What's your ratio of qualified vs non-qualified savings?

Fern · #1 (**permalink**) 06-30-2005, 09:53 AM

Qualified refers to monies going into tax-advantaged accounts like 401ks, 403bs, SEPs, IRAs.

Non-qualified refers to all other money that you might be savings on your own, and on which you pay taxes each year.

I'm curious, for those of you who save money every month or year, what your rough ratio is between qualified and non-qualified savings, for example, 40% retirement/60% taxable or whatever.

My dilemma has been that I could contiribute more to my 401k and enjoy the added tax advantages, but once I do, of course, that $ is "locked" in and i can't access it without penalty. I sometimes feel more comfortable saving more $ in taxable accounts just to make sure i have access to that $ in an emergency, should i ever need it.

Any comments, suggestions?

34saving · #2 (**permalink**) 06-30-2005, 11:16 AM

My qualified savings are maxed, so . . . I guess I do quite a bit unqualified (sorry, I'm not sure of the %), but I do know there's a huge psychological benefit to having some cash around. I have a years worth of income in my emergency fund (at ING). I know that's not the best from an investment or even fiscal point of view, but for me it's totally worth it to know that if my husband loses his job we're okay.

PennyPincher · #3 (**permalink**) 06-30-2005, 12:53 PM

Unfortunately, I changed jobs and do not have 401K available yet. Even when it becomes available, it is not generous at all ~ only 1% of salary.

So currently, my percentage to taxable savings is 100%

DivaJen · #4 (**permalink**) 06-30-2005, 01:31 PM

We have agreater percentage in in 403b's, a 401k, and STRS than we do in savings and share certificates through our credit union. If I had to make a rough guess, I'd say we have about 25% in taxable savings and 75% elsewhere. But that's a very rough guess.

baselle · #5 (**permalink**) 06-30-2005, 08:25 PM

Just did my calculation. I do a net worth calculation every six months. Mines about 25% non-qualified, 75% qualified.

A piece of that "non-qualified" savings is in I-bonds (boy do I feel like my grandpa admitting I do savings bonds!), which is Fed-tax deferred, state and local tax-free. So again, Fern, I find your question tricky to answer.

mjrube94 · #6 (**permalink**) 07-06-2005, 12:35 PM

I'm about 75% qualified and 25% non-qualified. Fern, one option for you is to build up your emergency fund to a level that makes you comfortable, then build up your 401(k). Also, most big companies allow you to take loans from your 401(k), without penalty. Although this is generally not recommended, you could get at your money if you had to...