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Author: jtmitch Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 79104  
Subject: 403(B) or Non-Retirement Mutual Fund?? Date: 10/27/1999 3:02 PM
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I am about to leave a corporate job for one at a university. I'm 54 years old, have a military pension and hope to retire in about 4 - 5 years. My income objective in retirement is between $90K - $100K per year of which about $50K will come from the military pension (inflation adjusted). Our (my wife's and mine) total nest egg is about $750K of which $100K is in a rental property I inherited and may sell at some point in the future. Of the remaining $650K, about $390K is non-retirement (Mutual Funds, Money Market Fund, Bonds, CD's with a heavy weighting toward stock funds) and about $260K is in retirement vehicles (401(K)'s, IRA's and an annuity, also with a heavy stock orientation). My new job will pay 7.25% of salary into a retirement fund (TIAA-CREF) regardless of whether or not I make a contribution to the 403(B) plan (and without reducing my salary - "free money" if you will). I can, if I wish, contribute up to an additional $10K annually into the 403(B). The big question: considering my objectives and current financial situation, does it make more sense to contribute $10K annually to the 403(B) or to take that amount (reduced by taxes) and put it in a non-retirement vehicle such as Vanguard S&P Index? (I'm in a 31% Federal/7.5% state tax bracket now but my lower university pay may drop me back to 28% Federal).
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