This week, former financial planner Joe Saul-Sehy and I answer five questions about investing, retirement, insurance, travel and selling an expensive car.
Eliana is 25 and makes $63,000 per year, plus a little extra from freelance work. She holds $95,000 in cash, $67,000 in retirement investments, and no debt. She doesn’t necessarily hold early retirement as a goal, but she’d like the option to access her funds before she’s 59-and-a-half.
She asks two questions: First, she’s been spreading her money between a Roth IRA, pre-tax 403b, and taxable brokerage account to spread her risk. Should she not contribute so much to the taxable account?
She’s also paying $88 per month for a $25,000 life insurance policy for her mother, who is 57 years old. She likes the peace-of-mind that comes with knowing it’ll be there to cover funeral expenses, if needed. But she recognizes that there’s a huge opportunity cost that comes from paying for such an expensive plan. Should she drop it?