Personal Finance (Not Investing) • Contributions to tax-deferred or roth 401(k) 3 years from retirement

Hello,

I'm a regular guy and need some actionable advice. Here's my situation:

Age: will be 59 in 2 months
Single guy with two dogs
Plan to retire in 3 years at age 62, but might stay until 65 since I like my job
Plan to collect SS at FRA (67)
Pension (non-COLA) @ age 65: $1020/month
Salary: $220K (recently promoted with pay raise)
401(K): Total $1.17M (Roth 401(k): $630k; tax-deferred 401(k): $540k)
(with company match, I'm currently contributing 21% of my salary to my 401(k))
HSA:$18k (max annual contribution)
Cash: $20k
Mortage payment: $2100/month
Mortgage balance: $230k
Home equity: $220k
Credit card debt: $0
Car loan: $50k balance w/$1200/month payment (it's a car that I really enjoy and should be paid off by the time I retire)
Other assets that I own outright (other cars, a motorcycle, other stuff): approx $100k

So, NW (assets - liabilities) = approx $1.3M

Current tax bracket: 32% (still working)
Planned tax bracket in retirement starting @ 62: 12% (prior to pension and SS, $80k/year budget with funds taken out of both Roth and tax-deferred 401(k))
Start drawing on pension @ 65
Start drawing on SS @ 67
Also, my plan is to retire to a LCOL area from my current MCOL area.

Here's my question: With my planned retirement 3 years away, should my contributions to my 401(k) go to tax-deferred 401(k) to lower my tax bill during accumulation and pay taxes when I'm at a much lower tax bracket during decumulation or should I keep contributing to the Roth 401(k) for future tax-free growth and distribution?

Thanks in advance for your advice.

Statistics: Posted by Johnny_Excitement — Thu Mar 07, 2024 11:23 pm — Replies 2 — Views 348

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