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Advice on short/mid/long-term goals

Frequent Contributor

Re: Advice on short/mid/long-term goals

Good job on getting things going in the right direction.


 I just have a couple technical pointers that might be of help to you. When you 

achieve your intermediate goal of buying a house and are ready to up your longer

term, retirement type savings contributions, tax placement will be a consideration.

Research "backdoor Roth" and especially "mega-backdoor Roth". There is loads of

information on the web, but they are easy to understand. Understand how you need

your IRAs deployed to facilitate the "backdoor Roth". Check with your 401K plan

administrator to see if your plan allows the moves to accomplish the "mega_backdoor".

If not, it wouldn't hurt to request a plan change to allow it. Lastly, spend a little time

researching High deductible health plans and Health savings accounts to see if that

is something that fits with your lifestyle.


The reason to understand these dry topics is that your plans include a savings rate that

excedes the typical savings vehicle's limits. Taxes are a drag on savings performance 

that compound over time, just like investment returns do in the opposite direction. Getting

savings into tax sheltered space becomes a big deal when the investment horizon might

be 30 years or more. Just because the accounts are designed for "retirement" doesn't

mean they can't be utilized for other long term savings goals. Roths in particular are

pretty flexible in what is allowed for withdrawals.

+ 850 FICO8 since 2015, Thanks MyFICO - 5+ years since last HP
Message 11 of 11
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