Should You Max Out Your 401k?

Are you considering maxing out your 401(k) but unsure what to do next? We face this question all the time at Rosewood Wealth Management so today we want to explore if it’s wise to max out your 401(k) before investing anywhere else, and if it is, where to look if you want to save even more.
It’s a good conversation to have early in the year as you make plans for your retirement contributions over the next 12 months. Having said that, we do understand that this is a fortunate position to be in, and not everyone will have the ability to max out their contributions this year, and that’s totally fine. We can work through strategies for different situations, but today we want to focus on those who can save at a high rate so that they’re getting the most from their investments.
Here’s some of what we discuss in this episode:
0:00 - Intro
1:48 - Reasons to max out your 401k
5:59 - Reasons why you wouldn’t max it out
8:11 - Roth option
10:10 - Other investment options to consider
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[@aerated]

Don’t most people end up needing significantly less income in retirement? If I make $100k, spend $30k on taxes, and save $20k towards retirement, then I only need post-tax income in retirement of $50k to maintain my lifestyle.

[@rswiss9748]

My strategy is to contribute to both my 401k and Roth401k. The majority is going to Roth but I increase my pre-tax savings once my federal tax rate gets to 22%. I know it’s just the marginal amount but getting taxed on the income from 44-95k does make a difference.

[@painlesscotton]

55 year old. I make 52K/year and I would like to max out my Roth 401k at $23K and use my brokerage account money to make up the $23K. Is that a good idea to try to max out my Roth 401K and use brokerage account funds to make up the difference? Tax implications? I also max out my seperate Roth 401K at $7500. Thanks

[@aerated]

What do you mean by “use brokerage account money to make up the $23k”?

[@nutria12247]

I think he means to cover his living expenses.

[@painlesscotton]

Yes to cover my living expenses and max out my Roth401K for tax free income later. @@nutria12247

[@painlesscotton]

to cover my living expenses and max out my Roth401K for tax free income later. @@aerated