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I've been contributing at a 15% rate, only been on the desk 6 months so have been building up a safety net of cash. Just upped it to 25% going into 2021, so will be maxing this coming year.
Yes, maxed.
I was at 25% but I lowered to 20% to but the other 5% in more speculative investments
Following. I have had the same question... My firm doesn't match so I don't know if its worth it but I'm still working from home for the foreseeable future and saving a ton so I could be putting that towards my 401k I just don't know how it all works. Need to do some more research
Similar situation. My firm has a 3 year all or none vesting so most analysts don't get any match. The way I see it is you're still reducing your taxable income so it's to your benefit, as long as the illiquidity of the 401k doesn't bother you.
Could you go into that "reducing taxable income" more in depth? From what I understand, you contribute to your 401k and in 30 years when you take it out it's taxed at your current tax rate right?
Only contribute up to the match. Go aggro in equities with the rest of my cash
do you have trading restrictions at your bank. Are they not a hassle to deal with?
Just lever up on the ETFs you hold to get the same returns you could on single name tickers. Your personal finances can take 6 turns just like the next shit company your bank sells.
This is the way
This is the way
I normally only contribute up to the point that my company matches. With a 401k or IRA you can not withdraw from the account before you're 59 1/2 without penalties and paying income tax on your withdrawals. If you are ok with that, then go for it, it could be a good way to save for retirement. Just keep that in mind if you are depending on this money for a "safety net".
How I would prioritize savings:
Just my 1x10^-6 BTC
Would we still be paying taxes in that higher tax bracket if we wait until after we retire to draw from the 401k? Because wouldn't our income go way down then?
To be completely honest with you, I am far from an expert on this, so take what I say with a grain of salt. With a Roth 401K all of your contributions and gains are tax-free after 59 1/2. So your money is able to compound tax free (so no capital gains). That is not the case with a traditional 401K. That being said, the benefit of the traditional 401k is that since your contributions are pre-tax more of your money is actually being invested and compounded. There are quite a few online calculators that can show you the differences based on your inputs.
To specifically answer your question re: income at retirement, I personally think I will be withdrawing more in 30 years at retirement than I the amount I am making now. The reason is because no matter how much we try to resist it, lifestyle creep is a real thing. So if I am making 3x what I am now at the apex of my career, my lifestyle is going to adjust accordingly. Probably not to where I need all of that income to support my lifestyle, but likely 70-80%. In order to support that lifestyle in retirement, even if I cut it back to 50%, would require me to withdraw more than I am making now.
Anyways, that's how I think about it. They both have their merits, the fact that it is even on your mind means you're ahead of the curve, you're going to be fine either way.
You should be in a lower tax bracket when you retire, unless you become very wealthy and generating a ton of income every year even after you retire.
This is exactly what I do. I know at some point I’ll want to either buy a house or do an MBA, so I don’t want all my money tied up in a 401k
.
Max that shit out EVERY year because soon you’ll be maxing out and don’t have enough tax advantaged containers to fit all your CF
Do you feel the traditional is worth it over the Roth 401k like the above poster mentioned
Traditional if your marginal tax bracket is 35% or higher ($200k+ single)
Roth if your marginal tax bracket is less than 30% (sub $150k single)
anything in between is up to you
all IMO of course
Yep, definitely maxing it out. Also maxing out IRA. My employer offers both traditional and Roth 401k and I usually do a 50/50 split (I really should go full Roth but haven't pulled the trigger yet). In my opinion, yes the 401k is good for tax reasons but what I like about it is how automatic it is and how it directly comes out of your paycheck versus coming to your bank account and then leaving. Makes it feel less painful and gets me used to living on the portion coming into my bank account.
There are also some pretty complex ways to access the money before 59.5 (look up "Roth IRA Ladder") so I'm not too worried about it, plus expect to have a pretty decent non-401k savings by the time I want to retire.
Would definitely be maxing it out if I could afford to. Right now just putting until the match limit and then maxing out a Roth IRA. However, I’m also thinking about grad school so I’m putting aside money into a 529 as well.
Do you think the 529 is worth it compared to the money you could get investing it in the markets
Personally yeah because the plans in my 529 still track broad indices. The closer I get to grad school, the less yolo bets I want to take.
Always have. Did a smaller % throughout the year and larger % for bonus paycheck. Not as good for DCA into the market, but better for cash flow.
Thats what I do now. The bonus easily gets you to max contribution of $19.5K.
It's my understanding your taxable income for bonus is reduced because you funded the 401K with pre-tax bonus money. Quite frankly its better to do it like this versus having the govt hold 50% of your income via tax and getting a portion of it back via tax return.
How does contributing to the 401k from your bonus check work exactly? I'm assuming your standard x% isnt auto deducted like your normal bi weekly paycheck right?
The bank I work at has a separate section on their 401k website to let you pick the % you want to put into your 401k from your bonus check. Sure this is the same across all firms.
Makes sense to do the highest possible contribution now during covid especially if you've moved home or something. Personally as a first year analyst a few years ago, I honestly didn't contribute as I was living in an apartment which was too expensive and was partying too much to be fiscally responsible. After that I did the maximum match to firm contribution but after joining PE I did the full 19.5K p.a. contribution.
I work in Hong Kong. Anyone know if a US citizen can invest in 401k while working overseas?
I am now as an analyst but I regret not doing more sooner, I didn't contribute near the max when I first started. For reference, I work in lower middle market (firm name pops up on some threads here but not a name brand place) and our comp is pretty dependent on bonus and I still was fairly comfortable socking away $19.5k this year.
It makes more sense to contribute the most you possibly can from your bonus because it's taxed at a much higher rate than your salary. I tend to max the limit via bonus and go from there.
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