Retirement contribution confusion..

[yupikgal]

Facts: I started a new job in November, I'm not a spring chicken. My husband retires in 7 1/2 years, I will be "retiring" along with him. Most of my life I've been a stay at home mom. He has 3 retirement plans going at the same time, one is a defined benefit one where he will make the same amount after his 30 years in, it will not fluctuate depending on the market, it's a set amount. I will have that same plan, but mine will be a lot less per month since I started way later than him, he will have 30 years in. With a previous employer, I was in the same retirement system, and have approximately 3 years in there already, so I'm picking up where I left off.

I have been contributing a small amount to a Roth IRA that I rolled over from a previous employer. With my new job, I have the main defined benefit one like my husbands (we work for the same employer, different divisions) in addition to a Supplemental Benefit one that the employer contributes to as well. There is a 3rd option called Deferrred Comp. plan, it's basically a 457 plan that is pre-tax $$. That one is not mandatory to contribute to, although I would like to, but I'm debating on whether to up my payments towards the Roth or start contributing to the Deferred comp. plan. I just need some suggestions or points of view since I'm no wiz at this kind of stuff. Thanks in advance for your input!

 

[akcire]

Deferred comp plans have risk. If the company goes belly up so does deferred comp. my husband contributes to a deferred comp plan because the continued match by his employer is worth the risk to our family. We do not qualify for a Roth.

If it were me I would put the money in a Roth.

 

[eliza61]

Some very basic questions to toss around, not to answer publically

#1) Now that you are working does your salary make roth contributions not as attractive. If your income exceeds a certain limit, a roth isn't an option. Also if you are planning on retiring soon does your roth have a time requirement? some ROTHs cannot take withdrawal on earnings within 5-7 years

2) your pension (defined account) probably won't be all that much if you've been a SAHM, if you only kicked in a few years of service and if you plan on retiring in 7 years along with your husband check with HR to see if there are limitation. My company you have to be there a total of 10 years now before you're vested in the defined retirement plan.

3) You can also make "catch up" contributions to your roth if you are over a certain age (50). that maybe an option outside of the deferred comp.

4) as previous poster mention, does your employee offer company match? I contribute to any plan that gives me free money. my compnay matches my contributions dollar for dollar on the first 6%.

5) the supplemental benefit, is that a 401K? I would probably bump that up.

 

[clh2]

Really, please go see a financial advisor to get your answers!

There are many great ones. A "fee-only" advisor is worth every penny that you would pay to them.

My DH and I are planning on retiring in about the same time frame, and we wouldn't do anything right now related to our retirement portfolios without getting input from the group of people we affectionately refer to as "the boys". We have been working with the same person for over 20 years, and we really have benefited from their advice! Far more so than the exhorbitant fees we've paid them over the years!

 

[borgthe]

Why not do both? Contribute the max, which is $5500 per person, to a Roth. Just make sure you qualify. If you don't qualify, put the $5500 in a regular IRA and then convert it to a Roth. Then, with any other money you can save, put that in the deferred comp.

 

[mom2t]

Really, please go see a financial advisor to get your answers!

There are many great ones. A "fee-only" advisor is worth every penny that you would pay to them.

My DH and I are planning on retiring in about the same time frame, and we wouldn't do anything right now related to our retirement portfolios without getting input from the group of people we affectionately refer to as "the boys". We have been working with the same person for over 20 years, and we really have benefited from their advice! Far more so than the exhorbitant fees we've paid them over the years!

Agree everyone situation is different. I am going to retire in the next few years trying to pay off some debt we have from unexpected medical expenses. I have 30+ years. We are meeting with a planner on Monday to get done answers on this same topic.

 

[tvguy]

I agree, you need a Financial advisor.

Questions you need to look at:

1) If your husband were to die before you, will you be entitled to any money from his defined benefit pension plan, or will that money go away?

2) Does a Roth make sense, or a traditional IRA? Pay particular attention to you tax bracket now, and what you anticipate it will be when you retire.

3) Make sure your will is up to date, power of attorney for medical.

4) Make sure you and your spouse have your property set up so you can avoid probate.

5) Give serious consideration to long term care insurance.