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Message
Got a new job with a large raise, what to do about retirement?
Posted on 5/24/23 at 8:15 am
Posted on 5/24/23 at 8:15 am
I'm not going to get into specifics here, just trying to crowd source some input to see if other people have the same idea I do. Lets say your employer is going to fund your retirement account at 10% of your six figure salary whether you kick in anything or not. Are you still putting in 5-15% to a 401k/IRA, buying individual stocks, maybe using that to save for down payments on a rental, or something else?
I do think we are getting real estate at a discount right now (though I don't think we are at bottom yet) so even with rates up it is tempting to go that route. Not really interested in commercial at all with that bomb about to drop.
We are also getting stocks at a discount as well though.
Some form of retirement account is the safest option, but I'm considering retiring fairly young and that probably won't get me there.
I do think we are getting real estate at a discount right now (though I don't think we are at bottom yet) so even with rates up it is tempting to go that route. Not really interested in commercial at all with that bomb about to drop.
We are also getting stocks at a discount as well though.
Some form of retirement account is the safest option, but I'm considering retiring fairly young and that probably won't get me there.
This post was edited on 5/24/23 at 8:22 am
19
Posted on 5/24/23 at 8:20 am to TrussvilleTide
I started a Roth in 2006 and have never regretted it. I do wish we had higher contribution limits back then.
Posted on 5/24/23 at 8:22 am to TrussvilleTide
If your employer lets you buy their stock at a discount
take it! Then cash out every year...its free money.
You may look at it as a deduction but when you cash out every year its like a bonus (maybe do a ROTH with it)
If they are putting in 10% I would match it...As I approach retirement I appreciate every move like this I made.
take it! Then cash out every year...its free money.
You may look at it as a deduction but when you cash out every year its like a bonus (maybe do a ROTH with it)
If they are putting in 10% I would match it...As I approach retirement I appreciate every move like this I made.
Posted on 5/24/23 at 8:35 am to TrussvilleTide
I max out my 401k, back door a Roth for $6500 and have $500 a month split between a savings and money market account. Haven’t done anything with rental properties yet because I’m not sure I want to deal with that hassle.
Need to get my savings into something better than Chase.
Need to get my savings into something better than Chase.
This post was edited on 5/24/23 at 8:37 am
Posted on 5/24/23 at 8:48 am to TrussvilleTide
quote:
Are you still putting in 5-15% to a 401k/IRA,
10-15%, YES
Posted on 5/24/23 at 8:54 am to TrussvilleTide
quote:
Are you still putting in 5-15% to a 401k/IRA
In your case he is putting in 10% and you don't have to put in anything?
1. 401K up to the employer match
2. Max out Roth IRA
3. HSA account if you have one
4. Max out 401K
Only after those 4 do you start looking at alternative non-tax advantaged accounts.
quote:
buying individual stocks,
If this is your primary retirement accounts then the best thing is to stick to low cost broad index funds.
quote:
Some form of retirement account is the safest option, but I'm considering retiring fairly young and that probably won't get me there.
If retirement accounts won't get you there, what will? Assuming you mean taking on higher risk, and for most people that means never retiring.
Posted on 5/24/23 at 8:55 am to bayoubengals88
quote:401k would likely be maxed before you get that high, right? (Eta: 6 figures is a pretty broad range, so tough to know)
10-15%, YES
I think I would contributed enough to max the 401k and also max a Roth if eligible or do a backdoor Roth contribution.
This post was edited on 5/24/23 at 8:59 am
Posted on 5/24/23 at 9:07 am to TrussvilleTide
Personally I'm maxing my contribution regardless of employers contribution. I don't even want to see that money.
The purists will tell you you shouldn't do this and you should do Roth first and then this and that, but I believe in maxing out 401k, maxing out HSA, then dealing with Roth after I handle brokerage and college accounts for kid.
The purists will tell you you shouldn't do this and you should do Roth first and then this and that, but I believe in maxing out 401k, maxing out HSA, then dealing with Roth after I handle brokerage and college accounts for kid.
Posted on 5/24/23 at 9:26 am to Rize
quote:
Haven’t done anything with rental properties yet because I’m not sure I want to deal with that hassle.
Yeah my grand dad built houses for a while, so he built and then rented out an entire neighborhood
. Even people they knew personally who rented from them could be a huge PITA, and people were just really gross when it came time to clean after a tenant left. Posted on 5/24/23 at 9:30 am to WDE24
quote:
401k would likely be maxed before you get that high, right? (Eta: 6 figures is a pretty broad range, so tough to know)
It would be close, but the account the company is contributing to is a pension so it wouldn't count toward the 401k max
Posted on 5/24/23 at 9:32 am to UltimaParadox
quote:
Some form of retirement account is the safest option, but I'm considering retiring fairly young and that probably won't get me there.
If retirement accounts won't get you there, what will? Assuming you mean taking on higher risk, and for most people that means never retiring.
Building out a passive income stream of rental properties would get me there faster
Posted on 5/24/23 at 10:46 am to TrussvilleTide
quote:
Lets say your employer is going to fund your retirement account at 10% of your six figure salary whether you kick in anything or not.
Yal still hiring?
Posted on 5/24/23 at 11:07 am to TrussvilleTide
My retirement target age is 55. My employer puts about 16% of my salary into my 401k. I put another 15% in my 401k and IRA.
Seems to be working well for me.
Seems to be working well for me.
Posted on 5/24/23 at 11:14 am to TrussvilleTide
I second this:
5. Taxable brokerage in low cost index funds
Real estate isn't as passive as you may think and at current interest rates I'd be skeptical of the ROI.
Use HSA if eligible as a triple tax advantaged investment account. Pat out of pocket and save receipts for future tax free withdrawals.
Tax advantaged accounts can absolutely get you there for ER. Read this Madfeintist: How to Access Retirement Funds Early
Plus, you pay zero long term capital gains on ~$100k of taxable income (married/joint). So, in ER you can pull a mix of tax free Roth contributions, banked HSA expenses, taxable brokerage basis and gains, and only pay income tax on early traditional 401k/IRA withdrawals (no penalty if using 72(t)/SEPP, or rule of 55.
quote:
1. 401K up to the employer match
2. Max out Roth IRA
3. HSA account if you have one
4. Max out 401K
5. Taxable brokerage in low cost index funds
Real estate isn't as passive as you may think and at current interest rates I'd be skeptical of the ROI.
Use HSA if eligible as a triple tax advantaged investment account. Pat out of pocket and save receipts for future tax free withdrawals.
Tax advantaged accounts can absolutely get you there for ER. Read this Madfeintist: How to Access Retirement Funds Early
Plus, you pay zero long term capital gains on ~$100k of taxable income (married/joint). So, in ER you can pull a mix of tax free Roth contributions, banked HSA expenses, taxable brokerage basis and gains, and only pay income tax on early traditional 401k/IRA withdrawals (no penalty if using 72(t)/SEPP, or rule of 55.
This post was edited on 5/24/23 at 11:16 am
Posted on 5/24/23 at 11:34 am to UltimaParadox
quote:HSA first if you have one IMO
1. 401K up to the employer match
2. Max out Roth IRA
3. HSA account if you have one
Posted on 5/24/23 at 11:38 am to TrussvilleTide
quote:nice
Lets say your employer is going to fund your retirement account at 10% of your six figure salary whether you kick in anything or not.
Posted on 5/24/23 at 11:39 am to TrussvilleTide
quote:
I'm not going to get into specifics here
Why not?
Posted on 5/24/23 at 11:54 am to TrussvilleTide
I would balance retirement savings with stacking cash. A Roth IRA makes sense up to the limits because that gives you some options as well.
Real estate, if you can afford to pay a management company would be worth it in my mind, but only if you can go in with a positive cash flow right away. Having to rehab or dump additional money before it ever turns a profit seems counter to my purposes.
Cash is king.
Real estate, if you can afford to pay a management company would be worth it in my mind, but only if you can go in with a positive cash flow right away. Having to rehab or dump additional money before it ever turns a profit seems counter to my purposes.
Cash is king.
Posted on 5/24/23 at 11:57 am to TrussvilleTide
17.5% of each check goes into 401k and Roth IRA for me. My employer only matches 3% though.
Posted on 5/24/23 at 11:57 am to TrussvilleTide
quote:
but I'm considering retiring fairly young and that probably won't get me there.
How young, or better put, how long would you have before your retirement accounts would be accessible without penalty? I would add that as a consideration as you decide how much to put where.
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