About Me

jIM

I am a 35yo married and father of twins. I will update the photos once in a while. They were born 3 months early in March of 2008 and went through a tough first 4 months. They are now doing well.

Retirement checkpoints
( ) $1.5 M needed age 53 2026
( ) $750k needed age 45 2018
( ) $375k needed age 37 2010
( ) $180k needed age 29 2002

I had 200k before the drop in 2008. I need to set aside around 200k in next 2.5 years to get early retirement.

[ ] max 401k for me
[ ] max 401k for wife
[x] max Roth for me
[x] max Roth for wife
[x] start taxable portfolio
[ ] 3 months expenses in EF
[ ] 9 months expenses in taxable account
[ ] open college savings account for kids
[ ] dividend income equals half of annual expenses
[ ] pay off 2nd mortgage by 2013
[ ] pay off 1st mortgage by 2026
[ ] finance next car for 3 years or less
[ ] pay cash for my next car around 2016
[ ] start a TIPs 10 year bond ladder by 2016.

The bucket approach to investing part II

August 8th, 2008 at 04:26 pm

There is another "bucket" approach worth mentioning:

Tax deferred
Tax free
Taxable

As in 3 buckets which are each taxed differently.

Tax deferred implies you have not paid taxes on that money.

Tax free means you have paid taxes on the money and will not pay taxes again.

Taxable means you have paid taxes on the money and you only pay taxes on the interest, capital gains, or dividends generated (each year).

Tax deferred accounts pay taxes at marginal rates based on the federal and state tax brackets.

Taxable accounts pay taxes at capital gains rates.

A follow up post will discuss how to use the part I buckets with the part II buckets.

Posted in retirement | 2 Comments »

2 Responses to “The bucket approach to investing part II”

zetta Says:
August 11th, 2008 at 05:33 pm

What happens if my IRA has a mix of untaxed (from 401k rollover) and taxed (from non-deductible contributions) money? Have I screwed myself somehow by mixing the money? Is this an accounting nightmare?
jIM_Ohio Says:
August 11th, 2008 at 05:39 pm

That depends what you do with the money, but in general yes- you have an accounting issue.

If you do a partial Roth conversion, for example, you will convert a portion of the tax deferred and a portion of the taxable.

jIM_Ohio is Investing to retire early

Instead of making retirement a question, make it a sport- can I do it and how fast?

The bucket approach to investing part II

2 Responses to “The bucket approach to investing part II”

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