<< Back to all Blogs
Login or Create your own free blog
Layout:
Home > Decision on Retirement
 

Decision on Retirement

January 22nd, 2017 at 06:58 am

I was considering changing our retirement vehicle from the Roth IRAs to Traditional to save on taxes. I was definitely procrastinating this decision and the calculations. My husband was agreeable either way. I finally realized it was a bit silly to invest in the Traditional considering we are in the 15% tax bracket. If we were to switch to Traditional we would save that money now, but it isn't that we would invest that savings, we would likely put it towards tuition or other college costs. I finally decided that the growth that would occur on the money invested in Traditional accounts would mean more taxes later. The Roth IRA is actually a really good deal!

I also decided to increase my husbands TSP to 11% of his basic pay. It had been 10% prior. This means an additional $992 saved for retirement. His raise was 2.1% so we put almost half away for later. Smile

I mentioned in my last post that we are expecting nearly a $1500 refund. This means we effectively had too much withheld from my husbands paycheck. That is money we could have had in our hands all year long. I am pretty sure I planned it this way so that money could be put towards tuition this February. I'm not going to need to do that for 2017. I have changed our withholding from 8 to 9. Increasing the withholding number lowers the amount withheld from each paycheck. For us the change amounts to $90.99.

With these changes, my husbands paycheck will actually increase by about $50 a pay period or $100 a month. I think I need to put this extra in a specific budget category. Tuition seems like a good place! Or vacation. Smile

2 Responses to “Decision on Retirement”

  1. My English Castle Says:

    How about a split between tuition and vacation?! You're a whiz at calculating withholding and figuring it all out. I sort of fly by the seat of my pants with it. Last year we paid into federal because of my freelance work. In 2016 I didn't get paid for the freelance work until 2017, but DH made more money. So far in 2017, he's just received unemployment which should balance my freelance payments.

  2. rob62521 Says:

    Sounds like you are quite good at calculating what you need to do. Well done!

Leave a Reply

(Note: If you were logged in, we could automatically fill in these fields for you.)
*
Will not be published.
   

* Please spell out the number 9.  [ Why? ]

vB Code: You can use these tags: [b] [i] [u] [url] [email]