I am saying, first, that $300k creates tax drag. Are you maxing all retirement options every year, including backdoor or mega Roth? If so, then saving in taxable is fine... but a 529 would (likely) be better at your tax rate. There are risks to saving huge amounts in a 529 plan (especially with one kid.) See here: viewtopic.php?p=7679003#p7679003"You are rich and can do whatever you want to fund the kid's college 16 years from now"You have two million dollars. You have a one year old.
You are rich and can do whatever you want to fund the kid's college 16 years from now. You're unlikely to ever qualify for financial aid unless you spend down that taxable account and have no earned income. You can save into a 529 if you want to capture the state tax break. Paying off the mortgage doesn't seem like a high priority: seems you could basically pay it off whenever you want.
Why do you feel you need nearly $300k in a taxable account? What is that money for?
- I think it is prudent to do the "optimal" choice given alternatives. Don't you think?
"Why do you feel you need nearly $300k in a taxable account? What is that money for?"
- I am not sure what you are asking. Do you mean we don't need to save in taxable account? Save elsewhere ? Don't save at all? etc.
Perhaps you plan on early retirement? I'm just trying to understand the purpose of having that much money in a taxable account, creating.... tax due.
In 16 years, at 7% growth with no future contributions at all ($0/per year) 280k becomes $855k. That covers college easily, even with taxes. However if you don't have a need for a lot of money in taxable, then move some of it to a 529 to reduce tax drag.
$2m in 16 years @ 7% growth with zero future contributions is $6m.
Statistics: Posted by Admiral — Sat Jan 27, 2024 9:11 am — Replies 8 — Views 663