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401k only or 401k / Roth mix for retirement?
Posted on 2/20/15 at 10:06 pm
Posted on 2/20/15 at 10:06 pm
Pondering 2 options:
1 - Max out 401k (pre tax only)
Or
2 - Get company match in 401k (pre tax)
- Max out Roth (targeted mutual funds?) (after tax)
- Some more money in 401k (pre tax)
What is the preferred option of the Money Board?
1 - Max out 401k (pre tax only)
Or
2 - Get company match in 401k (pre tax)
- Max out Roth (targeted mutual funds?) (after tax)
- Some more money in 401k (pre tax)
What is the preferred option of the Money Board?
5
Posted on 2/20/15 at 10:08 pm to weagle99
Popular question lately
I'd go with 2
I'd go with 2
Posted on 2/20/15 at 10:08 pm to weagle99
2
Posted on 2/20/15 at 10:13 pm to Croacka
Apologies. I should have searched.
Posted on 2/20/15 at 10:15 pm to weagle99
Max both.
Posted on 2/21/15 at 3:53 am to weagle99
My company offers a roth 401k. So I'm working on maxing out it
Posted on 2/21/15 at 8:18 am to LSU6262
Roth depends on your personal financial situation. One option is not always best for all people.
A roth is intended to be tax free at retirement. So if you are making more now than you think you will need in retirement, a pre-tax is better (lower tax rates on your money). If you believe tax rates will rise or will make more in retirement, then a Roth is better.
Also, you can use it to tax diversify. Any company match will be pre-tax, so that's a way to diversify as well.
#2 is a popular response. I don't disagree, but it needs a little more review than just defaulting to this answer.
A roth is intended to be tax free at retirement. So if you are making more now than you think you will need in retirement, a pre-tax is better (lower tax rates on your money). If you believe tax rates will rise or will make more in retirement, then a Roth is better.
Also, you can use it to tax diversify. Any company match will be pre-tax, so that's a way to diversify as well.
#2 is a popular response. I don't disagree, but it needs a little more review than just defaulting to this answer.
Posted on 2/21/15 at 9:17 am to weagle99
My company offers both, so I contribute to both. A lot of what I've read regarding this topic suggests that tax diversification is the way to go.
Posted on 2/21/15 at 7:10 pm to Sum3rian
Thanks everyone for the replies.
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