I've been deep in thought as to how to handle my after tax account. This is the money that I will start living on when I retire at age 56. I am planning on living on it for four years, maybe six years if things go well.

I am 8 years away from age 56 and I would like to ladder bonds or CDs in $50k chunks to supplement my pension. Since I am not going to be able to save $50k per year in the after tax portion of my savings, I will have to use some of the existing money that I currently have in the stock market. That means in 3 to 4 years I will have to start building the ladder.

So, I am going to stop putting the money in the market and start using safer investments. Once I started thinking along those lines I realized that it doesn't make much sense to invest in something paying around 4% while paying off the last four years of my mortgage at 6.5%.

For the next year I am going to pay down the mortgage instead of putting the money in my after tax account. It looks like I should have the house paid off by January of 2006.

I will then snowball the mortgage money plus the additional savings into my after tax account. This should increase my after tax money by about $18k at the point that I retire (assuming a 3% return). It's not much, but it will pay a nice chunk of the new car I will need for retirement. Even better will be the feeling I have when I am finally debt free !!! That is a big milestone, probably second to reaching FI.

I feel quite relieved in coming up with this strategy. I have been struggling with how to start building the ladder. The nice thing is that even using really low returns for the total portfolio, I should hit my mark in 8 years.

-helen

who just needs to stay healthy and employed.