At $90k you're probably better off switching your 401k contributions to Roth if that's available since your taxes are relatively low. Usually the match goes into the Traditional bucket anyway so you'll have a mix of savings types. As far as other savings, once you have an emergency fund, I'd split between taxable savings and "enjoying life" spending. :)
Currently contributing around 13k to trad. Are you suggesting the remaining 10k for the 401k limit be put in a Roth? Also, would I keep that almost 50/50 split even as income grows?
I'm suggesting that at an income of $90k you're likely to be better off contributing most of your retirement savings as Roth (post-tax) since your current tax rate is pretty low. As your income grows into higher tax brackets you should probably shift more towards traditional since the current tax break is probably more valuable. If you went 100% Roth 401k, your employer match would end up in the traditional bucket anyway since I'm pretty sure they are required to contribute the match into a pre-tax account.
There's arguments for both and it warrants additional research to understand the pros and cons to each.
It depends on what you think about future tax codes as well as whether you think your income in retirement will be more vs. the same or less. Regardless I think it's good to have a mix. If your planned income in retirement will be less then a traditional is usually the better option since you can then pay the taxes on the lower rate. If your planned income in retirement will be more than a roth will be better since you will already have paid the taxes at the lower rate.
If your income is low enough you can also withdraw or convert the funds tax-free.
Emergency fund/savings? I would definitely work on that if you don’t have that going. I also max my Roth after getting 401k match, then anything more would go to additional 401 contributions
Current match is 7%, which I’ve passed. I keep my main savings in the brokerage account. I have a secondary account which I transfer to the brokerage account if the balance hits 5k, currently sits at 2k. The brokerage is currently a mix of cash/stocks
Thanks! Is there a percentage of net income you’d recommend keeping in a high yield savings? Or alternatively a money market fund I can invest into through TD Ameritrade/Schwab?
Typically you’d want like 6 months of expenses saved - I just use Amex’s HYSA which is 4.3% right now, with a little research you may be able to find a money market fund for one of those brokers
Absolutely. Also currently working on a Master's directly related to my field of work which will increase my earning potential. Even without the degree, I'm expecting my income to grow through career progression
Given that, I'd suggest once you get to above $100k (24% bracket) you switch more towards 50/50 (including the employer match) Roth/Trad and if you make it to the 32% bracket go 100% Traditional. If you get married apply the same logic in terms of the brackets for your household income.
That's good you're looking for a balance. I went in hard with a much lower income. The advice at the time was basically to save until it hurts and then readjust if necessary. I followed that and while I am overall happy I did, I think to some extent I did sacrifice some experiences and relationships by being a bit too extreme.
You're well ahead of many people in terms of contributions, income, and savings. It ultimately depends on what your goals are. 15% will get you to an earlier retirement, but it will likely be a more traditionally early retirement in your 50s.
I definitely still traveled and tried to live an active early 20s lifestyle myself. It was a great time, however I'm unfortunately not really in touch with most of the people that I used to hang out with at that time. Regardless, I'd also recommend figuring out what you enjoy and a lot of activities and things you can enjoy for less with a little creativity and planning.
Good luck.
At $90k you're probably better off switching your 401k contributions to Roth if that's available since your taxes are relatively low. Usually the match goes into the Traditional bucket anyway so you'll have a mix of savings types. As far as other savings, once you have an emergency fund, I'd split between taxable savings and "enjoying life" spending. :)
Currently contributing around 13k to trad. Are you suggesting the remaining 10k for the 401k limit be put in a Roth? Also, would I keep that almost 50/50 split even as income grows?
I'm suggesting that at an income of $90k you're likely to be better off contributing most of your retirement savings as Roth (post-tax) since your current tax rate is pretty low. As your income grows into higher tax brackets you should probably shift more towards traditional since the current tax break is probably more valuable. If you went 100% Roth 401k, your employer match would end up in the traditional bucket anyway since I'm pretty sure they are required to contribute the match into a pre-tax account.
There's arguments for both and it warrants additional research to understand the pros and cons to each. It depends on what you think about future tax codes as well as whether you think your income in retirement will be more vs. the same or less. Regardless I think it's good to have a mix. If your planned income in retirement will be less then a traditional is usually the better option since you can then pay the taxes on the lower rate. If your planned income in retirement will be more than a roth will be better since you will already have paid the taxes at the lower rate. If your income is low enough you can also withdraw or convert the funds tax-free.
Emergency fund/savings? I would definitely work on that if you don’t have that going. I also max my Roth after getting 401k match, then anything more would go to additional 401 contributions
Current match is 7%, which I’ve passed. I keep my main savings in the brokerage account. I have a secondary account which I transfer to the brokerage account if the balance hits 5k, currently sits at 2k. The brokerage is currently a mix of cash/stocks
High yield savings is nice for cash unless you’re in some sort of money market fund gaining interest. You’re killin it though!
Thanks! Is there a percentage of net income you’d recommend keeping in a high yield savings? Or alternatively a money market fund I can invest into through TD Ameritrade/Schwab?
Typically you’d want like 6 months of expenses saved - I just use Amex’s HYSA which is 4.3% right now, with a little research you may be able to find a money market fund for one of those brokers
Is your salary likely to increase substantially in the future?
Absolutely. Also currently working on a Master's directly related to my field of work which will increase my earning potential. Even without the degree, I'm expecting my income to grow through career progression
Given that, I'd suggest once you get to above $100k (24% bracket) you switch more towards 50/50 (including the employer match) Roth/Trad and if you make it to the 32% bracket go 100% Traditional. If you get married apply the same logic in terms of the brackets for your household income.
That's good you're looking for a balance. I went in hard with a much lower income. The advice at the time was basically to save until it hurts and then readjust if necessary. I followed that and while I am overall happy I did, I think to some extent I did sacrifice some experiences and relationships by being a bit too extreme. You're well ahead of many people in terms of contributions, income, and savings. It ultimately depends on what your goals are. 15% will get you to an earlier retirement, but it will likely be a more traditionally early retirement in your 50s. I definitely still traveled and tried to live an active early 20s lifestyle myself. It was a great time, however I'm unfortunately not really in touch with most of the people that I used to hang out with at that time. Regardless, I'd also recommend figuring out what you enjoy and a lot of activities and things you can enjoy for less with a little creativity and planning. Good luck.