycheck into a retirement account, so the end result may be close to the same.  I'd be more than fine with that since I plan to not have a mortgage anymore, so more money coming in would just be more money for fun stuff.

ETA: to add to the confusion...  The retirement program through work (tsp) does not have an income limit to contribute to the post-tax roth.  However, the total limit you can contribute is $19k.  I have a Roth through Vanguard, so using that, I can max my traditional through work, then contribute separately to my roth at Vanguard and max that as well.  But...  because I work so much overtime, and our raise comes out halfway during the year (and sometimes not until the next year, then they do retro pay, because it's a sucky system), I have no clue what I will make each year.  Last year I hit the limit for contributing the max to my vanguard, so had to wait to see if I could add anything once the year was over (I could not, I almost got burned with what I had already contributed).  I cannot add to the work Roth once the year is over (or even max it toward the end of the year if I find out my income is over the limit, unless I hit the limit several months out and don't need a paycheck the rest of the year).  Not too worried about it now, since I dropped my contributions to only 5% to have more cash on hand now, but when I go back to wanting to max, that part will not be fun, since my income is only increasing.

Also, my work account does not allow a backdoor roth, unless that changed with the new rules they put in place last month.  I should look into that.

[Tiny]

Oct 19, 2019 13:18:01 GMT -5 minnesotapaintlady said:

Oct 19, 2019 13:08:17 GMT -5 Miss Tequila said:

I wasn’t until this year because I pay a lot in taxes. So I was trying to minimize my current tax hit. But taxes are going to get much worse when the political change happens so I am being very short sighted. This is the first year that the bulk of my 401k contributions will go to a Roth. $15k to Roth versus only $4k to pre-tax. I just had to increase my quarterlies.

ETA: I can’t do a Roth IRA because of Income limitations. But we have the option in the 401k so that is where I’m contributing

Yeah, I meant IRA so you can still contribute to pre-tax in the 401K.   You can do a backdoor Roth IRA regardless of income.   

I'd put a caveat on that:  AND  you don't already  have a substantial amount in a traditional IRA.    (If I could go back in time 8 years, I would tell myself "NO!! noooooo!! Leave that 100K  in the old 401K... don't roll it over to an IRA!!!")    I never thought I'd be bumping into the income limits either... 

[CCL]

Oct 19, 2019 14:55:41 GMT -5 Tiny said:

Oct 19, 2019 13:18:01 GMT -5 minnesotapaintlady said:

Yeah, I meant IRA so you can still contribute to pre-tax in the 401K.   You can do a backdoor Roth IRA regardless of income.   

I'd put a caveat on that:  AND  you don't already  have a substantial amount in a traditional IRA.    (If I could go back in time 8 years, I would tell myself "NO!! noooooo!! Leave that 100K  in the old 401K... don't roll it over to an IRA!!!")    I never thought I'd be bumping into the income limits either... 

Can you explain? What is wrong with an IRA?

[Rukh O'Rorke]

Oct 19, 2019 13:08:17 GMT -5 Miss Tequila said:

Oct 19, 2019 9:51:17 GMT -5 minnesotapaintlady said:

Do you use the Roth IRA?  That's how I diversify between pre and post tax.  I think I'm going to add an HSA for next year as well.  

I wasn’t until this year because I pay a lot in taxes. So I was trying to minimize my current tax hit. But taxes are going to get much worse when the political change happens so I am being very short sighted. This is the first year that the bulk of my 401k contributions will go to a Roth. $15k to Roth versus only $4k to pre-tax. I just had to increase my quarterlies.

ETA: I can’t do a Roth IRA because of Income limitations. But we have the option in the 401k so that is where I’m contributing

Hey msT!! How's the new job going??

My job has Roth 401k. But only doing regular so far for tax advantages.

How does roth 401k work? Is it combined limits?

What happens with matches?

I'm thinking to do some next year.....

[tallguy]

Oct 19, 2019 18:55:49 GMT -5 CCL said:

Oct 19, 2019 14:55:41 GMT -5 Tiny said:

I'd put a caveat on that:  AND  you don't already  have a substantial amount in a traditional IRA.    (If I could go back in time 8 years, I would tell myself "NO!! noooooo!! Leave that 100K  in the old 401K... don't roll it over to an IRA!!!")    I never thought I'd be bumping into the income limits either... 

Can you explain? What is wrong with an IRA?

Nothing by itself, but I'm guessing the poster is referring to the pro-rata rule.  It screws up Roth conversions.

[teen persuasion]

Oct 19, 2019 18:55:49 GMT -5 CCL said:

Oct 19, 2019 14:55:41 GMT -5 Tiny said:

I'd put a caveat on that:  AND  you don't already  have a substantial amount in a traditional IRA.    (If I could go back in time 8 years, I would tell myself "NO!! noooooo!! Leave that 100K  in the old 401K... don't roll it over to an IRA!!!")    I never thought I'd be bumping into the income limits either... 

Can you explain? What is wrong with an IRA?

If you have zero balances in traditional IRAs, then you can contribute to a non-deductible tIRA and immediately convert it to Roth. You got no tax deduction, so you owe no taxes on the conversion (or a tiny bit on any growth before the conversion).

If you have any tIRA balances, your conversion is pro-rated over the entire tIRA balance. So if you have $95k in tIRA, contribute $5k non-deductible and convert the $5k, only 5% is tax free, and 95% is taxed on conversion. You also have the ongoing fun of tracking the non-deductible balance vs deductible balance every year going forward for the IRS.

If you leave 401k balances where they are (instead of rolling them to tIRA), there's no problem. 401k balances aren't subject to the pro-rata rules. If you can roll a tIRA into an employer's 401k, that can clear the decks for a backdoor Roth IRA.

[teen persuasion]

By the posted income metric, we're on track: 8 times income at 52/53.

I like multiples of expenses better. We're at 22*expenses now. As we are saving > 50% of income currently, it should only be a few more years to FIRE, barring a big market meltdown.