I have a hsa and 401k through my employer and I’m maxing the hsa and getting the full match for my 401k, I’m only 24 with 60k income do I need a Roth too considering the hsa and 401k will be locked up until like 60 and I would want to retire early or is the 401k and hsa enough with a normal brokerage account and bank savings and I’m just thinking about it too much?
Roth IRA, 401k, HSA .
byu/EntrepreneurHead7841 inpersonalfinance
Posted by EntrepreneurHead7841
7 Comments
You don’t need it but if you can afford it it doesn’t hurt!
The HSA is actually pretty solid for early retirement since you can withdraw contributions penalty-free after age 65, plus it’s triple tax advantaged. But yeah a Roth IRA gives you way more flexibility – you can pull out contributions anytime without penalties which is clutch if you’re planning to FIRE. At 24 with your income level the tax breaks now vs later probably favor the Roth anyway
What do you mean by “full match” on your 401k?
Assuming your 401k is traditional? You should also have a Roth IRA so you have Roth as well. It gives you more options when you need it.
If you can swing the Roth in addition to getting the full 401k match and maxing your HSA, yes, but all dependent on living expenses – ya gotta live! Since you’re in lower tax bracket, I wouldn’t invest anymore than necessary to get the full match into the 401k. Any additional retirement contributions you want to make would probably be better served in a Roth since you’ll pay relatively low taxes on that money now and withdraw it tax free at retirement. As other have mentioned, you can also withdraw your contributions (not the gains) to the Roth at any point without penalty.
I would recommend you max out annual conventions to your 401k before opening the Roth IRA, but yes I think its a good idea. If you feel too pressed for money with your current salary, just add more money to your investments everytime you get a raise. You are on a great track!
I just started maxing out my annual contributions to my 401k (24500), Roth IRA (7500), and HSA (4400). I am 38 years old. You’re doing really well by being focused so early!
Do they offer a Roth 401k? You can add post-tax money to a 401k it turns out, if its a Roth 401k. I have that through my employer. I’m aiming to max it out yearly. I think the employer match is pre-tax though so if you touch the employer part you’d have to pay taxes.
I also have a Roth IRA I max out every year. A high yield savings account with an emergency fund of 3 months expenses and no more than that, a taxable brokerage account where I can invest on my own and take out investments when I please. No HSA because I get free healthcare for life (TriCare).
Definitely try to get a Roth ira and a brokerage account if you can! Even $50 a month contributed is better than nothing, and your income will grow so you should be able to increase contributions.