No 457

That is quite the spreadsheet...lots of assumptions but pretty much confirms what I thought...I am better off in a taxable account.

After putting a lot of thought into this I decided that I am not going to contribute to her 403b. Between my SEP IRA (high contribution limit) and her generous pension we should be set for our retirement goals with that.

The taxable account will be more long-term misc. savings (i.e. possible early retirement, kids college education, etc.). Will most likely invest with Vangaured in a Total Stock Market Index, Total Bond Index, and Total International index.

Thanks for everyones input.

Just to provide some irrelevant perspective from points north: in Canada, people are often advised to put their equity investments in taxable accounts, and their bonds/cash/CDs in their tax-deferred accounts. This is because capital gains and dividends are taxed more lightly in Canada than interest income, which is taxed at your marginal rate (my current marginal rate is about 48%, although when I retire I'll be much poorer so my marginal rate should be considerably lower). So all your significant growth occurs in taxable accounts, while your slower growth occurs in the tax-deferred ones.

And given that not a single person in the US knows what their tax situation or even the relative tax rates for different types of investments will be 11 days from now, no one actually knows what is better in the US either after December 31, 2012. People can speculate but the experts know no more than your or I.

If nothing else, I'd start a Roth for the wife. You may have to do a "backdoor" Roth by contributing to her TIRA and then immediately converting. She can put $5,000 in for 2012 (before the due date of the return) and $5,500 in for 2013. Assuming she has no other IRA's, she should be able to convert the whole $10,500 early next year without any taxes due (other than maybe a little earnings). Roths are pretty valuable and give you quite a bit of flexabilty down the road.

Pay off the mortgage before maxing out tax deferred accounts. You will temporarily not have much liquidity, but it will be a much shorter time than the time to retirement age. After that's done, maxing out the tax deferred accounts becomes easy and you'll still have a higher cash flow (and therefore more liquidity).