Got a note today from Vanguard (who manages my company’s 401k plan). Apparently I can now contribute up to 16% of my salary again (up from 10%). This will let me hit the IRS limit of $15,000 for the year but I now have some catching up to do…

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JLP over at AllFinancialMatters made an interesting post regarding Monte Carlo simulators and their use in retirement planning. I’ve been looking for some more tools like this (I have a couple of Excel spreadheets but they are hard to use…)  Broadly speaking, Montey Carlo methods are useful for modeling systems with many variables (like retirement planning). It is a bit more realistic way of looking at retirement planning than your standard 8% average return per year method. Check out JLP’s post for more links and info.

Per JLP’s suggestion I downloaded the retirement calculator from Pivot Point Advisors and spent some time with it tonight. It belongs in my Financial Information Resources category so here goes…
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We still haven’t finished our taxes and will likely have to file an extension.  Not a huge deal but disappointing.
As I posted before, work has been nuts for the last couple of months.  My wife had surgery on Thursday (was in the hospital until Friday).  She came through it fine (looks like someone beat her up though…her face is all bruised.)

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The inflation based (variable) component of I Bond interest rates won’t be known for sure until April 19th. (Consumer Price Index Home Page) Because inflation was abnormally high in September last year due mainly to high energy prices (Katrina), the variable component (which will go into effect May 1 based on September - March changes in CPI-U) will likely not be more than 1%. In fact, as of February, it was slightly negative!  Prices have been rising somewhat though so I expect the change in CPI-U to come in around .25% for the period which would translate into a .5% variable component.  I Bonds purchase between November and April would be earning a rate of 1.5% for their second six month period.  Far from outstanding but still not bad considering the 6.73% they are earning now.
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I was logging on to my 401k account this morning to make sure MS Money was in agreement with Vanguard. To my happy surprise there were several thousand more dollars in there than I expected.

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Got a letter from my 401K custodian last week. It seems that the raise I got last year pushed me over the limit for being a highly compensated individual for my company’s plan. This means I am limited to contributing only 10% of my salary to my 401k on a pretax basis and 3% after tax. Frankly I’m a bit shocked and a little angry. By earning a few thousand dollars more per year I now will be able to save several thousand dollars less on a pre-tax basis (the IRS limits for 401K contributions this year have risen to $15k). This will have the net effect of costing us over $1000 in additional taxes, not to mention the drag it will put on my 401K contributions. Takes a lot of the joy out of getting a raise…

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