Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

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Daedalus
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Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by Daedalus » Sun Jul 15, 2018 5:20 pm

Title says it all. I've already maxed out my Roth IRA in January and am working on trying to max out my 401k as well by the end of 2018. I have never maxed out my 401k before. Just turned 28. My math works out on paper; however, I've come to appreciate the ever changing complexity of life situations in my 20's :D Just curious to see if anyone else here is in the same boat or if any of the elders have words of wisdom to share!

financeidiot
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by financeidiot » Sun Jul 15, 2018 5:44 pm

Read your company's 401k policy. Many policies will not keep providing the match if you max out your individual contribution limit ($18,500) before the end of the year. Make sure you'll continue getting the match on every paycheck, usually this just means making sure your final paycheck contribution for the year gets you to your $18,500 mark.

Miriam2
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by Miriam2 » Sun Jul 15, 2018 5:47 pm

Daedalus wrote:
Sun Jul 15, 2018 5:20 pm
Title says it all. I've already maxed out my Roth IRA in January and am working on trying to max out my 401k as well by the end of 2018. I have never maxed out my 401k before. Just turned 28. My math works out on paper; however, I've come to appreciate the ever changing complexity of life situations in my 20's :D Just curious to see if anyone else here is in the same boat or if any of the elders have words of wisdom to share!
Do you mean - you're afraid of maxing out your 401k because you might need some of that money while you're still in your 20's?

If so, well, look ahead realistically at your expenses coming up this year and in the near future and fund your emergency fund or savings account for such contingencies. You can contribute what feels comfortable to your 401k now and put the rest in your account (preferably a higher interest on-line savings account, such as Ally Bank) as a cushion in case you need it. Then as the year moves on, you may feel you can handle an increase in contributions to your 401k - so increase your contributions, knowing that if something happens, you have your savings to handle it. Time it so your 401k is full by the end of the year, bearing in mind your employer may need lead time to change the contribution amount.

You lose the opportunity of contributing the yearly max of $18,500 to your 401k at the end of the year. It's a use it or lose it.

mortfree
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by mortfree » Sun Jul 15, 2018 5:49 pm

If your plan has spillover election be sure that is turned off.

Congrats on maxing both.

Tdubs
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by Tdubs » Sun Jul 15, 2018 5:51 pm

financeidiot wrote:
Sun Jul 15, 2018 5:44 pm
Read your company's 401k policy. Many policies will not keep providing the match if you max out your individual contribution limit ($18,500) before the end of the year. Make sure you'll continue getting the match on every paycheck, usually this just means making sure your final paycheck contribution for the year gets you to your $18,500 mark.
This^

True for me.

ThriftyPhD
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by ThriftyPhD » Sun Jul 15, 2018 5:55 pm

mortfree wrote:
Sun Jul 15, 2018 5:49 pm
If your plan has spillover election be sure that is turned off.

Congrats on maxing both.
Why turn off spillover election?

mortfree
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by mortfree » Sun Jul 15, 2018 6:16 pm

ThriftyPhD wrote:
Sun Jul 15, 2018 5:55 pm
mortfree wrote:
Sun Jul 15, 2018 5:49 pm
If your plan has spillover election be sure that is turned off.

Congrats on maxing both.
Why turn off spillover election?
I have to max it out with my last paycheck and I don’t want $58 (I.e. the amount just over 18.5k) going to an after tax account.

YMMV

youngpleb
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by youngpleb » Sun Jul 15, 2018 7:46 pm

Daedalus wrote:
Sun Jul 15, 2018 5:20 pm
Title says it all. I've already maxed out my Roth IRA in January and am working on trying to max out my 401k as well by the end of 2018. I have never maxed out my 401k before. Just turned 28. My math works out on paper; however, I've come to appreciate the ever changing complexity of life situations in my 20's :D Just curious to see if anyone else here is in the same boat or if any of the elders have words of wisdom to share!
I’m maxing mine for the first time this year, but I only started my career in September of last year! Exciting times :mrgreen:
27. Always learning.

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Earl Lemongrab
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by Earl Lemongrab » Mon Jul 16, 2018 1:07 pm

mortfree wrote:
Sun Jul 15, 2018 6:16 pm
I have to max it out with my last paycheck and I don’t want $58 (I.e. the amount just over 18.5k) going to an after tax account.
If your plan has in-service distribution or in-plan rollover of after-tax, then you're missing an opportunity to up your Roth contributions.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

MotoTrojan
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by MotoTrojan » Mon Jul 16, 2018 1:09 pm

Yup. Been working 4 years. Did not contribute my first 2 at a prior employer, and my current employer's 401k is just starting this month. Will be contributing enough to max it out, along with similar monthly amount having gone into Roth/taxable the first half of the year.

Excited to have another account to play with :).

khangaroo
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by khangaroo » Mon Jul 16, 2018 1:22 pm

+1 on checking your company's 401k policy. Mine has it where the matching contribution isn't dependent on whether you're contributing this paycheck or not, you'll get your 5% match if you max out early and they'll true it up.

Last year was the first time I was able to max my 401k and I would like to congratulate you on getting your finances in order to be able to do that, it is no easy task with all of life's expenses.

I put my contribution limit to the max (25%) and capped out in early November last year. It was amazing to get those 3 final paychecks without a 401k deduction, it was like I was getting an extra bonus with each of those paycheck! It was fantastic.

mortfree
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by mortfree » Mon Jul 16, 2018 1:24 pm

Earl Lemongrab wrote:
Mon Jul 16, 2018 1:07 pm
mortfree wrote:
Sun Jul 15, 2018 6:16 pm
I have to max it out with my last paycheck and I don’t want $58 (I.e. the amount just over 18.5k) going to an after tax account.
If your plan has in-service distribution or in-plan rollover of after-tax, then you're missing an opportunity to up your Roth contributions.
Thanks. It doesn’t but appreciate the suggestion and will check again this fall to see if anything changes for next year. Excellent reminder.

sillysaver
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by sillysaver » Mon Jul 16, 2018 1:29 pm

It's been many years since I bothered contributed a meaningful amount to the 401k, due to job instability, crappy plans with no matches or bad options, etc.

However, this year I'm accelerating my contributions to contribute the max by September. I don't get any match, but I'm in a high tax bracket and want the tax deduction.

WhiteMaxima
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by WhiteMaxima » Mon Jul 16, 2018 1:33 pm

I already max out 18k for pre-tax. Target $55000 IRA limit. I learned my lesson by contribute too much % last year, reached $55000 a month earlier, missed one month company match. So this year my target is $52000 to get the full match.

barberakb
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by barberakb » Mon Jul 16, 2018 1:35 pm

CONGRATZ!!!

Last year was my first year to max out IRAS and 401K's

Looking to do the same this year

katzmandu
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by katzmandu » Mon Jul 16, 2018 1:41 pm

I will be maxing out 401k / ROTH and I get a match that hits equally every paycheck, so no issues there.

I'm hoping I am able to turn on spillover this year so I can contribute after tax to years end as my company supports in-service rollovers quarterly.

Daedalus
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by Daedalus » Thu Jul 19, 2018 8:10 pm

Thanks for the responses, everyone!!! It has certainly been an interesting week. Since I've posted this a few days ago, I've had a career opportunity come up in the most ideal scenario possible. Thus adding to the craziness of my 20's! It seems things have been unexpected since I've completing graduate school, but this new opportunity will finally provide me with great stability. Very excited for everything going on right now. Though this does complicate the 401k maxing further :oops: Oh well, I know I'm contributing plenty to investments this year regardless of the changes occurring before the end of 2018.

harrison20
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by harrison20 » Thu Jul 19, 2018 8:42 pm

Do everything you can to max out your 401k at your old employer before leaving. I mean like 80, 90% of your paycheck, then after you leave immediately transfer those funds into a self controlled IRA. Last time I left a job I presented them with the transfer papers on my final day. You don't want to be bound by the paltry investment choices in most 401ks

MichCPA
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by MichCPA » Thu Jul 19, 2018 9:01 pm

Daedalus wrote:
Sun Jul 15, 2018 5:20 pm
Title says it all. I've already maxed out my Roth IRA in January and am working on trying to max out my 401k as well by the end of 2018. I have never maxed out my 401k before. Just turned 28. My math works out on paper; however, I've come to appreciate the ever changing complexity of life situations in my 20's :D Just curious to see if anyone else here is in the same boat or if any of the elders have words of wisdom to share!
I am 26 and maxed out my 401k for the first time last year (along with a roth IRA and HSA). My debate this year is whether to hit the max with a roth 401k. I am saving to pay cash for a car later in the year and after that I am moving on to a house down payment. My struggle is that going full roth costs me about 300 a month over full traditional. Over the past couple of months, I have come to appreciate the flexibility of cash/taxable investments vs retirement accounts. The longer I go, the more I come to the conclusion that with a savings rate of 30%, I can probably so slow down, prioritize my housing goal and live a little. (Only a little :sharebeer .) So I would think less in terms of maxing the 401k and more in terms of meeting your goals.

dcabler
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by dcabler » Fri Jul 20, 2018 6:25 am

Daedalus wrote:
Sun Jul 15, 2018 5:20 pm
Title says it all. I've already maxed out my Roth IRA in January and am working on trying to max out my 401k as well by the end of 2018. I have never maxed out my 401k before. Just turned 28. My math works out on paper; however, I've come to appreciate the ever changing complexity of life situations in my 20's :D Just curious to see if anyone else here is in the same boat or if any of the elders have words of wisdom to share!
I've been maxing mine out by contributing the maximum % allowed. That's 70% of salary at my current company but I have worked at companies where it was as high as 90%. Net result is that I've maxed out within the first few months of the year. I mainly do it to "layoff proof" my 401K since my industry historically has layoffs, when they happen, in the second half of the year. Now by doing that, I don't get the full match by the time I've maxed out. However, it will be "trued up" in the early part of the following year with an additional deposit from my employer.

Chadnudj
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by Chadnudj » Fri Jul 20, 2018 6:33 am

Daedalus wrote:
Sun Jul 15, 2018 5:20 pm
Title says it all. I've already maxed out my Roth IRA in January and am working on trying to max out my 401k as well by the end of 2018. I have never maxed out my 401k before. Just turned 28. My math works out on paper; however, I've come to appreciate the ever changing complexity of life situations in my 20's :D Just curious to see if anyone else here is in the same boat or if any of the elders have words of wisdom to share!
I'm almost 39, and I've always (with the exception of a couple years where I changed jobs/was out of a job for awhile and wasn't immediately eligible for a 401k) maxed mine out since I got out of law school (at 27), but this is the first year in our 8 year relationship when my wife is maxing out hers (she always contributed a significant amount, but never the full max).

I'll admit -- it's been a bit tough from a cash flow perspective. Of course that probably has more to do with insane daycare costs for 2 kids under 4 (we pay 150% of our MORTGAGE in daycare every month) and some other unexpected expenses that popped up this year, and we'll be fine in the end (I have $5k in pre-tax dependent care savings coming in September/October that I'll get; plus we both have some 3 paycheck months coming up, plus year end bonuses hopefully and some bigger paychecks when I hit the Social Security tax cut off).....but still, it has not been entirely easy.

But, I tell myself, when I'm 67 (or hopefully much earlier) and have zero worries about money for the rest of our lives, I think I won't even remember the little cash flow stress I had in my mid-30s....

McDougal
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by McDougal » Fri Jul 20, 2018 6:40 am

Just know that if you can start maxing out your 401K/IRA in your 20's, (assuming you can afford to do so), and continue for a year or 2, you won't even miss the money anymore. This sets you up beautifully for planning and enjoying a comfortable retirement. Something most folks in their 20's don't even think about.
Congrats and good luck!

Chadnudj
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by Chadnudj » Fri Jul 20, 2018 6:41 am

MichCPA wrote:
Thu Jul 19, 2018 9:01 pm
I am 26 and maxed out my 401k for the first time last year (along with a roth IRA and HSA). My debate this year is whether to hit the max with a roth 401k. I am saving to pay cash for a car later in the year and after that I am moving on to a house down payment. My struggle is that going full roth costs me about 300 a month over full traditional. Over the past couple of months, I have come to appreciate the flexibility of cash/taxable investments vs retirement accounts. The longer I go, the more I come to the conclusion that with a savings rate of 30%, I can probably so slow down, prioritize my housing goal and live a little. (Only a little :sharebeer .) So I would think less in terms of maxing the 401k and more in terms of meeting your goals.
In this situation, I'd stay the course with the traditional 401k. There's countless threads here on it, but generally speaking you have to build up your traditional 401k to a certainty of being pretty high (we're talking in excess of $3 million, I think, by the time you're 70, assuming low returns from here until then) so that you fill out all the lower brackets in retirement fully with RMDs/Social Security before the Roth 401k becomes a better option. (At least, that' s my analysis). And you already have a Roth/HSA which will improve the picture even more....and there's the chance to do Roth conversions down the line if you reach a point that it makes sense (and if tax laws haven't changed on that front).

Plus, doing so let's you be secure that you'll enjoy a good retirement while still having money to enjoy the present.
Last edited by Chadnudj on Fri Jul 20, 2018 6:48 am, edited 1 time in total.

Grt2bOutdoors
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by Grt2bOutdoors » Fri Jul 20, 2018 6:41 am

Chadnudj wrote:
Fri Jul 20, 2018 6:33 am
Daedalus wrote:
Sun Jul 15, 2018 5:20 pm
Title says it all. I've already maxed out my Roth IRA in January and am working on trying to max out my 401k as well by the end of 2018. I have never maxed out my 401k before. Just turned 28. My math works out on paper; however, I've come to appreciate the ever changing complexity of life situations in my 20's :D Just curious to see if anyone else here is in the same boat or if any of the elders have words of wisdom to share!
I'm almost 39.

I'll admit -- it's been a bit tough from a cash flow perspective.

But, I tell myself, when I'm 67 (or hopefully much earlier) and have zero worries about money for the rest of our lives, I think I won't even remember the little cash flow stress I had in my mid-30s....
The turning point will come sooner than you think, compounding works in mysterious ways, even after several bad hiccups during my investment period, am surprised by level of growth and I own zero fancy stuff.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Chadnudj
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by Chadnudj » Fri Jul 20, 2018 6:54 am

Grt2bOutdoors wrote:
Fri Jul 20, 2018 6:41 am
The turning point will come sooner than you think, compounding works in mysterious ways, even after several bad hiccups during my investment period, am surprised by level of growth and I own zero fancy stuff.
Amen, friend. It's not just compounding I'm looking forward to (I'm already experiencing that, to some degree, even in the somewhat sideways market of 2018) -- I'm looking forward to the kids going to elementary school instead of daycare (which will be a HUGE boost to our monthly cash flow that we can then invest -- daycare is $3600 a month!), my/my wife's next raises (when you're both maxing out 401ks, raises pretty much are pure raises for you), finishing up a low interest car payment (again, improving cash flow by $600 a month), eventually paying off my student loan debt (around $900 every month), and all the rest. The oldest is just about to turn 4 (but won't start kindergarten until fall 2020), the youngest is just over 1 (so we got some time on him)....but really, if our take home income is JUST BARELY more than our expenses (given the crazy level of our expenses at present) while we max out both our 401ks/build equity by paying down our mortgage/pay down principle on our all-low-interest debt, I think I can live with that for a few years.

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Cycle
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by Cycle » Fri Jul 20, 2018 7:45 am

MichCPA wrote:
Thu Jul 19, 2018 9:01 pm
Daedalus wrote:
Sun Jul 15, 2018 5:20 pm
Title says it all. I've already maxed out my Roth IRA in January and am working on trying to max out my 401k as well by the end of 2018. I have never maxed out my 401k before. Just turned 28. My math works out on paper; however, I've come to appreciate the ever changing complexity of life situations in my 20's :D Just curious to see if anyone else here is in the same boat or if any of the elders have words of wisdom to share!
I am 26 and maxed out my 401k for the first time last year (along with a roth IRA and HSA). My debate this year is whether to hit the max with a roth 401k. I am saving to pay cash for a car later in the year and after that I am moving on to a house down payment. My struggle is that going full roth costs me about 300 a month over full traditional. Over the past couple of months, I have come to appreciate the flexibility of cash/taxable investments vs retirement accounts. The longer I go, the more I come to the conclusion that with a savings rate of 30%, I can probably so slow down, prioritize my housing goal and live a little. (Only a little :sharebeer .) So I would think less in terms of maxing the 401k and more in terms of meeting your goals.
My advice is to max out your 401k and Roth before saving for other stuff like cars/houses. Pay yourself first. I maxed out my Roth/401k from like 23 onward, and at age 35 I now have 580k in those accounts.

We now save 70-75% net, because our house is modest (180k) and so is our car (7k). We use points to travel often. The payoff is that in 10 years we will be able to retire with spending assumptions 4x our current annual spending (this is our goal, comfortable FI).

Grt2bOutdoors
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by Grt2bOutdoors » Fri Jul 20, 2018 7:49 am

Chadnudj wrote:
Fri Jul 20, 2018 6:54 am
Grt2bOutdoors wrote:
Fri Jul 20, 2018 6:41 am
The turning point will come sooner than you think, compounding works in mysterious ways, even after several bad hiccups during my investment period, am surprised by level of growth and I own zero fancy stuff.
Amen, friend. It's not just compounding I'm looking forward to (I'm already experiencing that, to some degree, even in the somewhat sideways market of 2018) -- I'm looking forward to the kids going to elementary school instead of daycare (which will be a HUGE boost to our monthly cash flow that we can then invest -- daycare is $3600 a month!), my/my wife's next raises (when you're both maxing out 401ks, raises pretty much are pure raises for you), finishing up a low interest car payment (again, improving cash flow by $600 a month), eventually paying off my student loan debt (around $900 every month), and all the rest. The oldest is just about to turn 4 (but won't start kindergarten until fall 2020), the youngest is just over 1 (so we got some time on him)....but really, if our take home income is JUST BARELY more than our expenses (given the crazy level of our expenses at present) while we max out both our 401ks/build equity by paying down our mortgage/pay down principle on our all-low-interest debt, I think I can live with that for a few years.
I wouldn't be paying down low-interest mortgage debt if it's strangling you. Sometimes it's not about accumulating all you can, you need to have a certain quality of life, what's the sense of living if you have to be miserable? Send a few dollars less to the prepayment and put it in your savings account instead - when you need it, you have it without having to stress out over it. You're still young!
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Grt2bOutdoors
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by Grt2bOutdoors » Fri Jul 20, 2018 7:51 am

Cycle wrote:
Fri Jul 20, 2018 7:45 am
MichCPA wrote:
Thu Jul 19, 2018 9:01 pm
Daedalus wrote:
Sun Jul 15, 2018 5:20 pm
Title says it all. I've already maxed out my Roth IRA in January and am working on trying to max out my 401k as well by the end of 2018. I have never maxed out my 401k before. Just turned 28. My math works out on paper; however, I've come to appreciate the ever changing complexity of life situations in my 20's :D Just curious to see if anyone else here is in the same boat or if any of the elders have words of wisdom to share!
I am 26 and maxed out my 401k for the first time last year (along with a roth IRA and HSA). My debate this year is whether to hit the max with a roth 401k. I am saving to pay cash for a car later in the year and after that I am moving on to a house down payment. My struggle is that going full roth costs me about 300 a month over full traditional. Over the past couple of months, I have come to appreciate the flexibility of cash/taxable investments vs retirement accounts. The longer I go, the more I come to the conclusion that with a savings rate of 30%, I can probably so slow down, prioritize my housing goal and live a little. (Only a little :sharebeer .) So I would think less in terms of maxing the 401k and more in terms of meeting your goals.
My advice is to max out your 401k and Roth before saving for other stuff like cars/houses. Pay yourself first. I maxed out my Roth/401k from like 23 onward, and at age 35 I now have 580k in those accounts.

We now save 70-75% net, because our house is modest (180k) and so is our car (7k). We use points to travel often. The payoff is that in 10 years we will be able to retire with spending assumptions 4x our current annual spending (this is our goal, comfortable FI).
I'm moving to Minneapolis! You are killing it! :beer
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Cycle
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by Cycle » Fri Jul 20, 2018 8:50 am

A few of easy ways to suffer while you are young in order to hammer on the savings are to have roommates, Airbnb your place, dog sit (Rover). Going carless can also be a massive benfit, but depends on your commute.

I have a coworker who rented three bedrooms in his 4 bedroom home... He was cash flow positive on his house. We rent out the other half of our duplex, which is a similar good deal.

Prior to my wife moving into my first condo, I had a roommate that paid $800/mo for my spare bedroom. My mortgage was $1100.

28fe6
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by 28fe6 » Fri Jul 20, 2018 11:33 am

I used to only contribute the match to my 401k and the reason was that I felt I should put money towards my mortgage and car loan first. Especially since my marginal tax bracket is usually 12% after maxing my HSA.

After doing some bogleheading I had a change of heart and now I think that deferring even 12% taxes is probably superior to saving 3.25% partially-deductible interest. So this is the first year I have bit the bullet and tried to max both 401k and HSA. In fact, if I have anything left over I may direct it to a tIRA. I think the savers credit kicks in for me at some point which was another motivator.

My luck, the market will crash right after I maxed my 401k, but what are you going to do eh.

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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by Chadnudj » Fri Jul 20, 2018 12:26 pm

Grt2bOutdoors wrote:
Fri Jul 20, 2018 7:49 am
Chadnudj wrote:
Fri Jul 20, 2018 6:54 am
Grt2bOutdoors wrote:
Fri Jul 20, 2018 6:41 am
The turning point will come sooner than you think, compounding works in mysterious ways, even after several bad hiccups during my investment period, am surprised by level of growth and I own zero fancy stuff.
Amen, friend. It's not just compounding I'm looking forward to (I'm already experiencing that, to some degree, even in the somewhat sideways market of 2018) -- I'm looking forward to the kids going to elementary school instead of daycare (which will be a HUGE boost to our monthly cash flow that we can then invest -- daycare is $3600 a month!), my/my wife's next raises (when you're both maxing out 401ks, raises pretty much are pure raises for you), finishing up a low interest car payment (again, improving cash flow by $600 a month), eventually paying off my student loan debt (around $900 every month), and all the rest. The oldest is just about to turn 4 (but won't start kindergarten until fall 2020), the youngest is just over 1 (so we got some time on him)....but really, if our take home income is JUST BARELY more than our expenses (given the crazy level of our expenses at present) while we max out both our 401ks/build equity by paying down our mortgage/pay down principle on our all-low-interest debt, I think I can live with that for a few years.
I wouldn't be paying down low-interest mortgage debt if it's strangling you. Sometimes it's not about accumulating all you can, you need to have a certain quality of life, what's the sense of living if you have to be miserable? Send a few dollars less to the prepayment and put it in your savings account instead - when you need it, you have it without having to stress out over it. You're still young!
Sorry -- I'm not prepaying more on mortgage debt. I was just talking about the normal principle that gets paid as part of our normal, 30-year fixed mortgage.

Daedalus
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Joined: Sat Oct 21, 2017 5:22 pm

Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by Daedalus » Sun Jul 22, 2018 4:18 pm

MichCPA wrote:
Thu Jul 19, 2018 9:01 pm
Daedalus wrote:
Sun Jul 15, 2018 5:20 pm
Title says it all. I've already maxed out my Roth IRA in January and am working on trying to max out my 401k as well by the end of 2018. I have never maxed out my 401k before. Just turned 28. My math works out on paper; however, I've come to appreciate the ever changing complexity of life situations in my 20's :D Just curious to see if anyone else here is in the same boat or if any of the elders have words of wisdom to share!
I am 26 and maxed out my 401k for the first time last year (along with a roth IRA and HSA). My debate this year is whether to hit the max with a roth 401k. I am saving to pay cash for a car later in the year and after that I am moving on to a house down payment. My struggle is that going full roth costs me about 300 a month over full traditional. Over the past couple of months, I have come to appreciate the flexibility of cash/taxable investments vs retirement accounts. The longer I go, the more I come to the conclusion that with a savings rate of 30%, I can probably so slow down, prioritize my housing goal and live a little. (Only a little :sharebeer .) So I would think less in terms of maxing the 401k and more in terms of meeting your goals.
That's great! Boy, I'm sure glad to have found the Bogleheads community in my 20s. Just think of how great shape we will be in a decade from now :sharebeer

Daedalus
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Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by Daedalus » Sun Jul 22, 2018 4:21 pm

harrison20 wrote:
Thu Jul 19, 2018 8:42 pm
Do everything you can to max out your 401k at your old employer before leaving. I mean like 80, 90% of your paycheck, then after you leave immediately transfer those funds into a self controlled IRA. Last time I left a job I presented them with the transfer papers on my final day. You don't want to be bound by the paltry investment choices in most 401ks
Yes, I plan to be increasing my 401k at this employer dramatically over the next several months before the transition hits.

Would there be more benefit of rolling everything into an IRA account as opposed to transferring it over to my next employer's 401k plan? I don't know what exactly that plan looks like yet. I'll have to keep the transfer papers in mind when the time comes. Thank you for the heads up insight!

Katietsu
Posts: 1626
Joined: Sun Sep 22, 2013 1:48 am

Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by Katietsu » Sun Jul 22, 2018 4:26 pm

harrison20 wrote:
Thu Jul 19, 2018 8:42 pm
Do everything you can to max out your 401k at your old employer before leaving. I mean like 80, 90% of your paycheck, then after you leave immediately transfer those funds into a self controlled IRA. Last time I left a job I presented them with the transfer papers on my final day. You don't want to be bound by the paltry investment choices in most 401ks
This is not a good idea if you would be eliminating a match at your new employer.

Daedalus
Posts: 35
Joined: Sat Oct 21, 2017 5:22 pm

Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by Daedalus » Sun Jul 22, 2018 4:27 pm

Grt2bOutdoors wrote:
Fri Jul 20, 2018 6:41 am
Chadnudj wrote:
Fri Jul 20, 2018 6:33 am
Daedalus wrote:
Sun Jul 15, 2018 5:20 pm
Title says it all. I've already maxed out my Roth IRA in January and am working on trying to max out my 401k as well by the end of 2018. I have never maxed out my 401k before. Just turned 28. My math works out on paper; however, I've come to appreciate the ever changing complexity of life situations in my 20's :D Just curious to see if anyone else here is in the same boat or if any of the elders have words of wisdom to share!
I'm almost 39.

I'll admit -- it's been a bit tough from a cash flow perspective.

But, I tell myself, when I'm 67 (or hopefully much earlier) and have zero worries about money for the rest of our lives, I think I won't even remember the little cash flow stress I had in my mid-30s....
The turning point will come sooner than you think, compounding works in mysterious ways, even after several bad hiccups during my investment period, am surprised by level of growth and I own zero fancy stuff.
Great perspective. That "turning point" that's right around the corner haha. I know my first few years of investing it was hard to see any progress, but now when I track my progress on graphs it really is eye opening to see how compounding works.

Daedalus
Posts: 35
Joined: Sat Oct 21, 2017 5:22 pm

Re: Anyone Else Here Trying to Max Out 401k for the 1st Time in 2018?

Post by Daedalus » Sun Jul 22, 2018 4:29 pm

Katietsu wrote:
Sun Jul 22, 2018 4:26 pm
harrison20 wrote:
Thu Jul 19, 2018 8:42 pm
Do everything you can to max out your 401k at your old employer before leaving. I mean like 80, 90% of your paycheck, then after you leave immediately transfer those funds into a self controlled IRA. Last time I left a job I presented them with the transfer papers on my final day. You don't want to be bound by the paltry investment choices in most 401ks
This is not a good idea if you would be eliminating a match at your new employer.
Yes, I'll have to keep that in mind as things play out. Keeping a little bit of room available would be beneficial until the end of 2018

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