Hello all,
For some context, I'm 26 years old, make about 95k a year. I have about 20k in cash savings for emergencies, maintenance costs, sinking funds, etc, and I have no other debts. I have about 13k in a Roth IRA, 7k in a 401k, and I'm vested in a very generous pension plan. Under my plan if I stayed at my job for another 19 years I'd be able to retire early at 55 with 70% of my income at retirement. I've been trying to get my finances in order and am trying to figure out the value of investing more for retirement vs just investing in a taxable considering I have the pension benefit to count on in the future.
Currently I max out my Roth every year, and I recently upped my 401k contributions to 8% (my job does not offer a match). Due to finishing up my debt obligations, I have about an extra $1,000 a month that I can contribute to my savings/investments and I have been heavily debating whether I should invest the $1,000 in a taxable brokerage or increase my 401k contributions by $1,000 to ~18%. The benefits I see to a taxable is that I could theoretically retire even earlier than 55 (though I haven't done the math entirely to see if that would make sense), and that if I decide to buy a house when things improve in the market that I could use the money from the taxable to use as a down payment.
For the 401k contributions, I've been learning more about Roth conversions and am thinking that could be a better vehicle for retiring earlier than 55, even though I'm not 100% sure how that would work either. Obviously the tax benefits are helpful, but I'm still taxed at a fairly low marginal rate now. Curious to hear what people here think about it as it is not a situation that I see often discussed on these forums. Thanks!
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