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$53k is the max of employee and employer contribution. The 17K is the limit you can contribute from wages. It is not the maximum contribution allowed to your 401k overall.
So who contributes to get to 53k? If you are contributing 17k is your employer contributing 36k?
You can make after-tax contributions to your 401k ... if your plan allows it.
So if you contribute 17k pretax and your employer matches say 3k pretax you're saying you then contribute 33k in after-tax dollars? Never heard of that, have to check it out.
You can make after-tax contributions to your 401k ... if your plan allows it.
There are very few reasons that would ever make sense (hardcore backdoor Roth's). Other than that you pay income tax on all gains vs. just capital gains rates in a brokerage.
There are very few reasons that would ever make sense (hardcore backdoor Roth's). Other than that you pay income tax on all gains vs. just capital gains rates in a brokerage.
Well, starting this year you don't have to do the Roth backdoor route anymore.
This is common among those who are self employed or working in small companies (esp. startups). You have to make a minimum of $140,000 (if my math is right) to accomplish a contribution of $53,000. $18,000 from wages, and 25% of your salary. Since you're in a high tax bracket at this point, it's a no brainer.
The after-tax contribution method isn't as interesting... but if you're in a low tax bracket, you can get a lot of money into a ROTH this way via a rollover. I'm not sure it can be classified as a backdoor ROTH since you're not a high income earner.
I don't understand this logic ... what do you mean "wasted money"?
Money that I won't ever be able to access.
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Whatever you save is yours to spend.
No, you can't spend 401K money until you are 59 1/2. Unfortunately, that age minimum is likely to rise, meaning that many of us won't ever be able to withdraw money from a 401K without paying steep penalties.
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Just because you fear your cost of living will rise when you retire doesn't mean the money you saved went to waste ... it just means it won't last as long as you need it to.
No, that is not what I said at all. What I said is that by the time I (and others from my generation) reach traditional retirement age, Medicare will likely not exist, meaning that we will have no way to obtain health insurance for any reasonable cost.
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This means you have to save as much as possible and invest that 401k money appropriately for growth and not just park it in some money market fund.
But that won't work if Medicare no longer exists.
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And I think you can afford the $40/month extra for a smartphone and data plan if you think you're missing out on something.
But you just said above that I should be maxing out my 401K, and not spending money on a smart phone.
The penalty on early withdrawals is 10% not exactly "steep". Also look into 72t distributions and/or Roth conversion ladders. There are definitely ways to access your 401k penalty free well before 59.5 years of age.
I am your generation more or less. I prioritize contributing to my 401k to the max ($53,000 this year) and IRA (whenever possible). If you keep doing this, and invest, your 401k will grow to a point where it is self-sustainable. At that point, you'll be able to survive without a job.
Again, not everybody is as rich as you. Not only is it not legal to contribute more than $17,000 per year to your 401K (and nobody has an employer that contributes $36,000 per year), but most of us can't afford to put $53,000 per year away anyway.
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A smartphone, to me, is a money-saving device. It's a solid investment that saves me money and time. However, I wouldn't look into reducing my 401k to pay for it (if I couldn't afford it). I'd look at other sources of income or savings.
No idea how a smart phone is a money-savings device. Sounds like you are encouraging me to work a second job. Sorry, I value my free time too much for that. I see no point in getting a second job just to afford a smart phone.
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Frankly, I'm not counting on these fears. Just make as much as you can, and save a good portion of it.
But it is obvious that both fears are going to happen eventually.
I'm sorry, but I value my free time too much to work a second job. I see no point in working a second job and giving up all of my free time just to get a smart phone. What is the point of having a smart phone if I won't have the time to enjoy it?
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