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Subject:  Re: What comes first? Date:  2/17/2001  9:41 PM
Author:  Mark0Young Number:  27967 of 80511

I'll post my reasoning as well as the nest (next?) egg priorities and you can see if the reasons make sense to you.

Am I spreading myself too thin?

This really depends on your plans. Generally, after getting high-interest debt paid off, it is a good idea to build up an emergency fund with the equivalent of 3 to 6 months of living expenses. If one also has significant purchases or expenses planned for sometime in the future but before 59.5, you may want to save or invest for that, too, at least in part.

What comes first?

1. The way your message is worded, it isn't clear if the 7% employer contribution is to your 403(b) or to something separate. If it is to the 403(b) and contingent on you also contributing to the 403(b), then I would recommend contributing at least to the point where you get the maximum employer match, if feasable.

2. After that, I would generally recommend a Roth IRA. The money within a Roth IRA grows tax deferred and, if the withdrawals are qualified (e.g., one has had a Roth IRA for at least 5 years and is at least 59.5 years old before making withdrawals of the earnings), the growth is tax free. Plus:

- the regular contributions can be withdrawn at any time for any reason, tax free and penalty free. (The earnings, on the other hand, have to remain invested for at least 5 tax years and meet one of the qualifications before being penalty free.) Of course, for the best payout in retirement, it is better to keep both the contributions and earnings invested.

- The Roth IRA account can be established at just about any brokerage or fund family, so the choice of investments are much greater than typically available in a 403(b). This means you could potentially find less expensive good investments, or find investments that would help round out the offerings in your 403(b). (E.g., my 403(b) is with TIAA-CREF, which tends to be