But if you take the deduction on your income tax then it’s pre-tax dollars going into the IRA. In that case a conversion would all be taxable as income. Generally it’s not very efficient to convert to Roth because of the initial tax drag.

>Since my contributions are coming out of my pocket post-income tax

Are you deducting the IRA contributions on your income taxes each year?

You can look at it, just don’t fret about it. You have 30yrs until normal retirement age, so you have lots of time for it to grow. There will be more downturns but upturns out number those.

>So should I really expect it to go from $170k to $510k over the next 5 years? That seems crazy and unrealistic to me. What am I missing?

By itself they will not just triple, you have to be intentional on targeting that level.

Generally taking the money out over 10yrs is the most efficient tax wise as it’s less likely to push you into higher brackets. You could play around with some tax software to see how much you can push it without going into another bracket.

Remember, our tax system is a progressive one, you only pay the higher percentage of a bracket on the amount that goes into that bracket, not your entire taxable income (hugely misunderstood fundamental of our tax system in the US)

If you are under the income limits for deductible IRA contributions, you can offset some of that income by contributing. Be careful not to go over the income limits if that is your plan.

Also, a couple years ago when mortgage rates were 2-2.5% I’d say get a mortgage but with current rates you should compare the cost of interest on say a 15yr loan to the taxes paid

Either way you need to get the IRA money out in 10yrs, so do some calcs to figure out the most tax efficient way. Sorry there isn’t a one-size-fits-all solution, we all have different tax situations.

Set him up with his own account that gets funded $X per week or month. This account sits apart from your overall accounts that pay bills and savings.

>Bonds or Stocks Which Way Do You Go?

Both. Pick your allocation and stick to it regardless of what the market is doing. The most efficient portfolio for long term growth is one where you don’t try to optimize for current market because you most certainly will mis time the market.

And ignore the bloviating talking heads on media, they don’t know what’s in store in the next year any more than you or I do

If you get a gig playing on the moon, the terrestrial IRS will expect you to claim that income on your taxes. Bonus though is you can also claim the Tranquility Base Municipal tax paid on the moon on your IRS filing.

Exactly. It’s part of your compensation, one that lots of people leave on the table

>They gave me $50 for my goose neck ball and $600 for the brand new rims and tires that cost me $4000.

Generally you don’t get anything for mods. So that’s at least something. If you have the original rims you can ask to put those back on and keep your new ones, I was successful once doing that on a Mini Cooper.

>and they wanted $200 to give me something I can actually fight with.

$200 is totally worth it if it’s thousands extra you get. Appraisers don’t work for free

>My spouse and I currently have around $550k in retirement savings across all our accounts, plus another $200k in home equity.

You can count house in NW, but don’t count it as part of retirement savings. You can’t buy groceries with a house, well you could but you’d have to sell.

>This year, I'm on track to save roughly $45k using a combination of Roth IRAs, 401k and mega-backdoor Roth.

That’s awesome. Most people can’t get near that level of saving.

>OTOH, the average American only has roughly $100k saved for retirement.

Ignore that nonsense data. You aren’t them. You are ahead some and where they are is irrelevant.

>My spouse and I have estimated our current expenses at about $60k per year, including the mortgage.

To keep that level of spending you take that multiply by 25 and that’s what you need to not work while your money is invested. You’d need $1.5M to meet a $60k goal. (This is based on the “safe withdrawal rate” of 4%)

>My spouse has some relatives who belong to a vacation club and basically live in resorts in the Caribbean for much of the year. My spouse would like us to sign up as well. To do that, I would need to cut our retirement savings rate in half at least.

Ehhh. First off what’s is the relatives financial situation? Have they reached financial independence(“FI”)? Not trying to be a dick, but you guys haven’t reached that. You are behind in reaching a reasonable FI number for yourselves. Once you get to that FI number (the $60k/$1.5M) does it support living in another country part of the year?

>My parents will leave me and my sister $500k each when they pass on in a few years.

Don’t count on inheritances. You never know if parents need long term care which can destroy inheritances

Generally this is correct but there are some qualified “limited purpose” FSAs or post-tax FSA that you can have. These are not common and your employers plan summaries should spell that out clearly as to how they comply.