Monday, February 12, 2007

A better plan

The more I thought about the plan I came up with yesterday the more stressed I got that it might not work out (like if they don't process the paperwork to return my contributions to a normal level in time!)

So what I am going to do instead with the extra savings is to max out the Roth now, and change my monthly contribution to $1000 from $500. That way I won't feel much of a pinch since I won't be contributing the $200 per month (which sadly since I am now in such a high tax bracket, I would only get post-tax about $300 from the extra $500).

Also I figured out that I would only be able to do the whole-month thing twice before I hit the cap on my 403(b) contributions. What a dilemna to have, eh? ;)

So if all goes as planned, I will contribute the following amounts to my 403(b) during the year 2007:

$3990 - involuntary contributions
$500 - already made, voluntary
+ $11000 - will make, voluntary
$15490 - juuuust squeaking under the maximum voluntary contributions

Also: $5784 - employer contributions
$4000 - Roth IRA

Total: $25274, maxing out both the IRA and the 403(b).

I am extremely pleased with myself. =) Maybe I will hit my retirement goal before 30!


English Major said...

Yow--this is amazing! The awesome thing is that by starting off with such high contribution levels, you'll avoid having the "oh God, I need to cut my lifestyle way back to contribute to retirement!" panic attack in your late 30s, which means your lifestyle will slowly but steadily expand--you can totally skip that sense of deprivation. (And at some point, you might even be able to reduce your contributions.) That's pretty exciting.

D said...

I am so green with envy, it is sickening. You go girl!!!

You financial security is being set up and you will enjoy the ride.

This will work much better, in my eyes, why risk a paper work snapfoo that can cause some tough financial times when you are doing so well.

Congrats again!!!

your jealous online friend!

Wanda said...

Those are awesome numbers! Regarding the involuntary contributions - does that mean you HAVE to contribute to a plan at your work no matter what? And your work also contributes to your retirement account?

Kira said...

Yes, where I work there is a mandatory pension plan (as I am technically a state employee, this is in lieu of contributing to Social Security) and I have 9.5% or so of my pay automatically put into the pension plan - or in my case, directly into the 403(b). That happens whether or not I do anything and is mandatory. The university contributes about 14% of my pay also without me doing anything.

Tim said...

are you getting a tax return? If so, why don't you use it to max out your roth ira. you don't need to be in a hurry to max out the Roth. Depending on your emegency savings and other savings levels, putting yourself on a squeeze for the next couple of months may not be so wise.

Kira said...

I won't be getting a tax return - in fact, I will be paying almost $5,000 in extra taxes this year from starting a business. =) This really won't be a financial squeeze for me since I'm essentially returning to the same income level I was before I got the new job - I'll be using CashDuck money to fund the IRA.

Anonymous said...

hmm I notice your net worth is positive now, it seems that you change it a few times a month instead of monthly??

Kira said...

Yes, I change it whenever there is a big change. In this case I deposited some more money into savings and some into my IRA. Don't have many holdings, and I only include my contributions to retirement, so it's easy to keep track.