how do we maximize my retirement savings?

[rigz]

Currently, my wife and I both max our ROTH IRAs each year.

she maxes out her TSP at work and I also max out my SEP IRA each year.

how do we get more money into retirement? are there other types of accounts?

what we have been doing is just dumping extra money into investment accounts (exact same mutual funds as our ROTH and SEP IRAs except just in a regular account) and just considering that "for retirement" - ie, we arent touching it for 20-30 years.

is that smart? is that our best bet or are there other options we should consider.

[kork13]

Honestly, there's not alot more that you CAN do, at least as far as tax advantaged accounts for retirement. The fact that you're maxing out your Roth IRAs, TSP, and SEP-IRA is absolutely fantastic. If you can comfortably maintain that pace for the next 20-30 years, you will probably be set up very nicely for retirement. However, if your plans do call for more savings than that, there are still a couple other options...

The first is obviously exactly what you're doing -- investing your money in standard, non-advantaged investment accounts. This is what I'm doing, as are probably most people. It gets your money invested but allows you more flexibility than a retirement account.

Another option that comes to mind (at least in seeking tax advantages) is to consider federal or municipal bonds. Federal bonds (such as I-bonds) are exempt from state and local taxes, and federal taxes can be deferred until cashed in, or upon maturity (30 years). They don't earn a whole lot (especially right now), but they are inflation-protected and guaranteed not to lose value. Municipal bonds are exempt from federal taxes, and in many cases, can also be exempt from state and local taxes. You have to do your homework on what muni's you get, but there are plenty out there that are reliable while still providing a healthy return.

Otherwise, just look at other ways you can find tax advantages. Being self-employed, you might qualify for one of the various medical savings plans available (details from the IRS here). If you have kids with plans for college, look at 529 plans or Coverdell ESA's. These other options don't necessarily go directly toward retirement, but if you save on your tax obligations for stuff you would otherwise pay with taxed income, they can make more cash available for saving/investing elsewhere.

[dczech09]

I would definitely look at HSAs. There are no income requirements, but there are contribution limits.

HSAs require that you have a high-deductible health insurance policy. So you have to make sure you meet that qualification. But then you could stash money in there tax-deferred and pull the money out tax-free if used to qualified health expenses. Even meeting a deductible for health insurance qualifies for tax-free treatment!

I am not sure if I would look at municipal bonds. The bond market is probably a place you want to stay away from for the time being. You COULD look into some new muni's, but just make sure you hold them until they mature.

Another option is a variable annuity from an insurance company. You could stash some money into a variable annuity and get a tax benefit. Shop around for variable annuities before you make a decision. They vary wildly and the fees can be pretty high.

The fact that you have the Roths, a TSP, and SEP maxed is fantastic! Keep that up and look into these other option! If you keep this pace up until retirement, you should be living the high life.

[bjl584]

You are in a situation where any extra money that you save above and beyond what you already are will have to go into a taxable brokerage account. There are several tax advantaged securities that you can look into buying however. Things like muni bonds werealready suggested. There are also countless tax advantaged funds that you can look into to.

[jpg7n16]

Currently, my wife and I both max our ROTH IRAs each year.

she maxes out her TSP at work and I also max out my SEP IRA each year.

how do we get more money into retirement? are there other types of accounts?

Other types of accounts for you, yes. How much is your SEP contribution? Do you have any employees?

Check out this chart from the DOL. They go through each plan's ability to contribute.
elaws - Small Business Retirement Savings Advisor

Found this calculator too: (compare how much you could contribute to various plans)
Small Business Retirement Plan Calculator

In many cases, if you guys are still Roth elligible, the Self Employed 401k option allows you put away more than the SEP will.

what we have been doing is just dumping extra money into investment accounts (exact same mutual funds as our ROTH and SEP IRAs except just in a regular account) and just considering that "for retirement" - ie, we arent touching it for 20-30 years.

is that smart? is that our best bet or are there other options we should consider.

You could also consider a LOW COST deferred annuity. It works pretty much like an IRA in most respects, but there is an annual annuity charge for the account (hence why it has to be low cost). That could provide additional tax deferred growth.

But I would re-evaluate your small business plan first. Deferred annuities are generally a last resort type option.

[Petunia 100]

Another way to maximize your retirement savings is to make certain that your money is working as hard for you as it possibly can. Watch the costs in your retirement accounts. Choose low-cost providers whenever possible (IRAs), and when it isn't possible (employer plans) utilize the offerings with the lowest costs. Example: Your 401k offers an S & P Index Fund at a cost of .50% and an actively managed large cap fund at a cost of 1.0%. Take the index.

Costs compound against you. The difference between a high-cost fund and a low-cost fund over many years can be substantial.

[Petunia 100]

You could also consider a LOW COST deferred annuity. It works pretty much like an IRA in most respects, but there is an annual annuity charge for the account (hence why it has to be low cost). That could provide additional tax deferred growth.

But I would re-evaluate your small business plan first. Deferred annuities are generally a last resort type option.

I'd take a tax-managed fund, or tax-efficient total market index fund over a deferred annuity any day of the week. The costs are lower, most of the gains will be tax-deferred until you sell, and if you hold for at least 1 year you get to pay favorable long-term capital gains rates instead of ordinary income tax rates. In my opinion, it is a much better way to go.

[rigz]

thanks for the help everyone!

and just realized typo in the title. its OUR retirement savings. not MINE.

[Oquote]

Keep in mind that an HSA is not an investment. Current interest rates are about .0000009% (Yes, that was satire). However, yes, you can tax deduct your contributions, assuming you're purchasing qualified medical, dental or vision expenses.

I have one and it has worked well. Network-negotiated repricing is a big plus!

[jpg7n16]

I'd take a tax-managed fund, or tax-efficient total market index fund over a deferred annuity any day of the week. The costs are lower,

Costs are not the only factor. And the entire investment shouldn't be in stocks.

most of the gains will be tax-deferred until you sell, and if you hold for at least 1 year you get to pay favorable long-term capital gains rates instead of ordinary income tax rates.

Under current tax law, yes. But will the 15% LTCG treatment still be there when you need the funds? Maybe yes, maybe no.

This also does not hold true for bonds. Interest income is fully taxable in the year earned, unless you go the muni route. And muni income may be less than you would get on tax deferred compounding income.

In my opinion, it is a much better way to go.

What if you need to change the allocation? Sell, pay cap gains, reinvest the rest. Reallocate 2-3x/year? Repeat for a portion. What about dividend income? Interest income? Capital gain distributions? Bond allocation?

There are more factors than just low cost, and assuming no trades will ever take place.


As I said above, I believe they are essentially last resort type accounts. If you want to keep your equity portion in taxable accounts, that's perfectly fine. I'm not selling annuities here. Just saying it is an option to consider.

[kv968]

what we have been doing is just dumping extra money into investment accounts (exact same mutual funds as our ROTH and SEP IRAs except just in a regular account) and just considering that "for retirement" - ie, we arent touching it for 20-30 years.

is that smart? is that our best bet or are there other options we should consider.

What are the "exact same" mutual funds that and in your investment accounts and IRAs? Some, such as bond funds, you shouldn't really have in a taxable account if you're looking to minimize the tax hit.

Another option in your taxable account would be to use index funds and/or certain ETF's since they usually have a lower turnover rate than mutual funds hence you can better control capital gains.

[kellogg9]

For me the only real way to maximize retirement savings is to look to make your retirement account a long term investment through a discount broker such as questrade that dont charge you an arm and a leg on hidden fees and administration costs. That way you can buy and hold on index etfs for years and let your retirement savings grow.

[jIM_Ohio]

Other types of accounts for you, yes. How much is your SEP contribution? Do you have any employees?

Check out this chart from the DOL. They go through each plan's ability to contribute.
elaws - Small Business Retirement Savings Advisor

Found this calculator too: (compare how much you could contribute to various plans)
Small Business Retirement Plan Calculator

In many cases, if you guys are still Roth elligible, the Self Employed 401k option allows you put away more than the SEP will.



You could also consider a LOW COST deferred annuity. It works pretty much like an IRA in most respects, but there is an annual annuity charge for the account (hence why it has to be low cost). That could provide additional tax deferred growth.

But I would re-evaluate your small business plan first. Deferred annuities are generally a last resort type option.

Read JPG's post 3 times. Ask questions.

For example, depending on business, maybe a 401k plan could offer more than a SEP. Maybe a profit sharing plan on top of the 401k could set aside even more. A good CPA, TPA or financial planner can find the way to set aside more.

There are many kinds of annuities. Fixed, deferred, variable. All 3 would shelter gains from taxes while accumulating, but be subject to taxes on withdraw/ distribution. Is your goal to save taxes now, retire early, pass assets to kids or something else. Clearly stating the #1 goal will drive whether the annuity makes sense or not.

I would also not hold the same securities in a taxable account as I do in sheltered accounts. For example, keep bonds and dividends inside a shelter, and growth funds outside the shelter.

[Josh28]

If your company is doing any sort of matching,use it to the maximum, Nothing beats free money!
If you are still young, it might be worth the risk and put it in a more volatile industry . If you are within 10 years of retiring, then it might make more sense to keep it conservative. Blue chip companies, mutual funds, index funds, etc. are safe bets.

[Tree0164]

You could do a tax deferred variable annuity. Be aware that there are alot of fees associated with it.