re: WWYD: 401K and Roth IRA

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If you truly have nothing invested for retirement at age 40, then in my opinion you should maximize your traditional tax deferred savings before doing any Roth. The reason is that when you retire, at least some of your income will be taxed in the lowest brackets, whereas if you contribute to Roth now it will be taxed at your highest marginal rate.

There are other ways of looking at it, and we never know what future tax rates will be, but you'd be paying 22-24% Fed on your Roth savings now, but maybe only have an effective tax rate of 12% in retirement. Doesn't mean not to save in the Roth, just that your bang for the buck right now is maximum tax deferred before you do any Roth.

The Roth has many advantages which go beyond just the tax issues, so it's not always about the math, but at 40 years old and no savings and a good income.....defer.

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I get the sentiment, but think funding a Roth at age 40 could still be the best bet. The tax savings from 25+ years of growth in a Roth could easily be the better route. I had been semi-retired for close to 10 years now and have paid more in taxes each year than I ever expected.

You would still have a max out of pocket with a high deductible plan. And as the HSA grew you can pay yourself back for that out of pocket expense. And you can pay yourself back many years down the road for past expenses.

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If you are capable of fully funding a large retirement nest egg, then you want a diverse range of accounts to pull your money out of.

The goal in retirement is to control your "taxable income".
Ideally, you have some qualified funds to max out your lowest tax bracket (it is not ideal to have no tax deferred funds).

You can do positive investing into a brokerage account with the extra refund from the qualified funds that you invest today (ira or 401k).

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Agree on having tax diversification in retirement. This is something that should be planned for long before retiring.

But I have become a more active investor in my retirement years, and controlling my taxable income has not been my primary goal. At least not yet. I have made more money than my working days in most years of my early retirement. Some of this is fortunate timing on when one retires, but the income you can earn in retirement years can be more than you plan for. Building a decent amount of wealth over a lifetime can provide good investment options in early retirement years. My real estate investments affect my income in ways that produce income more than just stock market money, so that is not typical. But most of us have our strongest balance sheet of our life during early retirement, which provides opportunity to make more income than one might have expected.

Agree

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Even it is there you cannot retire comfortably on social security alone.

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Agree with this, but will say that also focusing on building non-retirement investments is what allowed me to "retire" early. Which has been one of the best things I ever did. I worked in high stress environment for 35 years, and do not miss it. My point is to fund both types of investments.