An advantage we have where I teach is being able to save in both a 457 plan and a 403(b). We have the option of using the traditional pre-tax 457/403(b) or a Roth 457/403(b). This year, I’m planning on contributing to my
- 100% pre-tax 457, at $19,000 + $6000 catch-up =$25,000
- 100% pre-tax 403(b), at $19,000 + $6000 catch-up = $25,000
- Roth IRA $6000 + $1000 catch-up = $7000
That’s a total of $50,000 pre-tax and $7000 post-tax.
I’m maxing the Flexible Spending Account too, at $2700 to save nearly $900 in taxes.
In case you’re wondering, that doesn’t leave me with much to live on.
In my consumer scientist brain, if they offer it, I’m using it. And because I want to really challenge myself, I’m taking zero income until the 457 and 403b cups are full. Once that happens in mid-2019, I’ll fill the Roth IRA cup and start piling up the dollars to use towards living in the first half of the next year, 2020, when the front-loading begins all over again.
Aggressive? You bet but I learned to pay myself first by doing it this way. I used to pay everything else first and didn’t think I could max out. But then I tried it. Any guess what? It was just a matter of shifting mindsets and dollars.
The other reason I approach it this way is to see if we could live without my income. At first, there was no end in sight for me to retire or to stop earning income. The only way out was to stop spending it. Easier said than done. In fact, it was impossible.
At first. Until the plan was hatched and I weaned ourselves off of my income. Instead of spending it, I redirected it. I saved it. This way it benefits us instead of escaping us on things.
Go ahead and give it a try. What’s the worst that’ll happen?