I have listened to a bunch of episodes now of the choose fi podcast. I have been bouncing around episodes and I just landed on the Incremental Gains and the detour episode (582 & 583). I love them as rapid (ish) fire points, but the Detour episode had me scratching my head to some extent.
For Context: I am a firefighter and my wife has a more normal job. We are both 36 years old. I have been contributing to my 457 since I started my job ten years ago. These contributions have been all Roth, and total about 62,000. My wife has a 401k through her job that has a 3% employer match with a 6% employee contribution. She has contributed and has a total of about 80,000 in this account. A year or two she switched these contributions to Roth as well, so a small percentage of that account is Roth. We have approximately 26,500 combined in Traditional IRAs from old 401ks. We have approximately $3000 in Roth IRA as well. We currently have a mortgage with a balance of approximately 146,000 with an interest rate of 5.99. It is due to be paid off in November of 2042 (16 years). We had been paying aggressively on it but I think it will be more beneficial to put that money to work for us instead of just building equity. As it stands right now we are able to invest/save about 2,000 a month, As we optimize more, it will grow.
Anyway, my plan that I had hatched was to max out our Roth IRAs going forward and also to sock money into our taxable brokerage account. This, while continuing to get the match in my wife's 401k (switch back to traditional??) and also continue to contribute to my 457 (again change to Traditional or continue with Roth?)
We have a goal of buying a second property for recreation in about ten years. We have a one year old daughter and would love to have the property in the family when she is able to enjoy it. We are thinking either hunting land or a cabin on or near a lake. We also want to take our daughter on an Alaska cruise around that same time. With this 10 year goal, and 16+ years left to work, I don't want to just load up my 457, as I can't access this until I retire. I plan to finance these with Taxable Brokerage money, and possibly Roth IRA contributions if needed.
I am not truly looking to retire early, as I can retire with full pension at Age 53. I have calculated this (and also am most of the way through listening to "The Golden Albatross") to be about 7,000 a month that my pension will pay out, using conservative estimates of raises and overtime oppurtunities. This being said, it is also a goal that my wife could retire around the same age as me, where we thought in the past she would need to keep working.
All this being said, I am wondering if I should reconsider so much Roth and switch some contributions to traditional. I ran it through Chat GPT and it seems I could save about $1000 a year just by switching my Deferred Compensation (457) contributions to Traditional. My thought is that when my wife and I retire we will go from two incomes down to my pension income. This could perhaps have some opening for optimization with either drawing from my 457 at a reduced tax rate (if I switch to Traditional now) while still having large Roth options. These would include the money in our Roth IRAs and the growth on my 457 up to this point. Rule of 72, this would hopefully be around 240,000 at that point.
I would love to be a part of a case study if that would be an option. Maybe there are things I have not thought of in this as far as optimization. I have listened to the episodes with Grumpus Maximus and The Millionaire Educator. Loved the "Is my Pension Safe" episode and learned a lot from that. Any other episodes I should look at?
Thanks to anyone that reads through all of this.
