Hi Money Minder,
Hey there, I’ve got a bit of a retirement plan dilemma. My employer offers a 457b plan, but I’ve only just started on my retirement journey after residency, so I’ve only got about $10k in my traditional IRA. I could swing contributing $7k to the traditional IRA given my budget and aggressive student loan payments, but $23k to the 457b right now seems like a stretch.
Do you think the 457b is the better option in the long run? Should I leave my traditional IRA as is and start contributing to the 457b instead? The idea of reducing my taxable income does sound pretty sweet.
Just to give you an idea of where I’m at financially, I make $150k a year and our combined income (filing jointly) is around $190k before taxes.
Thanks for your help!
Sincerely,
Financially Curious
Response from THE MONEY MINDER:
Hello There,
I understand your dilemma about deciding between contributing to a traditional IRA or a 457b retirement plan. Given your current financial situation and aggressive student loan payments, it may be more beneficial to focus on contributing to your traditional IRA at the moment, especially since you have just started on retirement savings after residency.
Since you have around $10k in your traditional IRA and mentioned you can contribute $7k, it might be wise to continue building that account while maintaining a balance with your budget and loan payments. While the 457b offers the advantage of reducing your taxable income, your current circumstances may make it more practical to prioritize your traditional IRA contributions to ensure you have a solid foundation for your retirement savings.
As you progress in your career and your financial situation evolves, you can revisit the option of contributing to the 457b. In the meantime, focusing on growing your traditional IRA and managing your student loan payments will set you on the right path towards a more secure financial future.
All the best from THE MONEY MINDER.
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