Or both? Or none! I've heard maxing out 401k and then doing roth is good strategy.
Roth 401k, then backdoor Roth IRA, maxed everything year. Current tax rates expire in 2025, and you’re dreaming if you think tax rates are going to be lower in the future. The US is swimming in debt and Medicare for all will compound that problem.
Medicare for all is never gonna happen. Best we get is continuation of ACA with Medicare public option.
Whether it does or doesn’t is basically irrelevant. $1 trillion annual deficit IN A GOOD ECONOMY means taxes are going back up. At least that’s the reason for my investment strategy.
I max out traditional 401k and backdoor Roth IRA. My company doesn’t allow mega backdoor, so I put the rest in ESPP and my taxable brokerage account.
Yeah, you’re leaving out an option. Some employers offer a Roth 401k. We do Roth 401k and backdoor Roth IRAs in our house. We started investing young enough that it makes enough of a difference to do Roths for our accounts.
I max out a traditional 401k. My wife maxes out a Roth 401k. Then we both do max backdoor Roth conversions. Additional savings goes to the market and investment property.
Impressive! Socking away 50k / year. Good for you both!
Well, with our employer matches, it’s $86k into 401k. Roth 401k employer match goes into a traditional 401k bucket (it’s the law). Then we use our HSA as a 100% retirement vehicle. Medical deductibles are out of pocket. The tax benefit of an HSA as a retirement vehicle is almost unmatched. Then $12k backdoor Roth. Then 529 funds for our two kids, at least $10k per child per year. Then save in a separate brokerage account. No tax advantages there. Then save in an Alliant bucket for investment real estate down payments, rehab of new and existing properties, etc.
A more traditional way of doing it: - invest in 401k for full match - do Roth IRA to limit. - go back into 401k after maxing Roth. Reason: most employer 401k plans have shitty options. With a Roth IRA you’re in charge.
Right now just max out 401k. Thinking about doing 1-2% in Roth just because.
Who doesn't have both? During underage it was beat into our heads to have both... SSI is going to only have dust in it by the time I retire.
Why both?
Greater opportunity for building wealth, OP. But if you can’t max out both options, a good rule of thumb is to 1) put in enough in your 401k (traditional, or Roth if it’s available) to get your company match 2) $6k into a Roth IRA to max it out and then 3) back to your 401k to add as much as you can
I want to add something I haven't seen mentioned yet. All developed countries are hugely in debt and hundreds of millions of voters world-wide will have nothing saved for retirement. I think it's very likely that the laws may be changed regarding retirement accounts to extract more tax from these. The most likely target is a cap gains tax on Roth accounts. There is safety in numbers, and more people have traditional IRAs. Also trad IRAs will still be taxed as income upon withdrawal so they're less likely to be double-taxed.
Certainly an intriguing thought. Further promotes the idea of diversification is key - what you’re investing in, how you’re investing, pre-tax vs Roth, etc.
Oh shit. We have a commission driven financial consultant hawking his wares here. Is this LinkedIn 2.0? Go away Tomas Avalos.
I respect the hustle but damn get outta here 😂😂
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