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We didn’t start maxing both 401ks until our hhld income was roughly 150k +/-. We spent a far number of years savings 40-60% of gross income and we are closer to 35-45% now.
We didn’t start maxing both 401ks until our hhld income was roughly 150k +/-. We spent a far number of years savings 40-60% of gross income and we are closer to 35-45% now.
When it's available I tend to max out my 401K, but it's fairly rare for me to be able to do so as I consult. I should open a SEP account, but never have. In reality, I'd rather use my brokerage account as a savings account. If a recession does break home prices out here further, then we can use that money to acquire more property.
I don't think it's that unusual for people to contribute only enough to get the full employer match and that is particularly true when they are first starting out, saving up for a down payment on a house and retirement is 40 or so years off.
Once you are more established in life - own a home, have a little nest egg built up, earning more money - that is when they start to worry about maxing out retirement accounts.
Unfortunately for me my budget doesn't allow me to contribute the max. I do take advantage of my company match plus some on top. However having a young and growing family means the budget is tight. (E.G. Up to $2,600 a month in daycare costs alone).
I only do enough to get the company match (6%). Then I max out my Roth IRA, HSA, and 529 college savings plan. Then if I still have more to save I'll increase my 401k contribution. But it generally stays under 10%.
We fluctuate. It’s always a priority but not always do-able. We have no company match but we do each fully fund a Roth in addition to our 403b’s. As we approach the last few years we plan on maxing out even if it means forgoing the big family vacation. With catch-up amounts maxing for two is a significant chunk of cash (60k?+15k Roth). Most couples I know aren’t even close to saving $75k per year.
I've never been able to comfortably max out my 401K contributions, but I have ALWAYS contributed enough to get the full employer matching contribution as that would be leaving "free money" on the table.
Beyond that, I've never had a 401K plan that is worthy of maxing it out anyway. Limited investment options coupled with somewhat high fees, no thanks. I max it to the employer contribution and then have my own self-directed IRA where I put money above and beyond that where I can choose my own stocks/mutual funds/ETFs.
Maxing out is the most efficient if you can afford it (and the market risk associated) and have ROTH, cause you can always grab your contributions back. I allocate more to retirement than I would ultimately need as I've been maxed for a while, and my HSA I don't touch either and keep as retirement 2.0. But the thought is that I'd yank out contributions for first time home purchase down payment or whatever else I want to allocate towards. This way I'm essentially tax sheltered from gains.
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