Maxing out everything?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
RPW25
Posts: 15
Joined: Wed Nov 30, 2016 11:10 am

Maxing out everything?

Post by RPW25 » Mon Jul 22, 2019 9:55 am

So does anyone here max out all of their tax advantaged space?

I'm a well pain professional and I currently max out my 401K and backdoor Roth IRA as does my wife. We do no have access to HSA's. We have a taxable brokerage account also which we put in about 2K per month and we also pay extra on our mortgage which is currently at less than 1/2 my yearly income. We are both rather young. I'm 35 and she is 28 so we have pretty long runways to retirement.

We still have access to:

20K iBonds

20K EEBonds

While my current asset allocation is rather aggressive at 80/20 would it make sense to max these out due to their tax advantages?

Is anyone else doing this?

dicejam
Posts: 25
Joined: Fri Jul 24, 2015 10:07 am

Re: Maxing out everything?

Post by dicejam » Mon Jul 22, 2019 10:45 am

all i can say is Wow!! that is excellent discipline and i am sure you will come out ahead.

While i am nowhere nearly doing as much, i do max out 401ks, HSAs, save about 1k and max out 529s. I have read a bunch on backdoor IRA (56k$ is the limit?) but never done it. my employer offers post tax deduction which i have recently started taking advantage of.

mhalley
Posts: 7651
Joined: Tue Nov 20, 2007 6:02 am

Re: Maxing out everything?

Post by mhalley » Mon Jul 22, 2019 10:57 am

I’m not aware of current bond rates so don’t know if they are a good buy right now. I was stupid and didn’t back up the truck when they were paying 3% many years ago. :oops: EE Bonds are not often recommended here. You might consider munis if you want some bonds in taxable.
I maxed out everything before I retired, 401k, SERP, backdoor roth. Didn’t do the hsa as none was offered until about the time I retired, but have done it since. Never bought the ibonds which I do regret.
Last edited by mhalley on Mon Jul 22, 2019 11:02 am, edited 2 times in total.

pancake19
Posts: 100
Joined: Thu Jan 16, 2014 1:46 pm

Re: Maxing out everything?

Post by pancake19 » Mon Jul 22, 2019 10:59 am

Well pain profession eh, I'd describe my job the same way! A few spaces I have focused my efforts, all of which are definitely "second tier" compared to what you already do.

1. 529 accounts: obvious choice if you plan on having kids but even if you know for certain you won't it's a great way to help out family (nephews/nieces) or save for your own continuing education.

2. Donations: having a taxable account intended for your donations, donating the winners and TLH the losers. Much more efficient than donating cash, and puts more capital to use especially now with the latest SALT changes.

3. I'd consider to paying off the mortgage too, no real benefit to having it sit out there, though I know there are different personal preferences regarding early paydown of lower interest debt.

I assume you already looked into Mega Backdoor Roth but just mentioning it in case you haven't. I'll be monitoring this thread to see what other ideas come out from others!

sschoe2
Posts: 449
Joined: Fri Feb 24, 2017 4:42 pm

Re: Maxing out everything?

Post by sschoe2 » Mon Jul 22, 2019 11:02 am

I max out my t401k and rIRA each year which is 27% of my gross income.

WhiteMaxima
Posts: 2024
Joined: Thu May 19, 2016 5:04 pm

Re: Maxing out everything?

Post by WhiteMaxima » Mon Jul 22, 2019 11:04 am

Don't forget to max your life. Money is not your goal. Use money to better your life is.

User avatar
fortfun
Posts: 2451
Joined: Tue Apr 19, 2016 7:31 pm

Re: Maxing out everything?

Post by fortfun » Mon Jul 22, 2019 11:06 am

We max:
My 401k, 457, roth IRA.
DWs Defined contribution, 403b, 457, HSA, roth IRA.

This is well over 50% of our income but we still manage to have some fun. Just returned from 3 weeks in Galapagos and Inca Trail/Machu Picchu (with two children). Use credit card bonuses to fund flights and basement rental to fund the rest.

We are playing a little catchup and would like to do this as long as possible. Stopped contributing to 529s for now. We do a little after tax but it is psychologically easier for me/us to have it pulled from pay checks, for some reason...

Topic Author
RPW25
Posts: 15
Joined: Wed Nov 30, 2016 11:10 am

Re: Maxing out everything?

Post by RPW25 » Mon Jul 22, 2019 11:08 am

pancake19 wrote:
Mon Jul 22, 2019 10:59 am
1. 529 accounts: obvious choice if you plan on having kids but even if you know for certain you won't it's a great way to help out family (nephews/nieces) or save for your own continuing education

I assume you already looked into Mega Backdoor Roth but just mentioning it in case you haven't. I'll be monitoring this thread to see what other ideas come out from others!
Already maxing our the 529 and have been for a couple of years but still no kiddos yet.

We don’t have access to the mega back door roth sadly.

Topic Author
RPW25
Posts: 15
Joined: Wed Nov 30, 2016 11:10 am

Re: Maxing out everything?

Post by RPW25 » Mon Jul 22, 2019 11:12 am

WhiteMaxima wrote:
Mon Jul 22, 2019 11:04 am
Don't forget to max your life. Money is not your goal. Use money to better your life is.
Oh we've been doing that too. Just bought the wife a new car that we paid for in cash and we're taking a Baltic sea cruise next month... After a safari honeymoon earlier this year.

WhiteMaxima
Posts: 2024
Joined: Thu May 19, 2016 5:04 pm

Re: Maxing out everything?

Post by WhiteMaxima » Mon Jul 22, 2019 11:16 am

RPW25 wrote:
Mon Jul 22, 2019 11:12 am
WhiteMaxima wrote:
Mon Jul 22, 2019 11:04 am
Don't forget to max your life. Money is not your goal. Use money to better your life is.
Oh we've been doing that too. Just bought the wife a new car that we paid for in cash and we're taking a Baltic sea cruise next month... After a safari honeymoon earlier this year.
Get yourself a new Corvette C8 for under 60K (mid engine, suppose excellent handling)

User avatar
1955Chevy
Posts: 44
Joined: Thu Jul 11, 2019 8:30 am
Location: Land of Milk and Honey

Re: Maxing out everything?

Post by 1955Chevy » Mon Jul 22, 2019 11:17 am

Max out the taxable account. :twisted:
"Investment success accrues not so much to the brilliant as to the disciplined." | Bernstein

Topic Author
RPW25
Posts: 15
Joined: Wed Nov 30, 2016 11:10 am

Re: Maxing out everything?

Post by RPW25 » Mon Jul 22, 2019 11:20 am

WhiteMaxima wrote:
Mon Jul 22, 2019 11:16 am
Get yourself a new Corvette C8 for under 60K (mid engine, suppose excellent handling)
Oh man I've been looking at those. I think I'm gonna wait a year or so until they get the kinks worked out. They've only been saying they were gonna put one out for like 15 years...

Also Im more of a pickup truck guy myself. And I have my favorite model right now... paid off.

Topic Author
RPW25
Posts: 15
Joined: Wed Nov 30, 2016 11:10 am

Re: Maxing out everything?

Post by RPW25 » Mon Jul 22, 2019 11:23 am

1955Chevy wrote:
Mon Jul 22, 2019 11:17 am
Max out the taxable account. :twisted:
I've been doing ok with this. I put about 2k a month in VTSMX.

And while I'm against market timing... stocks are a little "high" right now so I've been throwing more pesos at the house because my wife says its our "forever home".

bloom2708
Posts: 6953
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Maxing out everything?

Post by bloom2708 » Mon Jul 22, 2019 11:26 am

Does either employer offer a "Mega Back Door Roth"?

After-tax contributions, converted to Roth. They don't call it "Mega Back Door Roth".

I would divert taxable funds to After-tax if one/both companies offer the Roth conversion.

Our company now does it "daily". Which corresponds to each of 24 pay checks (I think).

How about ESPP for one/both? Buy the max and sell all once they hit your account. Harvest the 10% (or whatever discount %).

Other than those two, looks good to me.
"People want confirmation, not advice" Unknown | "We are here to provoke thoughtfulness, not agree with you" Unknown | Four words. Whole food, plant based. Bing it.

Topic Author
RPW25
Posts: 15
Joined: Wed Nov 30, 2016 11:10 am

Re: Maxing out everything?

Post by RPW25 » Mon Jul 22, 2019 11:29 am

bloom2708 wrote:
Mon Jul 22, 2019 11:26 am
Does either employer offer a "Mega Back Door Roth"?

After-tax contributions, converted to Roth. They don't call it "Mega Back Door Roth".

I would divert taxable funds to After-tax if one/both companies offer the Roth conversion.

Our company now does it "daily". Which corresponds to each of 24 pay checks (I think).

How about ESPP for one/both? Buy the max and sell all once they hit your account. Harvest the 10% (or whatever discount %).

Other than those two, looks good to me.
Nope, nope, nope, nope, and nope to all. I'm a lucky guy but not that lucky.

Lou354
Posts: 635
Joined: Sun Apr 03, 2016 10:51 pm

Re: Maxing out everything?

Post by Lou354 » Mon Jul 22, 2019 11:36 am

We max out I bonds. We're not buying EE bonds because the interest rate is very low and there's insufficient protection against a big jump in inflation and/or interest rates sometime over the next 20 years.

User avatar
Vulcan
Posts: 1025
Joined: Sat Apr 05, 2014 11:43 pm

Re: Maxing out everything?

Post by Vulcan » Mon Jul 22, 2019 11:41 am

pancake19 wrote:
Mon Jul 22, 2019 10:59 am
Well pain profession eh, I'd describe my job the same way!
:D
pancake19 wrote:
Mon Jul 22, 2019 10:59 am
A few spaces I have focused my efforts, all of which are definitely "second tier" compared to what you already do.

1. 529 accounts: obvious choice if you plan on having kids but even if you know for certain you won't it's a great way to help out family (nephews/nieces) or save for your own continuing education.

2. Donations: having a taxable account intended for your donations, donating the winners and TLH the losers. Much more efficient than donating cash, and puts more capital to use especially now with the latest SALT changes.

3. I'd consider to paying off the mortgage too, no real benefit to having it sit out there, though I know there are different personal preferences regarding early paydown of lower interest debt.

I assume you already looked into Mega Backdoor Roth but just mentioning it in case you haven't. I'll be monitoring this thread to see what other ideas come out from others!
I advocate for paying off the mortgage before contributing to 529 to maximize finaid chances (529 balances count as parents assets, home equity in the primary residence does not, except at a very few schools).

Even if one's income is too high to qualify for any right now, that may change, especially if one is in a position to FIRE before sending kids to college (an ideal approach from finaid standpoint).
If you torture the data long enough, it will confess to anything. ~Ronald Coase

grettman
Posts: 460
Joined: Mon Sep 29, 2014 1:47 pm

Re: Maxing out everything?

Post by grettman » Mon Jul 22, 2019 11:42 am

RPW25 wrote:
Mon Jul 22, 2019 9:55 am
So does anyone here max out all of their tax advantaged space?
I see you are new here! Welcome! Most people on the forum I would assume max out all their tax advantage space. (unless they are retired).

anon_investor
Posts: 578
Joined: Mon Jun 03, 2019 1:43 pm

Re: Maxing out everything?

Post by anon_investor » Mon Jul 22, 2019 11:56 am

Nothing wrong with investing in a tax efficient total stock market index fund (e.g. Vanguard's VTSAX). More bonds might not make sense if it messes up your asset allocation.

Personally after maxing out 401k/mega backdoor Roth 401k (limited though because I am a HCE) - spouse does not work; family HSA; backdoor Roth IRA for me/spouse; 529 plans to state tax deduction limit; I dump anything left into my taxable brokerage account.

Topic Author
RPW25
Posts: 15
Joined: Wed Nov 30, 2016 11:10 am

Re: Maxing out everything?

Post by RPW25 » Mon Jul 22, 2019 12:00 pm

Vulcan wrote:
Mon Jul 22, 2019 11:41 am
I advocate for paying off the mortgage before contributing to 529 to maximize finaid chances (529 balances count as parents assets, home equity in the primary residence does not, except at a very few schools).

Even if one's income is too high to qualify for any right now, that may change, especially if one is in a position to FIRE before sending kids to college (an ideal approach from finaid standpoint).

I went ahead and began front loading my 529 because of the asset protection offered in my state.

I love my job and while I might drop to part time I don't think I'll ever FIRE unless I develop a disability.

I have a very expensive disability insurance policy incase that happens.
Last edited by RPW25 on Mon Jul 22, 2019 12:13 pm, edited 1 time in total.

Topic Author
RPW25
Posts: 15
Joined: Wed Nov 30, 2016 11:10 am

Re: Maxing out everything?

Post by RPW25 » Mon Jul 22, 2019 12:07 pm

grettman wrote:
Mon Jul 22, 2019 11:42 am
I see you are new here! Welcome! Most people on the forum I would assume max out all their tax advantage space. (unless they are retired).
Thanks, I've been reading bogleheads since 2011 and registered in 2016 but I just don't post much (obviously).

Also I haven't found it to be the case that those here max out all their tax advantaged space.

The basics like 401K, 457b, and IRA's-- Yes, I bet most do or get close.

The lesser known like iBonds, EEBonds, HSA, 529, and in some cases low cost variable annuities for tax inefficient asset classes-- Most probably don't.

I guess should have been more specific.

Either way this post is turning out to be a pretty good time (for me at least).

Topic Author
RPW25
Posts: 15
Joined: Wed Nov 30, 2016 11:10 am

Re: Maxing out everything?

Post by RPW25 » Mon Jul 22, 2019 12:11 pm

anon_investor wrote:
Mon Jul 22, 2019 11:56 am
Nothing wrong with investing in a tax efficient total stock market index fund (e.g. Vanguard's VTSAX). More bonds might not make sense if it messes up your asset allocation.

Personally after maxing out 401k/mega backdoor Roth 401k (limited though because I am a HCE) - spouse does not work; family HSA; backdoor Roth IRA for me/spouse; 529 plans to state tax deduction limit; I dump anything left into my taxable brokerage account.
It would definitely screw up my 80/20. It would be more like 65/35 at that point. But, I think I would be able to get it back to 80/20 in the first six months of 2020.

I currently have an old solo 401k from when I was an independent contractor that it strictly bonds but it was the best place I could think to put them. I'd like to transition them to stocks at the next correction and use bonds elsewhere.

H-Town
Posts: 2101
Joined: Sun Feb 26, 2017 2:08 pm

Re: Maxing out everything?

Post by H-Town » Mon Jul 22, 2019 12:13 pm

RPW25 wrote:
Mon Jul 22, 2019 9:55 am
So does anyone here max out all of their tax advantaged space?

I'm a well pain professional and I currently max out my 401K and backdoor Roth IRA as does my wife. We do no have access to HSA's. We have a taxable brokerage account also which we put in about 2K per month and we also pay extra on our mortgage which is currently at less than 1/2 my yearly income. We are both rather young. I'm 35 and she is 28 so we have pretty long runways to retirement.

We still have access to:

20K iBonds

20K EEBonds

While my current asset allocation is rather aggressive at 80/20 would it make sense to max these out due to their tax advantages?

Is anyone else doing this?
How much state income tax you're paying? If it's not much, I'd prioritize saving in brokerage account, then paying off mortgage, and then iBonds. You still have a long way to achieve FI. Don't let your foot off the gas. This is the time you can accelerate fast, you gotta take advantage of it.

Topic Author
RPW25
Posts: 15
Joined: Wed Nov 30, 2016 11:10 am

Re: Maxing out everything?

Post by RPW25 » Mon Jul 22, 2019 12:18 pm

H-Town wrote:
Mon Jul 22, 2019 12:13 pm
How much state income tax you're paying? If it's not much, I'd prioritize saving in brokerage account, then paying off mortgage, and then iBonds. You still have a long way to achieve FI. Don't let your foot off the gas. This is the time you can accelerate fast, you gotta take advantage of it.
I pay 5% state income tax. It certainly not terrible but its not nothing either.

I've been throwing everything I had a debt since 2014. Cleared that in 2016 and have been doing basic stuff since.

Im currently just looking for some more advantages or tilt. I want to be super squared away and not leave anything on the table.

Especially if it has asset protection.

DaftInvestor
Posts: 4782
Joined: Wed Feb 19, 2014 10:11 am

Re: Maxing out everything?

Post by DaftInvestor » Mon Jul 22, 2019 12:20 pm

Do you have kids? You didn't mention 529s - that would be the other area to look at.

H-Town
Posts: 2101
Joined: Sun Feb 26, 2017 2:08 pm

Re: Maxing out everything?

Post by H-Town » Mon Jul 22, 2019 12:21 pm

RPW25 wrote:
Mon Jul 22, 2019 12:18 pm
H-Town wrote:
Mon Jul 22, 2019 12:13 pm
How much state income tax you're paying? If it's not much, I'd prioritize saving in brokerage account, then paying off mortgage, and then iBonds. You still have a long way to achieve FI. Don't let your foot off the gas. This is the time you can accelerate fast, you gotta take advantage of it.
I pay 5% state income tax. It certainly not terrible but its not nothing either.

I've been throwing everything I had a debt since 2014. Cleared that in 2016 and have been doing basic stuff since.

Im currently just looking for some more advantages or tilt. I want to be super squared away and not leave anything on the table.

Especially if it has asset protection.
I didn't know iBonds have asset protection. From what I understand, only 401k has such feature.

Topic Author
RPW25
Posts: 15
Joined: Wed Nov 30, 2016 11:10 am

Re: Maxing out everything?

Post by RPW25 » Mon Jul 22, 2019 12:26 pm

DaftInvestor wrote:
Mon Jul 22, 2019 12:20 pm
Do you have kids? You didn't mention 529s - that would be the other area to look at.
None yet but I've been maxing out a 529 for the last two years. I just forgot to mention it.

We're gonna start trying though after the first of the year.

Topic Author
RPW25
Posts: 15
Joined: Wed Nov 30, 2016 11:10 am

Re: Maxing out everything?

Post by RPW25 » Mon Jul 22, 2019 12:27 pm

H-Town wrote:
Mon Jul 22, 2019 12:21 pm
I didn't know iBonds have asset protection. From what I understand, only 401k has such feature.

Its state law specific but to be honest I can't find a good answer for my state.

I do live in a great location from an asset protection outlook. Lots of things are protected here.

DaftInvestor
Posts: 4782
Joined: Wed Feb 19, 2014 10:11 am

Re: Maxing out everything?

Post by DaftInvestor » Mon Jul 22, 2019 12:28 pm

RPW25 wrote:
Mon Jul 22, 2019 12:26 pm
DaftInvestor wrote:
Mon Jul 22, 2019 12:20 pm
Do you have kids? You didn't mention 529s - that would be the other area to look at.
None yet but I've been maxing out a 529 for the last two years. I just forgot to mention it.

We're gonna start trying though after the first of the year.
What do you mean by "maxing out a 529" - are you contributing up to a state deduction or as much as you possibly can (I think some states allow up to $380,000 per year - that's a high max!)?
Personally - I'd wait for the child to be born before putting money in.

gmc4h232
Posts: 354
Joined: Wed Jan 27, 2016 8:11 am

Re: Maxing out everything?

Post by gmc4h232 » Mon Jul 22, 2019 12:34 pm

DaftInvestor wrote:
Mon Jul 22, 2019 12:28 pm
RPW25 wrote:
Mon Jul 22, 2019 12:26 pm
DaftInvestor wrote:
Mon Jul 22, 2019 12:20 pm
Do you have kids? You didn't mention 529s - that would be the other area to look at.
None yet but I've been maxing out a 529 for the last two years. I just forgot to mention it.

We're gonna start trying though after the first of the year.
What do you mean by "maxing out a 529" - are you contributing up to a state deduction or as much as you possibly can (I think some states allow up to $380,000 per year - that's a high max!)?
Personally - I'd wait for the child to be born before putting money in.
I dont think you can max out a 529. You can open multiple accounts to get as much state deduction as your state tax liability at least in VA I believe.

Topic Author
RPW25
Posts: 15
Joined: Wed Nov 30, 2016 11:10 am

Re: Maxing out everything?

Post by RPW25 » Mon Jul 22, 2019 12:34 pm

DaftInvestor wrote:
Mon Jul 22, 2019 12:28 pm
What do you mean by "maxing out a 529" - are you contributing up to a state deduction or as much as you possibly can (I think some states allow up to $380,000 per year - that's a high max!)?
Personally - I'd wait for the child to be born before putting money in.
Sorry about my wording there :oops: . I've been putting the 10K a year as that is what the state will let me deduct from my state income tax. Definitely not putting in 380K or anything like that.
Last edited by RPW25 on Mon Jul 22, 2019 12:35 pm, edited 1 time in total.

anon_investor
Posts: 578
Joined: Mon Jun 03, 2019 1:43 pm

Re: Maxing out everything?

Post by anon_investor » Mon Jul 22, 2019 12:34 pm

RPW25 wrote:
Mon Jul 22, 2019 12:11 pm
anon_investor wrote:
Mon Jul 22, 2019 11:56 am
Nothing wrong with investing in a tax efficient total stock market index fund (e.g. Vanguard's VTSAX). More bonds might not make sense if it messes up your asset allocation.

Personally after maxing out 401k/mega backdoor Roth 401k (limited though because I am a HCE) - spouse does not work; family HSA; backdoor Roth IRA for me/spouse; 529 plans to state tax deduction limit; I dump anything left into my taxable brokerage account.
It would definitely screw up my 80/20. It would be more like 65/35 at that point. But, I think I would be able to get it back to 80/20 in the first six months of 2020.

I currently have an old solo 401k from when I was an independent contractor that it strictly bonds but it was the best place I could think to put them. I'd like to transition them to stocks at the next correction and use bonds elsewhere.
You can find some pretty tax efficient index funds or ETFs (some of Vanguard's mutual funds as nearly as tax efficient as ETFs, like VTSAX or VFIAX) to hold in your taxable account. What bond fund are you currently holding in your old solo 401k? At your age, is there a particular reason you want to hold iBonds or EEBonds vs. an indexed bond fund (e.g. Vanguard's VBTLX)? The indexed bond fund is better to be held in a tax advantaged account (e.g. your 401k). Holding equities in your taxable account has the added benefit of potential tax loss harvesting in a downturn (e.g. exchanging a total US stock market fund for an S&P 500 fund, etc.).

User avatar
GerryL
Posts: 2500
Joined: Fri Sep 20, 2013 11:40 pm

Re: Maxing out everything?

Post by GerryL » Mon Jul 22, 2019 12:36 pm

I got started fairly late (after a rootless youth) and was able to max out retirement accounts whenever I was working. That started with an IRA back in the 80s when the limit was $2000. I was in my 40s when I finally got a job with a 401k and maxed that until I retired 21 years later. Started a Roth IRA as soon as that became available and contributed to that until the last few years when my income made me ineligible. I was also putting $$ aside in a taxable account.

I ended up being one of those people who ended up saving "too much." But no regrets.

PS One of my hobbies in retirement is making sure I don't pay any more in taxes than I need to.

Topic Author
RPW25
Posts: 15
Joined: Wed Nov 30, 2016 11:10 am

Re: Maxing out everything?

Post by RPW25 » Mon Jul 22, 2019 12:44 pm

anon_investor wrote:
Mon Jul 22, 2019 12:34 pm
You can find some pretty tax efficient index funds or ETFs (some of Vanguard's mutual funds as nearly as tax efficient as ETFs, like VTSAX or VFIAX) to hold in your taxable account. What bond fund are you currently holding in your old solo 401k? At your age, is there a particular reason you want to hold iBonds or EEBonds vs. an indexed bond fund (e.g. Vanguard's VBTLX)? The indexed bond fund is better to be held in a tax advantaged account (e.g. your 401k). Holding equities in your taxable account has the added benefit of potential tax loss harvesting in a downturn (e.g. exchanging a total US stock market fund for an S&P 500 fund, etc.).

I hold VBMFX in my old solo401k that I have through Vanguard.

My taxable account is through Vanguard also and holds VTSMX exclusively.

All our work 401K's hold low cost S&P500 indexes.

My main interest in iBonds and EEBonds is that if the government will only let me have a limited amount of a certain financal product it tends to be good for me and bad for the government... Which makes me want it more.

I'm weird about stuff like that.

Topic Author
RPW25
Posts: 15
Joined: Wed Nov 30, 2016 11:10 am

Re: Maxing out everything?

Post by RPW25 » Mon Jul 22, 2019 12:49 pm

GerryL wrote:
Mon Jul 22, 2019 12:36 pm
I got started fairly late (after a rootless youth) and was able to max out retirement accounts whenever I was working. That started with an IRA back in the 80s when the limit was $2000. I was in my 40s when I finally got a job with a 401k and maxed that until I retired 21 years later. Started a Roth IRA as soon as that became available and contributed to that until the last few years when my income made me ineligible. I was also putting $$ aside in a taxable account.

I ended up being one of those people who ended up saving "too much." But no regrets.

PS One of my hobbies in retirement is making sure I don't pay any more in taxes than I need to.
I think as long as you enjoyed your life and don't feel like you missed out on anything then there's no such thing as saving too much.

I have that same hobby but while working :sharebeer

anon_investor
Posts: 578
Joined: Mon Jun 03, 2019 1:43 pm

Re: Maxing out everything?

Post by anon_investor » Mon Jul 22, 2019 1:21 pm

RPW25 wrote:
Mon Jul 22, 2019 12:44 pm
anon_investor wrote:
Mon Jul 22, 2019 12:34 pm
You can find some pretty tax efficient index funds or ETFs (some of Vanguard's mutual funds as nearly as tax efficient as ETFs, like VTSAX or VFIAX) to hold in your taxable account. What bond fund are you currently holding in your old solo 401k? At your age, is there a particular reason you want to hold iBonds or EEBonds vs. an indexed bond fund (e.g. Vanguard's VBTLX)? The indexed bond fund is better to be held in a tax advantaged account (e.g. your 401k). Holding equities in your taxable account has the added benefit of potential tax loss harvesting in a downturn (e.g. exchanging a total US stock market fund for an S&P 500 fund, etc.).

I hold VBMFX in my old solo401k that I have through Vanguard.

My taxable account is through Vanguard also and holds VTSMX exclusively.

All our work 401K's hold low cost S&P500 indexes.

My main interest in iBonds and EEBonds is that if the government will only let me have a limited amount of a certain financal product it tends to be good for me and bad for the government... Which makes me want it more.

I'm weird about stuff like that.
If you really want to hold iBonds and EEBonds that badly, in order to keep your asset allocation, what is preventing you from just selling some of the VBMFX in your Solo 401k and and just buying whatever equity index fund you want (I assume your Vanguard Solo 401k has some good options)? Personally, I would not want to move off my desired asset allocation that much if I did not want/have to, 65/35 is drastically different than 80/20. I am not sure what your re-balancing trigger is, but stick to it.

tesuzuki2002
Posts: 848
Joined: Fri Dec 11, 2015 12:40 pm

Re: Maxing out everything?

Post by tesuzuki2002 » Mon Jul 22, 2019 3:15 pm

Yes I max everything!!

Unfortunately, I am not HSA eligible at the current time.

I hope to get to that point again.. but I may be retired before that happens anyway.

Space above and beyond I've been paying everything off. (Only $37K remaining on the mortgage.)

I'll be 37 this year. Planning to pay the mortgage off at 40 but I'm holding cash and may do it sooner.

User avatar
Watty
Posts: 17609
Joined: Wed Oct 10, 2007 3:55 pm

Re: Maxing out everything?

Post by Watty » Mon Jul 22, 2019 3:41 pm

RPW25 wrote:
Mon Jul 22, 2019 9:55 am
I'm 35 and she is 28 so we have pretty long runways to retirement.

We still have access to:

20K iBonds

20K EEBonds
One disadvantage of iBonds is that they will mature and must be cashed in 30 years when you would be 65 and 58. That could be right when you are in your peak earning years or when you are wanting to do Roth conversions in a low tax bracket. I am not sure how EE bonds work with that.

I really don't like iBonds at the current interest rates unless they are for some special niche use like for education or an emergency fund. The problem is that when they mature in 30 years you will be taxed on the inflation adjustment so you are guaranteed to lose purchasing power after owning them for decades.

Savings bonds also have another drawback in that they are one of the few investments that do not get a stepped up cost basis when they are inherited.

I would invest in a taxable account before I would buy iBonds at the current interest rates.
RPW25 wrote:
Mon Jul 22, 2019 9:55 am
...I currently max out my 401K and backdoor Roth IRA as does my wife.
That is at least $50K a year.

With the additional money it might be time to tip the "now vs later" balance more towards the "now" side and start spending more on yourself. I would be cautious about taking on things that will have ongoing expenses like buying a boat, but doing something like taking cruise or other travel might be reasonable and it would be a one time expense.

One year when I was in my 50s I went to three funerals of people that were about my age. I was not real close to any of them but it does get you thinking about doing things while you can. If you went to a large high school then try to connect with the people from your graduating class to find out where people are now. It is very likely that some of your old classmates have already died or developed lifelong health problems.

This life expectancy calculator is very simplistic but according to it there is about a 13% chance that one of you will not live another 30 years.

https://personal.vanguard.com/us/insigh ... ement-tool

I would suspect that there is even a greater chance that one of you would have major health problems by then too.

If you don't want to do do something like travel more then paying down your mortgage would get you closer to being financially independent since once it is paid off your income needs would be less.

HockeyFan99
Posts: 101
Joined: Wed May 22, 2013 8:53 pm

Re: Maxing out everything?

Post by HockeyFan99 » Mon Jul 22, 2019 4:12 pm

WhiteMaxima wrote:
Mon Jul 22, 2019 11:04 am
Don't forget to max your life. Money is not your goal. Use money to better your life is.
+1

Also echo the other suggestions re: 529 and, if you’ve researched and decide they fit your portfolio, I bonds.

After extensive discussion on this forum we opted against EE, but some people on here do like them.
"I'm spending a year dead for tax reasons." - Hotblack Desiato

Post Reply