You can split … By my napkin math, until your investments make +100% gains, your taxes/after-tax returns are similar between a trad 401k and a roth 401k (also depending on income bracket but I'm ignoring a couple factors for simplicity's sake). I count my blessings as I have reached the point where I max my Fidelity 401k each year and also max my Vanguard Roth IRA on January 1st. Also, if and when you do leave your job, I would recommend rolling over your 401(k) into your Roth IRA. /*# sourceMappingURL=https://www.redditstatic.com/desktop2x/chunkCSS/ReredditLink.f7b66a91705891e84a09.css.map*/It’s much harder to adjust to a lower paycheck than it is to adjust to a higher one later. So, how to allocate retirement funds is a common question.If you can afford to max out both, here are the contribution limits for 2018: Do you have less than $500k already invested in traditional accounts (all 401k and IRA)? Just remember to take some time to enjoy stuff every now and then. Started a Roth IRA with vanguard and plan to max 2020 and 2021 with Majority VTSAX and maybe some VTIAX. /*# sourceMappingURL=https://www.redditstatic.com/desktop2x/chunkCSS/TopicLinksContainer.361933014be843c79476.css.map*/._2ppRhKEnnVueVHY_G-Ursy{-ms-flex-align:center;align-items:center;display:-ms-flexbox;display:flex;margin:22px 0 0;min-height:200px;overflow:hidden;position:relative}._2KLA5wMaJBHg0K2z1q0ci_{margin:0 -7px -8px}._1zdLtEEpuWI_Pnujn1lMF2{bottom:0;position:absolute;right:52px}._3s18OZ_KPHs2Ei416c7Q1l{margin:0 0 22px;position:relative}.LJjFa8EhquYX8xsTnb9n-{filter:grayscale(40%);position:absolute;top:11px}._2Zjw1QfT_iMHH7rfaGsfBs{-ms-flex-align:center;align-items:center;background:linear-gradient(180deg,rgba(0,121,211,.24),rgba(0,121,211,.12));border-radius:50%;display:-ms-flexbox;display:flex;height:25px;-ms-flex-pack:center;justify-content:center;margin:0 auto;width:25px}._2gaJVJ6_j7vwKV945EABN9{background-color:var(--newCommunityTheme-button);border-radius:50%;height:15px;width:15px;z-index:1} I literally tracked every expense I had, no vacations or partying outside or anything like that. ._37coyt0h8ryIQubA7RHmUc{margin-top:12px;padding-top:12px}._2XJvPvYIEYtcS4ORsDXwa3{border-radius:100%;box-sizing:border-box;-ms-flex:none;flex:none;margin-right:8px}._2Vkdik1Q8k0lBEhhA_lRKE{height:54px;width:54px}.eGjjbHtkgFc-SYka3LM3M,._2Vkdik1Q8k0lBEhhA_lRKE{border-radius:100%;box-sizing:border-box;-ms-flex:none;flex:none;margin-right:8px;background-position:50%;background-repeat:no-repeat;background-size:100%}.eGjjbHtkgFc-SYka3LM3M{height:36px;width:36px}.j9k2MUR13FjoBBeLo1C1m{-ms-flex-align:center;align-items:center;display:-ms-flexbox;display:flex;margin-top:13px;margin-bottom:2px}._3Evl5aOozId3QVjs7iry2c{font-size:12px;font-weight:400;line-height:16px;margin-right:4px;margin-left:4px}._1qhTBEK-QmJbvMP4ckhAbh{border-radius:4px;box-sizing:border-box;height:21px;width:21px}._1qhTBEK-QmJbvMP4ckhAbh:nth-child(2),._1qhTBEK-QmJbvMP4ckhAbh:nth-child(3){margin-left:-9px}._3nzVPnRRnrls4DOXO_I0fn{margin:auto 0 auto auto;padding-top:10px;vertical-align:middle}._3nzVPnRRnrls4DOXO_I0fn ._1LAmcxBaaqShJsi8RNT-Vp i{color:unset}._2bWoGvMqVhMWwhp4Pgt4LP{margin:16px 0;font-size:12px;font-weight:400;line-height:16px}.tWeTbHFf02PguTEonwJD0{font-size:16px;margin-right:4px}._2AbGMsrZJPHrLm9e-oyW1E{width:180px;text-align:center}._1cB7-TWJtfCxXAqqeyVb2q{cursor:pointer;vertical-align:text-bottom;margin-left:6px;height:14px;fill:#dadada}.hpxKmfWP2ZiwdKaWpefMn{background-color:var(--newCommunityTheme-active);background-size:cover;background-image:var(--newCommunityTheme-banner-backgroundImage);background-position-y:center;background-position-x:center;background-repeat:no-repeat;border-radius:3px 3px 0 0;height:34px;margin:-12px -12px 10px}._20Kb6TX_CdnePoT8iEsls6{-ms-flex-align:center;align-items:center;display:-ms-flexbox;display:flex;margin-bottom:8px}._20Kb6TX_CdnePoT8iEsls6>*{display:inline-block;vertical-align:middle}.t9oUK2WY0d28lhLAh3N5q{margin-top:-23px}._2KqgQ5WzoQRJqjjoznu22o{display:inline-block;-ms-flex-negative:0;flex-shrink:0;position:relative}._2D7eYuDY6cYGtybECmsxvE{-ms-flex:1 1 auto;flex:1 1 auto;overflow:hidden;text-overflow:ellipsis}._2D7eYuDY6cYGtybECmsxvE:hover{text-decoration:underline}._19bCWnxeTjqzBElWZfIlJb{font-size:16px;font-weight:500;line-height:20px;display:inline-block}._2TC7AdkcuxFIFKRO_VWis8{margin-left:10px;margin-top:30px}._2TC7AdkcuxFIFKRO_VWis8._35WVFxUni5zeFkPk7O4iiB{margin-top:35px}._7kAMkb9SAVF8xJ3L53gcW{display:-ms-flexbox;display:flex;margin-bottom:8px}._7kAMkb9SAVF8xJ3L53gcW>*{-ms-flex:auto;flex:auto}._1LAmcxBaaqShJsi8RNT-Vp{padding:0 2px 0 4px;vertical-align:middle}._3_HlHJ56dAfStT19Jgl1bF,.nEdqRRzLEN43xauwtgTmj{padding-right:4px}._3_HlHJ56dAfStT19Jgl1bF{padding-left:16px}._2QZ7T4uAFMs_N83BZcN-Em{font-family:Noto Sans,Arial,sans-serif;font-size:14px;font-weight:400;line-height:18px;display:-ms-flexbox;display:flex;-ms-flex-flow:row nowrap;flex-flow:row nowrap}._19sQCxYe2NApNbYNX5P5-L{cursor:default;height:16px;margin-right:8px;width:16px}._3XFx6CfPlg-4Usgxm0gK8R{font-size:16px;font-weight:500;line-height:20px}._34InTQ51PAhJivuc_InKjJ{color:var(--newCommunityTheme-actionIcon)}._29_mu5qI8E1fq6Uq5koje8{font-size:12px;font-weight:500;line-height:16px;display:inline-block;word-break:break-word}._2BY2-wxSbNFYqAy98jWyTC{margin-top:10px}._3sGbDVmLJd_8OV8Kfl7dVv{font-family:Noto Sans,Arial,sans-serif;font-size:14px;font-weight:400;line-height:21px;margin-top:8px;word-wrap:break-word}._1qiHDKK74j6hUNxM0p9ZIp{margin-top:12px}.isNotInButtons2020 ._1eMniuqQCoYf3kOpyx83Jj{display:-ms-flexbox;display:flex;width:100%;-ms-flex-pack:center;justify-content:center;margin-bottom:8px}.isNotInButtons2020 ._326PJFFRv8chYfOlaEYmGt{display:-ms-flexbox;display:flex}.isNotInButtons2020 .Jy6FIGP1NvWbVjQZN7FHA,.isNotInButtons2020 ._326PJFFRv8chYfOlaEYmGt{width:100%;font-size:14px;font-weight:700;letter-spacing:.5px;line-height:32px;text-transform:uppercase;-ms-flex-pack:center;justify-content:center;padding:0 16px}.isNotInButtons2020 .Jy6FIGP1NvWbVjQZN7FHA{display:block;margin-top:11px}.isNotInButtons2020 ._1cDoUuVvel5B1n5wa3K507{display:block;padding:0 16px;width:100%;font-size:14px;font-weight:700;letter-spacing:.5px;line-height:32px;text-transform:uppercase;-ms-flex-pack:center;justify-content:center;margin-top:11px;text-transform:unset}.isInButtons2020 .Jy6FIGP1NvWbVjQZN7FHA,.isInButtons2020 ._326PJFFRv8chYfOlaEYmGt,.isInButtons2020 ._1eMniuqQCoYf3kOpyx83Jj,.isInButtons2020 ._1cDoUuVvel5B1n5wa3K507{-ms-flex-pack:center;justify-content:center;margin-top:12px;width:100%}.isInButtons2020 ._1eMniuqQCoYf3kOpyx83Jj{margin-bottom:8px}._2_w8DCFR-DCxgxlP1SGNq5{margin-right:4px;vertical-align:middle}._1aS-wQ7rpbcxKT0d5kjrbh{border-radius:4px;display:inline-block;padding:4px}._2cn386lOe1A_DTmBUA-qSM{border-top:1px solid var(--newCommunityTheme-widgetColors-lineColor);margin-top:10px}._2Zdkj7cQEO3zSGHGK2XnZv{display:inline-block}.wzFxUZxKK8HkWiEhs0tyE{font-size:12px;font-weight:700;line-height:16px;color:var(--newCommunityTheme-button);cursor:pointer;text-align:left;margin-top:2px}._3R24jLERJTaoRbM_vYd9v0._3R24jLERJTaoRbM_vYd9v0._3R24jLERJTaoRbM_vYd9v0{display:none}._38lwnrIpIyqxDfAF1iwhcV{background-color:var(--newRedditTheme-line);border:none;height:1px;margin:16px 0}.yobE-ux_T1smVDcFMMKFv{font-size:16px;font-weight:500;line-height:20px}._2DVpJZAGplELzFy4mB0epQ{margin-top:8px}._2DVpJZAGplELzFy4mB0epQ .x1f6lYW8eQcUFu0VIPZzb{color:inherit}._2DVpJZAGplELzFy4mB0epQ svg.LTiNLdCS1ZPRx9wBlY2rD{fill:inherit;padding-right:8px}._2DVpJZAGplELzFy4mB0epQ ._18e78ihYD3tNypPhtYISq3{font-family:Noto Sans,Arial,sans-serif;font-size:14px;font-weight:400;line-height:18px;color:inherit} Your income will be the main factor. In the real world we all need to make financial choices. All ER were between .92 and 1.06%. Max out any employer match on 401k (free money) Max Roth IRA. Edit: or IRA as this may have lower expense ratio … The Roth is better if you are temporarily in a lower tax bracket, like when you are young at just starting out or when you are underemployed or unemployed for part of the year. ._1PeZajQI0Wm8P3B45yshR{fill:var(--newCommunityTheme-actionIcon)}._1PeZajQI0Wm8P3B45yshR._3axV0unm-cpsxoKWYwKh2x{fill:#ea0027} Regarding (2), you can always take out contributions from your Roth IRA, and there are ways to take out early distributions from your retirement accounts without tax consequences that you can research or ask a CPA/accountant about. You make more money by maxing out a Roth IRA at 21 than someone maxing it out at 25. However, most people would recommend first contributing enough to get the full 401(k) match, then maxing out the $6K Roth IRA, and then continuing to fund the 401(k) with any additional money you have leftover (up to the $19K). .Rd5g7JmL4Fdk-aZi1-U_V{transition:all .1s linear 0s}._2TMXtA984ePtHXMkOpHNQm{font-size:16px;font-weight:500;line-height:20px;margin-bottom:4px}.CneW1mCG4WJXxJbZl5tzH{border-top:1px solid var(--newRedditTheme-line);margin-top:16px;padding-top:16px}._11ARF4IQO4h3HeKPpPg0xb{transition:all .1s linear 0s;display:none;fill:var(--newCommunityTheme-button);height:16px;width:16px;vertical-align:middle;margin-bottom:2px;margin-left:4px;cursor:pointer}._1I3N-uBrbZH-ywcmCnwv_B:hover ._11ARF4IQO4h3HeKPpPg0xb{display:inline-block}._2IvhQwkgv_7K0Q3R0695Cs{border-radius:4px;border:1px solid var(--newCommunityTheme-line)}._2IvhQwkgv_7K0Q3R0695Cs:focus{outline:none}._1I3N-uBrbZH-ywcmCnwv_B{transition:all .1s linear 0s;border-radius:4px;border:1px solid var(--newCommunityTheme-line)}._1I3N-uBrbZH-ywcmCnwv_B:focus{outline:none}._1I3N-uBrbZH-ywcmCnwv_B.IeceazVNz_gGZfKXub0ak,._1I3N-uBrbZH-ywcmCnwv_B:hover{border:1px solid var(--newCommunityTheme-button)}._35hmSCjPO8OEezK36eUXpk._35hmSCjPO8OEezK36eUXpk._35hmSCjPO8OEezK36eUXpk{margin-top:25px;left:-9px}._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP,._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP:focus-within,._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP._3aEIeAgUy9VfJyRPljMNJP:hover{transition:all .1s linear 0s;border:none;padding:8px 8px 0}._25yWxLGH4C6j26OKFx8kD5{display:inline}._2YsVWIEj0doZMxreeY6iDG{font-size:12px;font-weight:400;line-height:16px;color:var(--newCommunityTheme-metaText);display:-ms-flexbox;display:flex;padding:4px 6px}._1hFCAcL4_gkyWN0KM96zgg{color:var(--newCommunityTheme-button);margin-right:8px;margin-left:auto;color:var(--newCommunityTheme-errorText)}._1hFCAcL4_gkyWN0KM96zgg,._1dF0IdghIrnqkJiUxfswxd{font-size:12px;font-weight:700;line-height:16px;cursor:pointer;-ms-flex-item-align:end;align-self:flex-end;-webkit-user-select:none;-ms-user-select:none;user-select:none}._1dF0IdghIrnqkJiUxfswxd{color:var(--newCommunityTheme-button)}._3VGrhUu842I3acqBMCoSAq{font-weight:700;color:#ff4500;text-transform:uppercase;margin-right:4px}._3VGrhUu842I3acqBMCoSAq,.edyFgPHILhf5OLH2vk-tk{font-size:12px;line-height:16px}.edyFgPHILhf5OLH2vk-tk{font-weight:400;-ms-flex-preferred-size:100%;flex-basis:100%;margin-bottom:4px;color:var(--newCommunityTheme-metaText)}._19lMIGqzfTPVY3ssqTiZSX._19lMIGqzfTPVY3ssqTiZSX._19lMIGqzfTPVY3ssqTiZSX{margin-top:6px}._19lMIGqzfTPVY3ssqTiZSX._19lMIGqzfTPVY3ssqTiZSX._19lMIGqzfTPVY3ssqTiZSX._3MAHaXXXXi9Xrmc_oMPTdP{margin-top:4px} I want to retire early. Once you've maxed out your HSA, see if you qualify to contribute to a Roth IRA. While the conventional wisdom is that you never want to tap a retirement account for anything other than retirement, if your only other option is to put the money in a low-yielding and/or taxable account, you may as well give yourself the option of saving it for retirement until a higher priority comes along. Your wording is a little unclear so I’ll just say this in case you don’t know to potentially save you a headache: Once you max out your 2020 and 2021 Roth IRAs, you can’t contribute to any IRA — Traditional or Roth — until 2022. During your main working years, traditional IRAs and traditional 401Ks are typically better. Careful - You can only contribute $6000 max per year to any IRA (traditional and/or Roth) if you're under 50 years old. A Roth IRA is a great place to store funds that OP may eventually want/need to tap into for emergencies, vacations, house purchases, kids, etc. I make about 43k yearly if that helps. Reducing your taxes is free money too. The thought process is that it allows me to take money out tax-free during big spending years in retirement and the … I understand best by reading examples of hypothetical scenarios. Which is why it might make sense to try to max out retirement contributions as early in the year is possible, assuming you have the means to do so. To add to this, there’s one key element of the “the only difference is the tax rate” analysis. ._1zyZUfB30L-DDI98CCLJlQ{border:1px solid transparent;display:block;padding:0 16px;width:100%;border:1px solid var(--newCommunityTheme-body);border-radius:4px;box-sizing:border-box}._1zyZUfB30L-DDI98CCLJlQ:hover{background-color:var(--newCommunityTheme-primaryButtonTintedEighty)}._1zyZUfB30L-DDI98CCLJlQ._2FebEA49ReODemDlwzYHSR,._1zyZUfB30L-DDI98CCLJlQ:active,._1zyZUfB30L-DDI98CCLJlQ:hover{color:var(--newCommunityTheme-bodyText);fill:var(--newCommunityTheme-bodyText)}._1zyZUfB30L-DDI98CCLJlQ._2FebEA49ReODemDlwzYHSR,._1zyZUfB30L-DDI98CCLJlQ:active{background-color:var(--newCommunityTheme-primaryButtonShadedEighty)}._1zyZUfB30L-DDI98CCLJlQ:disabled,._1zyZUfB30L-DDI98CCLJlQ[data-disabled],._1zyZUfB30L-DDI98CCLJlQ[disabled]{background-color:var(--newCommunityTheme-primaryButtonTintedFifty);color:rgba(var(--newCommunityTheme-bodyText),.5);fill:rgba(var(--newCommunityTheme-bodyText),.5);cursor:not-allowed}._1zyZUfB30L-DDI98CCLJlQ:active,._1zyZUfB30L-DDI98CCLJlQ:disabled,._1zyZUfB30L-DDI98CCLJlQ:hover,._1zyZUfB30L-DDI98CCLJlQ[data-disabled],._1zyZUfB30L-DDI98CCLJlQ[disabled]{border:1px solid var(--newCommunityTheme-body)}._1O2i-ToERP3a0i4GSL0QwU,._1uBzAtenMgErKev3G7oXru{display:block;fill:var(--newCommunityTheme-body);height:22px;width:22px}._1O2i-ToERP3a0i4GSL0QwU._2ilDLNSvkCHD3Cs9duy9Q_,._1uBzAtenMgErKev3G7oXru._2ilDLNSvkCHD3Cs9duy9Q_{height:14px;width:14px}._2kBlhw4LJXNnk73IJcwWsT,._1kRJoT0CagEmHsFjl2VT4R{height:24px;padding:0;width:24px}._2kBlhw4LJXNnk73IJcwWsT._2ilDLNSvkCHD3Cs9duy9Q_,._1kRJoT0CagEmHsFjl2VT4R._2ilDLNSvkCHD3Cs9duy9Q_{height:14px;width:14px}._3VgTjAJVNNV7jzlnwY-OFY{font-size:14px;line-height:32px;padding:0 16px}._3VgTjAJVNNV7jzlnwY-OFY,._3VgTjAJVNNV7jzlnwY-OFY._2ilDLNSvkCHD3Cs9duy9Q_{font-weight:700;letter-spacing:.5px;text-transform:uppercase}._3VgTjAJVNNV7jzlnwY-OFY._2ilDLNSvkCHD3Cs9duy9Q_{font-size:12px;line-height:24px;padding:4px 9px 2px;width:100%}._2QmHYFeMADTpuXJtd36LQs{font-size:14px;line-height:32px;padding:0 16px}._2QmHYFeMADTpuXJtd36LQs,._2QmHYFeMADTpuXJtd36LQs._2ilDLNSvkCHD3Cs9duy9Q_{font-weight:700;letter-spacing:.5px;text-transform:uppercase}._2QmHYFeMADTpuXJtd36LQs._2ilDLNSvkCHD3Cs9duy9Q_{font-size:12px;line-height:24px;padding:4px 9px 2px;width:100%}._2QmHYFeMADTpuXJtd36LQs:hover ._31L3r0EWsU0weoMZvEJcUA{display:none}._2QmHYFeMADTpuXJtd36LQs ._31L3r0EWsU0weoMZvEJcUA,._2QmHYFeMADTpuXJtd36LQs:hover ._11Zy7Yp4S1ZArNqhUQ0jZW{display:block}._2QmHYFeMADTpuXJtd36LQs ._11Zy7Yp4S1ZArNqhUQ0jZW{display:none}._2CLbCoThTVSANDpeJGlI6a{width:100%}._2CLbCoThTVSANDpeJGlI6a:hover ._31L3r0EWsU0weoMZvEJcUA{display:none}._2CLbCoThTVSANDpeJGlI6a ._31L3r0EWsU0weoMZvEJcUA,._2CLbCoThTVSANDpeJGlI6a:hover ._11Zy7Yp4S1ZArNqhUQ0jZW{display:block}._2CLbCoThTVSANDpeJGlI6a ._11Zy7Yp4S1ZArNqhUQ0jZW{display:none} I’ve kind of assumed Roth was usually always better simple because your not getting taxed on the Growth portion of your money which is usually the point of your 401ks. I just did what you are doing right now. Where do you intend on retiring and how are you doing with your housing? And don’t worry, you will be able to access your 401K funds in early retirement by doing a backdoor Roth conversion ladder (google it). Are there any fees or penalties? Both of these reduce your taxable income. r/financialindependence is a sub that may interest you. The income limits for the Roth IRA apply only to Roth IRA contributions, so you could still contribute to a traditional IRA up to the $6,000 (or $7,000) limit. It may not be a good idea to do it, but it is possible; Pre-tax 401k - under current rules, you MAY be able to take 'substantially equal installments" over a period certain or based on life-expectancy without penalty (yes, there will be taxes). Start out maxing both... it takes 2 seconds to change your IRA contribution amount. A 401(k) allows you to put in money tax-free, grow tax free, and then is taxed when you withdraw in retirement. My question is after I max out 2021 Roth IRA. TLDR: I want to make enough money so I can leave my day job and pursue something I am passionate about without feeling the financial burden. My company has a Roth or traditional 401k … Am I allowed to max both the 401(k) and the Roth IRA; putting in $25,000 annually? /*# sourceMappingURL=https://www.redditstatic.com/desktop2x/chunkCSS/IdCard.0f76af1b61e8e247d28f.css.map*/._2JU2WQDzn5pAlpxqChbxr7{height:16px;margin-right:8px;width:16px}._3E45je-29yDjfFqFcLCXyH{margin-top:16px}._13YtS_rCnVZG1ns2xaCalg{font-family:Noto Sans,Arial,sans-serif;font-size:14px;font-weight:400;line-height:18px;display:-ms-flexbox;display:flex}._1m5fPZN4q3vKVg9SgU43u2{margin-top:12px}._17A-IdW3j1_fI_pN-8tMV-{display:inline-block;margin-bottom:8px;margin-right:5px}._5MIPBF8A9vXwwXFumpGqY{border-radius:20px;font-size:12px;font-weight:500;letter-spacing:0;line-height:16px;padding:3px 10px;text-transform:none}._5MIPBF8A9vXwwXFumpGqY:focus{outline:unset} You can also just invest in mutual funds outside of structured retirement accounts and consider that your “bridge retirement.” You’ll use that money for the years between your early retirement and when you can access your 401k and IRAs without penalty. For 2021, you can contribute up to $6,000 to a Roth IRA, or $7,000 if you’re age 50 or older. Initially, I'm a firm believer that you need to enjoy life while you're young enough to do so. Open a brokerage account. So, in short, save as much as you can at a young age, find the right balance between long-term plans and short-term cash needs, and learn as you go. Regarding (1), you can in theory max out both accounts. ._33axOHPa8DzNnTmwzen-wO{display:block;padding:0 16px;width:100%}.isNotInButtons2020 ._33axOHPa8DzNnTmwzen-wO{font-size:14px;font-weight:700;letter-spacing:.5px;line-height:32px;text-transform:uppercase} ._1x9diBHPBP-hL1JiwUwJ5J{font-size:14px;font-weight:500;line-height:18px;color:#ff585b;padding-left:3px;padding-right:24px}._2B0OHMLKb9TXNdd9g5Ere-,._1xKxnscCn2PjBiXhorZef4{height:16px;padding-right:4px;vertical-align:top}._1LLqoNXrOsaIkMtOuTBmO5{height:20px;padding-right:8px;vertical-align:bottom}.QB2Yrr8uihZVRhvwrKuMS{height:18px;padding-right:8px;vertical-align:top}._3w_KK8BUvCMkCPWZVsZQn0{font-size:14px;font-weight:500;line-height:18px;color:var(--newCommunityTheme-actionIcon)}._3w_KK8BUvCMkCPWZVsZQn0 ._1LLqoNXrOsaIkMtOuTBmO5,._3w_KK8BUvCMkCPWZVsZQn0 ._2B0OHMLKb9TXNdd9g5Ere-,._3w_KK8BUvCMkCPWZVsZQn0 ._1xKxnscCn2PjBiXhorZef4,._3w_KK8BUvCMkCPWZVsZQn0 .QB2Yrr8uihZVRhvwrKuMS{fill:var(--newCommunityTheme-actionIcon)} As for retiring early, there are ways to access these accounts down the road: Roth IRA - you can always take out your contributions 'basis' without tax or penalty, at any time, and at any age. Let me know your thoughts. The reasoning: traditional is better for tax advantaged purposes, but with greater than $500k of traditional assets there is likelihood that you will be approaching the 20% tax rate upon withdrawal anyway, so it loses relevance. Although you are young and feel invincible, you don't know how long you will actually live for. Would I be better starting a traditional IRA through vanguard and just pumping money through VTSAX or increase my 401k option? As with many things in life, find the right balance with your assets and investments, and don't tap into the retirement accounts for when 'hard times' come your way. ._2YJDRz5rCYQfu8YdgB_neb{overflow:hidden;position:relative}._2YJDRz5rCYQfu8YdgB_neb:before{background-image:url(https://www.redditstatic.com/desktop2x/img/reddit_pattern.png);content:"";filter:var(--newCommunityTheme-invertFilter);height:100%;position:absolute;width:100%}._37WD6iicVS6vGN0RomNTwh{padding:0 12px 12px;position:relative} 401K up to match I just did what you expect in retirement ”! Keyboard shortcuts, https: //www.bogleheads.org/wiki/Prioritizing_investments I can get some VTIAX then is the tax is..., max out 401k or roth ira reddit what does that mean exactly out your 401 ( k ) and contribute $ 19,000 a year also! Us will be taxes, so we ca n't really say which better. My family until I 'm a newbie and I appreciate all the help I can get retirement, ” does. 3 mil with 3 % but an extra mil takes some time to enjoy stuff every and. Doing with your housing enough for an emergency fund new comments can not make any contributions to a 401. Any tip is a great idea 401k first on your tax deferred / tax accounts. In VTI or VXUS in my company ’ s just a question taxes! Get on top of your finances have exact numbers on me right now but growth of! It was around 40k ) for the year can not exceed $ 6k in Roth... To access your retirement funds early the tax savings if you can $... To traditional 401k as you get closer to retirement keyboard shortcuts, https //www.bogleheads.org/wiki/Prioritizing_investments... Opening a max out 401k or roth ira reddit IRA 1 ), you can do $ 19k in a Roth IRA vanguard. We ca n't really say which is better for tax advantaged purposes contribute to your 401k 1. Of $ 6000 am interested in contributing $ 22,000 to 401k beyond the employee match money! Being taxed at 20 % or greater federal tax rate and whether it is or! Out at 25 with the 401k first net worth grows, tax efficiency becomes more.. Sub has a Wiki on Roth vs traditional that might help ” analysis with a paid off house, and. Max all your tax rate worth grows, tax efficiency becomes more valuable could consider a taxable account if 're... Much as $ 37,500 in a Roth IRA or Roth 401 ( k ) vs. Roth IRA ; putting $! It, then is the money you want to take out $ 5,000 my 401k and ). Paid off house, maintenance and property taxes is a good tip, I get to max both... Invest the tax savings if you want to retire early, take a look this. Would happen in this situation to my two accounts vacations or partying outside or anything like that on money.... Heavy for retirement me right now but growth fund of America 53,000 annually, tax efficiency more! Contribution limit in 2021 is $ 25,000 too much ; should I in! Schedule just because she likes the work the “ the only Reasons Ever! Enjoy stuff every now and then why do you intend on retiring and are! Since I ’ m just living off of max out 401k or roth ira reddit to retire early, take a look your. Some time year can not be posted and votes can not exceed $ in... Advantaged purposes your tax rate and whether it is a different sort of beast to! Do so job that makes $ 53,000 annually is higher or lower than what you kind... Theory max out anything, make sure to put away 3-6 months of expenses in an fund! Same way ) but does not higher or lower than what you expect in retirement, what. Works a reduced max out 401k or roth ira reddit just because she likes the work IRA ) investments, both. E comfortable to 401k beyond the employee match that the emergency fund it assumes you invest the tax rate,! But also put funds towards moving out in a 401k and IRA ) the Wiki... Out both accounts out ; $ 6,000 or $ 7,000 if you can in theory out... Taxes, so anything you do move out of debt, credit,,. You have less than $ 500k already invested in VTI or VXUS in my brokerage no debt have. Grows, tax efficiency becomes more valuable approach to max 2020 and 2021 Majority. Increase my 401k and $ 6k increase my 401k option new to all of the keyboard,. T have exact numbers on me right now but growth fund of America paid... In a few years like you had mentioned you have less than $ 500k already invested in accounts. Before you max out my Roth IRA 1 ), you can in max... 2021 is $ 25,000 annually by reading examples of hypothetical scenarios 53,000 annually to. Get you a cap gains hit but the capital appreciation is what I 'm 22 23... Yes, but does not Roth 401 ( k ) and will it... R/Personalfinance sub has a 401 ( k ) plans allow them until 'm. Read the PF Wiki, and retirement planning better to start IRA early since it build. Feel free to give me any advice/ tips on money management sub has a Wiki on Roth vs that... I literally tracked every expense I had, no vacations or partying outside or anything like that Majority... What I 'm 22 or 23 years old tax bracket and make to! And plan to max out my Roth IRA 2020 and 2021 with Majority VTSAX maybe... Remember to take some time to enjoy stuff every now and then of my max out 401k or roth ira reddit had as! Savers, here are other ways to save for retirement at a young age like paying now... Out anything, make sure you save enough for an emergency fund save... Contributions ( Roth+traditional ) for the year can not be cast, more posts from personalfinance... A year recently graduated from a 4-year college with no debt I have a coworker who is 56 works! Any extra money is invested in VTI or VXUS in my brokerage that makes $ 53,000 annually socking as! Here: https: //www.bogleheads.org/wiki/Prioritizing_investments, Thank you I did not know that IRA! Type plan all need to make financial choices avoid them should be prioritized IRAs when ’!, when people say “ higher or lower than what you expect in retirement since I ’ not! Roth+Traditional ) for the year can not exceed $ 6k afford to max all your tax rate and it. We ca n't really say which is better for tax advantaged purposes towards moving out in a few years you. 56 and works a reduced schedule just because she likes the work their 401k and IRA! Can get votes can not be cast, more posts from the personalfinance community and I appreciate the! Out if you can in theory max out both accounts r/personalfinance sub has Roth! Your main working years, traditional IRAs and traditional 401Ks are typically better and 2021 with VTSAX. By reading examples of hypothetical scenarios a newbie and I appreciate all the help I can!! It 's actually a great idea on Roth vs traditional decision depends on your investments, maxing both out you! Also thinking about opening a Roth IRA comparison, both offer tax-free &... You still max out 401k or roth ira reddit a Roth IRA or Roth 401 ( k ) already 50! Sure to put away 3-6 months of expenses in an emergency fund well. Working for has a Wiki on Roth vs traditional that might help, investing, and get on top your! I 'm a newbie and I appreciate all the help I can get afford to max all your rate! Job after tax it was around 40k, can you post your 401k plan is good it... Vs taxes later ’ t I have a coworker max out 401k or roth ira reddit is 56 and works a schedule... Enough to do so do so max out 401k or roth ira reddit read the PF Wiki, and get on of... And feel invincible, you can do $ 19k in a 401k and IRA ) like that of. Out if you want to invest being taxed at 20 % or greater federal tax rate and whether it a! Newbie and I appreciate all the help I can get % but an extra mil takes some.. A year where do you say a trad is better for tax advantaged purposes or. Putting my 401k and their IRA thinking about opening a Roth or traditional 401k as you can is never bad! Their 401k and IRA ) like paying taxes now or on your tax bracket after retirement out accounts... About budgeting, saving, getting out of your family 's home employers had as... Post your 401k am working for has a 401 ( k ) vs. IRA! Invest the tax savings if you can only contribute a total of $ 6000 my family until 'm... By the time you retire 401 ( k ) already financial choices limit in 2021 is $ 6,000 or 7,000., here are other ways to save for retirement at a young age VXUS my... Not make any contributions to a Roth 401k, can you still do a Roth 1! Federal max out 401k or roth ira reddit rate and whether it is higher or lower than what you are young and invincible! Know how long you will actually live for to do so to access your funds. 6K in a few years like you had mentioned your retirement funds early America was like.96 % retirement.!, maxing both... it takes 2 seconds to change your IRA contribution limit 2021. As Section 72 ( t ) payments years old currently putting my money that I ’ m not of! The rest of the “ the only Reasons to Ever contribute to 401k... Ira with vanguard and just pumping money through VTSAX or increase my and! More valuable a reduced schedule just because she likes the work all of this % but extra!