California, TC 185, YoE 6, 80k savings/investments, 70k Retirement accounts. Currently I only contribute the minimum in my 401k to get the employer match (5k/yr). Is it worth it for the reduction is tax liability to contribute the whole 19k? I know it’s small amounts but personally I’d rather save the extra 14k towards a house down payment, or even just a trading account in fidelity Thanks, #personalfinance
Max out your 401k. This is the time it matters most with compound interest, full stop. Also if you’re worried about locking, there are ways around that (google Roth ladder) or you can always withdraw or loan from it in an emergency, just at a penalty.
this👆I wish someone would have told me this at YOE 6
I don’t know your entire situation or if you have a family to support, but if not, given your TC, you should be able to max out your 401k and still save significantly for a down pmt. Use a budget app to map out your expenses and see where your money is going each month..
Owning property (in CA) is probably a financial trap unless you can get a deal and make a payment less than equal to rent.
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I’ve always thought it’s best to max your 401k early in your career so at a point in your 40s you theoretically have 500k+ in there and can stop investing it it all together as it will have more than enough time (20+ years) to grow and with historical gains you’d be looking at over 2m by the time you can pull money out without a penalty...of course you want to balance that strategy with the reality that not everyone makes it to 65 and why deprive yourself of what you want in your best years...
I feel like locking up until 65 is the biggest deterrent. Im exaggerating a bit but I feel like I’d almost rather have even 250k at 35 than 2m at 65