Max Saving for Retirement vs balancing other priorities
Monkeys- what is everyone’s thoughts or experiences with saving for retirement vs other priorities along the way (house, kids, a Porsche 911)? And how do yall balance the splits between retirement accounts savings, cash savings, and general investment accounts? Can anyone chime in with regrets they have about saving? Would be useful to not have others make the same mistake.
I know the technical finance answer is to run an NPV analysis and just figure out the dollar amounts but curious to hear any real-life anecdotes.
My general rule, max any tax advantaged account out. The personal finance reddit wiki is actually phenomenal btw and has a guide on spending/saving priorities that is hard to argue with . https://www.reddit.com/r/personalfinance/wiki/commontopics/
If you Roth it, you get the same flexibility as saving for other priorities as you can always withdraw your contributions without penalty, so put as much there as you can (backdoor etc.) and you may figure out that there actually become alternative paths to finance things without touching your retirement - student loans for an MBA are a key one etc.. Actually same thing if you preserve the ability to convert it to Roth at any point and have the money to pay the taxes
you can use a 529 for this as well
Agreed with 1st poster -- max out 401k and IRA. Beyond that, it's more discretionary but I'd still save a nice chunk of change after those earnings
I max 401K, max Roth, and contribute $3,500 a month to taxable brokerage (mostly just dump into VTI).
Beyond that, I probably save half my bonus, which gets dumped into VTI, and immediately sell my RSUs as they vest to also just dump into VTI. Beyond that I don't budget at all, buy whatever I want, and ball out for vacations. Based on 4% SWR I am already well beyond what I figure I need in retirement, so I may eliminate the taxable brokerage contributions to buy a home soon.
I don't give a shit about cars or watches or whatever, so not something I would spend money on. My big spending vice is eating out a lot and staying at nice hotels. I don't regret my aggressive approach at all - it is liberating knowing that I don't actually have to keep working in corporate to achieve my financial goals and that I can walk away if this ever becomes too much of a grind.
My best advice is to get as much of a head start on saving when you're young and able to utilize compounding interest to the fullest. A great start is going to allow a lot more flexibility if you want to retire early, or get a 911, etc.
Assuming you're in IB, tax deferral is going to be your best friend - max your 401k. Any spillover savings can go into a brokerage account.
The number one thing you want to avoid as your income rises is lifestyle creep. Enjoy your money, but be diligent with extravagant purchases. Personally, I tend to spend money on things that bring convenience and simplicity to my life versus luxury goods.
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