Low 401k balance

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psh
Posts: 18
Joined: Sat Feb 08, 2020 3:56 am

Low 401k balance

Post by psh » Fri Feb 14, 2020 3:18 pm

We're a family of 4 in bay area. Both work. Together we make 600k (450 me-150 her). I'm 43. Have about 400k left in my 30 yr, 3.25% interest mortgage (house value $1M). Call me stupid. I started investing in 401k (maxed out) only about 4-6 years back. My current 401k balance is only 170k. Despicable! I know. I've started looking into Roth IRA and other alternatives. I invest in 529 as well. I've about 460k worth of investments in my taxable account (80-20 split between stocks and bonds). We do plan to buy a new home as well. What are my options to improve my retirement income?

Past threads I created here for reference.
1. viewtopic.php?f=1&t=303624
2. viewtopic.php?f=1&t=303194

bloom2708
Posts: 7216
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Low 401k balance

Post by bloom2708 » Fri Feb 14, 2020 3:33 pm

Does your 401k offer post-tax with Roth Conversion?

You keep saving post-tax and the plan converts the amounts to Roth 401k. When you are done working your pre-tax goes to a Traditional Rollover IRA and your Roth 401k goes to your Roth IRA. It is called Mega Back Door Roth.

Family HSA if you have a HDHP?

Are you doing back door Roth IRA for both each year? This is completely separate from work based post-tax/Roth conversion. 2019 is "open" for $6k each if you haven't filed your taxes yet. 2020 is open for $6k each.

A rolling buy/sell ESPP is a way to harvest the 10% difference.

After all your tax-advantaged space, then taxable investing at Vanguard/Fidelity/Schwab is next up. In CA you could use Total stock indexes and a mix of CA muni bond index + National muni bond index to avoid the high tax income.

No magic answers. Know how you can save and increase your savings rate. Not always easy even with huge salaries. Taxes and big houses and cars nibble at the paycheck.
"People want confirmation, not advice" Unknown | "We are here to provoke thoughtfulness, not agree with you" Unknown | Four words: Whole food, plant based

mhalley
Posts: 7873
Joined: Tue Nov 20, 2007 6:02 am

Re: Low 401k balance

Post by mhalley » Fri Feb 14, 2020 3:41 pm

It’s very common for people to start getting sErious about retirement savings in their 40s. You have a small hole but a Very large shovel. 600k income should mean that you can max out your 401k, Hsa and backdoor Roth, plus save a fair amount in taxable. How much you will have in retirement is directly related to how much you save. Check out MMM post on the simple math.
https://www.mrmoneymustache.com/2012/01 ... etirement/
Last edited by mhalley on Fri Feb 14, 2020 3:46 pm, edited 2 times in total.

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Wiggums
Posts: 2741
Joined: Thu Jan 31, 2019 8:02 am

Re: Low 401k balance

Post by Wiggums » Fri Feb 14, 2020 3:44 pm

psh wrote:
Fri Feb 14, 2020 3:18 pm
We're a family of 4 in bay area. Both work. Together we make 600k (450 me-150 her). I'm 43. Have about 400k left in my 30 yr, 3.25% interest mortgage (house value $1M). Call me stupid. I started investing in 401k (maxed out) only about 4-6 years back. My current 401k balance is only 170k. Despicable! I know. I've started looking into Roth IRA and other alternatives. I invest in 529 as well. I've about 460k worth of investments in my taxable account (80-20 split between stocks and bonds). We do plan to buy a new home as well. What are my options to improve my retirement income?

Past threads I created here for reference.
1. viewtopic.php?f=1&t=303624
2. viewtopic.php?f=1&t=303194
What are my options to improve my retirement income?

Your savings rate and time in the market. I don’t know what your retirement goals are in terms of income, but this might be a good time to look at your expenses to validate that you are diverting the right amount to your retirement savings goal. I’m sure you have high expenses, but you also have a high income to work with. It should be an easy choice between spending now or saving for retirement.

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