I'm fairly close to paying off my car and I am toying with the idea of increasing my retirement contributions. I currently contribute 8% to my 401k and receive a 5% match. My contribution is set to increase by 1% every year. I also have a pension. I have an old Roth but am not contributing anymore. Y contributes 2% of his income to his pension and his employer contributes another 10%. He also contributes another 5% to his 457. He also has an old Roth but is no longer contributing.
I am thinking that I would like to increase my automatic contributions at work to 10%. I'm leaning towards this for a few reasons. We get hit hard with taxes. Our marginal tax rate is 25% and will likely be lower with retirement. Also, sometimes we can't even claim the child tax credit. I'm not an accountant but I think it makes more sense to lower our taxable income by utilizing my 401k.
What do you think? Or should I leave them as is?