While I’ve written a bit about our investment allocation in the past, we’ve tweaked things a bit recently so I thought I’d lay thing our here for all to see. Before we go any further, I should note that we have a number of different accounts, including two Roth IRAs, three different employer-related retirement accounts, a SEP-IRA, and a taxable brokerage account.

Because of the complexity of our situation, I have decided to treat our investments as one big pot of money rather than trying to manage each account individually. Thus, we’ve locked in certain accounts with just one investment type, and we adjust the overall allocation using my SEP-IRA. This management is made far easier by Vanguard’s Portfolio Watch tool, which allows us to track and visualize everything in one place.

Here goes… [more]

I’ve written in the past about the possibility of retiring overseas. While this can be a great way of stretching your retirement dollars, I recently ran across a blurb in Bottom Line/Personal that talked about some of the hidden costs of retiring outside of the United States.

For example, even if you move overseas, you’ll still have to pay income taxes on Social Security benefits as well as distributions from your pension, 401(k), traditional IRA, etc. You’ll even have to pay tax on income earned while abroad, though there are certain treaty provisions as well as the foreign earned-income exclusion that can reduce you liability. In addition, Medicare does not cover treatment outside of the United States. Thus, while many countries provide nationalized health care, you’ll need to check out how they handle foreign residents — you may or may not be covered.

I frequently find myself musing about the possibility of an retiring early. It’s not that I dislike my job. Rather, I’m just really, really attracted to the idea of total financial independence. While we have four relatively young kids, and thus have a few more obstacles than the average family, I’m still a big fan of running the numbers to see where we stand and how far we have to go. To this end, I wanted to point out yet another calculator that I recently ran across… [more]

The most recent issue of Money Magazine had an interesting article about early retirement. Included was a small sidebar with tips for getting out of the rat race well before traditional retirement age. While there wasn’t anything earth-shattering about these tips, they serve as a good reminder:

1. Live below your means. Keep an eye on both small and large expenditures, live in a low-cost area, send your kids to public instead of private schools, opt for less expensive vacations, etc.

2. Set lofty goals. Saving 10% of your income isn’t enough if you want to retire early. Instead, aim for 20-25%.

3. Be allergic to debt. Carrying debt is not the path to early retirement. Pay it off and then stay debt free (see Step #1).

Even if you don’t manage to retire early (or don’t want to), these are great steps for building wealth.

I just wanted to point out an interesting comment that a reader named ‘cheepy‘ left in response to my article on saving for retirement at the last minute:

How about moving to a developing country where a dollar can get you a lot further? Of course, the downside is that it is so far from friends and family, but you can get almost the same lifestyle with much less money… I am an Indonesian who lives in Australia. So if I go back to Indonesia, I practically quadruple my spending power…

This ties in nicely with the idea of reducing your expenses in retirement, although I suspect the majority of retirees aren’t going to be crazy about the idea of moving partway around the world to make up for a savings shortfall.

I just ran across an article by Mindy Fetterman in USA Today that talks about the effects of procrastination when saving for retirement. She starts out by presenting the same sorts of numbers that we’ve all seen a million times before:

“If you’re 20 years old and you save $100 a month in an investment that earns an average 7% a year until you retire at 65, you’ll end up with $381,472. If you wait until age 40 to start saving $100 a month, you’ll have only $82,056.

If you wait until 50… Well, you get the point.”

So… If you’ve waited until the last minute, what can you do? [more]

Have you maxed out your traditional or Roth IRA for 2007? If not, you have until Tax Day to get it done, so you better get crackin’. Given that the maximum allowable contribution for 2007 is $4,000 ($5,000 if you’re age 50 or more), and assuming that you contribute once a month from now through April, you’ll need to squirrel away just shy of $667/month to reach the max ($833/month if you’re 50 or older). [more]

A reader named Tom recently wrote in with the following question:

I have been looking online for 2008 403(b) contribution limits and can’t find the info. Can you tell me what the 2008 403(b) contribution limits are? Or where I can find them?

After a bit of digging, I was able to find the answer… Unfortunately, according to a recent press release from the IRS, the limit on elective deferrals will remain unchanged for 2008 at $15,500/year. This applies to things like 401(k), 403(b) and 457(b) plans.

The good news is that aggregate limit (employer + employee contributions), which is specific by Section 415(c)(1)(A) of the Internal Revenue Code, is increasing from $45,000/year to $46,000/year (this is the so-called 415(c) limit). So there’s a bit of extra breathing room for retirement contributions, but only if your combined employee/employer contributions are bumping up against the limit.

Have you ever heard of “Longevity Insurance?” In short, longevity insurance is a relative new form of insurance that provides you with a guaranteed stream of income later in life, typically starting after you turn 85. To get longevity insurance, you have to make a substantial upfront payment 20 or so years earlier. [more]

Yesterday afternoon I received the following question in my inbox:

I’m 43. I’m looking to payoff my mortgage. Can I withdraw from my Roth IRA to payoff my house without penalty? I have $52K in a Roth IRA. My mortgage payoff would be $77K. I have enough in savings to make up the difference. Can I withdraw without a penalty. Is it wise to do so?

There are a couple of questions here, so let’s take them one at a time… [more]