It's that time of year again... I'm getting a raise this month, so I'll once again be increasing my retirement savings. As I've noted previously, each year when I get a raise I increase my retirement contributions by 1% of my total salary -- after all, if you never see it, you won't miss it. When I started my job I was contributing the 5% necessary to get the dollar-for-dollar match in my 403(b), as well as an additional 5% for good measure.

After factoring in my annual increases, my 'additional' contributions had reached 8% as of this past year. Shortly after tax time, however, I decided that re-directing my additional contributions (i.e., those beyond what's required to get my employer's full match) to a Roth IRA would make the most sense. To make a long story short, I'm ratcheting up my retirement contributions such that I'll be contributing 5% to my 403(b) (plus the 5% match) and an additional 9% to my Roth IRA during the upcoming year. My Roth is actually almost maxed out for the year, so I will soon start diverting these funds into my wife's Roth. Eventually, when we're both maxing out our IRAs, I'll revert to putting future increases into my 403(b). My ultimate goal is to get to the point where both of our IRAs plus my 403(b) are getting maxed out every year. We're still a little ways off from that, but I'm confident that we'll eventually get there.

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"Ratcheting up our Roth IRA Contributions" was first published at fivecentnickel.commortgage calculator