529 Plan and College Savings

Archive for January, 2006

Question: Retirement planning opinion, any suggestions please?

Hello All,

I am a total noobie to all this. i am doing my own research but need different opinion from the community

My wife and I both work and live in CA.
Annual Gross Household: little over 200K
We both contribute to 401K but only 5% monthly wage. Our employer don’t match the 401K contribution.
Monthly mortgage around $4000 started this year so we probably will see some benefit for the interest paid.

Anyways, i want to put away more money before taxes. we both planing to increase our 401K contribution to 10% .
Can i contribute to traditioal IRA ? I am thinking 529 but would prefer IRA if i could.

Any advice on how can i maximize return based on current figures?
thanks
sorry, i forgot to mention ,I do have term life insurance. so my family is covered

Answer: Given that your employers do not match your contributions, you should both open IRAs so that you have better investment choices.

You can both contribute up to $4000 per year. If you still have more to put away, you can then continue to contribute to 401k. 529 is a good option as well and more flexible if you will be using the money for your children education.

There are a lot of money/investment calculators online to help you with financial planning. For example, http://cgi.money.cnn.com/tools/savingscalc/savingscalc.html

If you are a novice in investment, consider Vanguard. They are consistently charging relatively small fee for the rate of returns. You can invest with them directly to avoid advisory fees. https://personal.vanguard.com/VGApp/hnw/home

Best wishes.

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