Nobody should give you individualized advice
on a forum like this without first understanding a great deal more about your
financial picture and your intended retirement in a few years.
Having said that, here are a few general
thoughts that may be of help….
You asked about maxing your
contribution to your IRA or “putting extra” in a Roth IRA. In 2015, you can
contribute $6,500 in total to an IRA,
Roth IRA, or some combination of the two. There’s no “putting extra” in a Roth
IRA…it’s subject to the same contribution limit as a traditional IRA. The
breakdown is $5,500 of earned income + $1,000 catch-up for folks age 50+. If
you’re married, you can also contribute $5,500 to your spouse’s IRA or Roth
IRA, plus the $1,000 catch-up if your spouse is age 50+. Be aware of these IRS
contribution and deduction limits.
Whether one should contribute to their traditional IRA or Roth IRA is largely
determined by (1) the tax bracket they’re in now vs. anticipated tax bracket in
retirement, (2) time frame for holding the resources, and (3) the current mix
of their other pre-tax, already-taxed, and tax-free assets. Generally speaking,
those in a higher tax bracket now vs.
retirement will benefit more from the traditional IRA deduction now. Those who anticipate a higher tax
bracket in retirement will usually benefit more by foregoing the deduction now
in favor of drawing out tax-free Roth IRA funds in retirement.
Ideally, you want a healthy mix of
pre-tax (IRA, 401k), already-taxed (regular investment), and tax-free (Roth
IRA/Roth 401k) assets in retirement. That should give you the opportunity to
mix-and-match your distributions in such a way as to create the least tax bite,
plus possibly minimize the taxation of your future Social Security benefits.
Finally, I’d encourage to hire a
(genuine) financial planner who can help you review your entire financial
picture, identify any potential blind spots, map out your retirement, and offer
actionable advice that’s tailored to you. Find a planner who’ll objectively
work for you as client rather than one who makes their money by selling you financial
Hope that helps.
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