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Message
Retirement Contributions. Do you agree with this chart?
Posted on 6/22/18 at 1:45 pm
Posted on 6/22/18 at 1:45 pm
How much should you contribute to your 401(k)?
Level...................Contributions
1 (No employer match)...5% of salary
1 (With employer match).Max % employer will match
2 ......................Max % employer will match plus Roth IRA
3.......................Roth IRA plus 10% of salary
4.......................Roth IRA plus 15% of salary
Maximum ................Roth IRA plus annual 401(k) maximum
_______________________________________
I currently contribute 8% to a Roth 401k. My company matches 5%. Should my additional 3% and any future increases be going towards Roth instead.
Yes, I have 4 months emergency expenses and no high interest debt
Level...................Contributions
1 (No employer match)...5% of salary
1 (With employer match).Max % employer will match
2 ......................Max % employer will match plus Roth IRA
3.......................Roth IRA plus 10% of salary
4.......................Roth IRA plus 15% of salary
Maximum ................Roth IRA plus annual 401(k) maximum
_______________________________________
I currently contribute 8% to a Roth 401k. My company matches 5%. Should my additional 3% and any future increases be going towards Roth instead.
Yes, I have 4 months emergency expenses and no high interest debt
6
Posted on 6/22/18 at 3:37 pm to LSU6262
My opinion for what it is worth is to contribute the maximum the company will match, then max out a Roth IRA, then if you have the money max out the 401K. My reasoning is this, I am retired, a lot of the money I live on was in 401K tax deferred accounts which means it is now being taxed as regular income as I withdraw it, whoever said this was a good idea because you would likely be in a lower tax bracket when you retire was full of it. I wish I had maximized my opportunities for tax free growth and income when I was saving for retirement.
Posted on 6/22/18 at 3:49 pm to EA6B
He has a Roth 401k. AFAIK, the company match will go into a Traditional 401K account, but it sounds like he'll be fine as far as future taxes on his contributions and gains are concerned.
If he's eligible for an HSA, that's typically a good move. As for the rest, if the options are good, plow it in the Roth 401K or the Roth IRA. If you're in a position to max it all, then max it all.
If he's eligible for an HSA, that's typically a good move. As for the rest, if the options are good, plow it in the Roth 401K or the Roth IRA. If you're in a position to max it all, then max it all.
This post was edited on 6/22/18 at 3:54 pm
Posted on 6/22/18 at 3:51 pm to EA6B
quote:
a lot of the money I live on was in 401K tax deferred accounts which means it is now being taxed as regular income as I withdraw it, whoever said this was a good idea because you would likely be in a lower tax bracket when you retire was full of it. I wish I had maximized my opportunities for tax free growth and income when I was saving for retirement.
WHOA, this is Blasphemy!
See, you were downvoted right out of the box for being honest and actually living it
wow This goes against all the investment scholars in here. Max your Roth, do company match in 401k, then if you can still contribute..contribute to another tax free plan (high dividend WL plan, VUL), use this to create a Tax Free asset, that will give you guaranteed tax free money for living. That way, all other investments will become Lagniappe and not worry about the taxes. But I'm a big Tom Hegna fan, so I'm the black sheep lol
Sounds like your doing good! I'd put the extra 3% into roth, max that thing out.
This post was edited on 6/22/18 at 4:04 pm
Posted on 6/22/18 at 5:43 pm to LSU6262
Take advantage of all company matches you can in whatever accounts. This is free money.
Once you've done that, max the Roth.
Then you can work on maxing other accounts. Personally I think the HSA (if that's available) takes priority over the 401 because if you manage things properly your HSA is entirely tax free, both on your contributions and withdrawals. Plus you can tap it if you need to for qualified medical expenses at any time.
Once you've done that, max the Roth.
Then you can work on maxing other accounts. Personally I think the HSA (if that's available) takes priority over the 401 because if you manage things properly your HSA is entirely tax free, both on your contributions and withdrawals. Plus you can tap it if you need to for qualified medical expenses at any time.
Posted on 6/22/18 at 6:55 pm to LSU6262
Forget the fricken percents if your goal is FIRE.
Get the match yesterday,
Max roth, then max remainder of 401 if you can or by putting in any raises you get. Get an HSA going if possible. Keep a good running balance in savings to cover emergencies. Put away some each month for car replacement, keep current vehicle until car notes are a thing of the past. Low cost, broad market index funds are suggested if those options are offered in the accounts, this will add up huge over time.
Get the match yesterday,
Max roth, then max remainder of 401 if you can or by putting in any raises you get. Get an HSA going if possible. Keep a good running balance in savings to cover emergencies. Put away some each month for car replacement, keep current vehicle until car notes are a thing of the past. Low cost, broad market index funds are suggested if those options are offered in the accounts, this will add up huge over time.
Posted on 6/24/18 at 9:32 pm to bstew3006
quote:
high dividend WL plan, VUL)
Garbage advice. All permanent insurance sucks. Period. After match and Roth max, muni bond is where to go for tax free potential
This post was edited on 6/24/18 at 9:36 pm
Posted on 6/24/18 at 11:27 pm to EA6B
quote:
My opinion for what it is worth is to contribute the maximum the company will match, then max out a Roth IRA, then if you have the money max out the 401K.
What the heck am I living on if I'm saving that much?
Posted on 6/25/18 at 7:10 am to EA6B
quote:
. My reasoning is this, I am retired, a lot of the money I live on was in 401K tax deferred accounts which means it is now being taxed as regular income as I withdraw it, whoever said this was a good idea because you would likely be in a lower tax bracket when you retire was full of it. I wish I had maximized my opportunities for tax free growth and income when I was saving for retirement.
To be fair though, all things equal you should have a substially greater amount of money in your 401k then you would in a Roth if you contribute the same amount post tax to each.
You are talking about 25% more in contributions which would lead to even more after investing.
The key really is to save as much as you want. 20% or more is best.
Posted on 6/25/18 at 7:49 am to PetroBabich
quote:
What the heck am I living on if I'm saving that much?
good question. unless you are making alot of jack. you also have taxes along with living expenses as you stated that have to come from what you DO NOT put away. Remember, this board is not the norm. we have stated it many times. Also, many other people including myself do not follow that cookie cutter advice. we invest in RE, have or do private lending, tax liens, trade futures, etc as part of a diversified investment portfolio so money is spread around. I choose to put the most into what gives me the best returns. that is cash flowing RE.
It is not that the advice here is bad. it is not. but it is not easy for a regular joe to execute the advice here for the main reason you stated.
This post was edited on 6/25/18 at 7:51 am
Posted on 6/25/18 at 10:07 am to PetroBabich
quote:
What the heck am I living on if I'm saving that much?
beans and rice
old cars.
Posted on 6/25/18 at 7:46 pm to Fat Bastard
I agree not to mention vacations and other fun interests.
My question is lets say you max the Roth and 401 but dont want to work until 60. Brokerage account?
My question is lets say you max the Roth and 401 but dont want to work until 60. Brokerage account?
This post was edited on 6/25/18 at 7:50 pm
Posted on 6/26/18 at 12:26 am to down time
quote:I max out Roths and 401k. Then decent contributions to 529 plans for the kids. I then put some away to participate in my company's bonus options plan.
My question is lets say you max the Roth and 401 but dont want to work until 60. Brokerage account?
After all that, it is brokerage accounts that I treat mentally like retirement accounts... That is to say I don't touch them.
Posted on 6/26/18 at 9:02 am to Spirit of Dunson
quote:
I max out Roths and 401k. Then decent contributions to 529 plans for the kids. I then put some away to participate in my company's bonus options plan. After all that, it is brokerage accounts that I treat mentally like retirement accounts... That is to say I don't touch them.
Age and Salary? Cause I mean.. Gahh Damn
Posted on 6/26/18 at 9:12 am to Blind Zebras
quote:
Garbage advice. All permanent insurance sucks. Period
That's a Negative, dave ramsey
quote:
After match and Roth max, muni bond is where to go for tax free potential
Not saying this isn't an option or not to do this.
I suggest a high dividend (6%-7%), Paid up WL or VUL. Plenty of studies that show certain WL plans that compete and out perform Munis. Just the personal investors decision on which way to go. Blanket statements aren't very productive, as every investor is in a different situation (values, risk tolerance and goals). If you like Munis, go for it, but it's not the only option.
This post was edited on 6/26/18 at 11:51 am
Posted on 6/26/18 at 9:16 am to LSU6262
the only thing I tend to agree with "for sure" is putting 15% pre-tax equivalent of your gross income from the day you get your first real job. How you divide the 15% up between traditional and roth is different for each individual.
Other than that, I don't think there is a good rule that can work as a generality. Everyone's situation is different.
Other than that, I don't think there is a good rule that can work as a generality. Everyone's situation is different.
Posted on 6/26/18 at 9:31 am to down time
quote:
My question is lets say you max the Roth and 401 but dont want to work until 60. Brokerage account?
Max mega backdoor roth
Posted on 6/26/18 at 10:13 am to LSUTOM07
quote:
Max mega backdoor roth
Great idea, particularly right now with taxes on sale, but most people's 401K doesn't provide the ability to make after tax contributions AND in service withdrawals.
Posted on 6/26/18 at 10:19 am to bstew3006
quote:
I suggest a high dividend (6%-7%), Paid up WL
Because you sell it.
Posted on 6/26/18 at 10:20 am to notsince98
quote:
the only thing I tend to agree with "for sure" is putting 15% pre-tax equivalent of your gross income from the day you get your first real job
This is pretty unrealistic for most young people, especially living in an urban area.
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