25M. Maxing out 401k (24,500) and roth ira (7,500). Have emergency fund and everything else is put into taxable brokerage.
Thinking about a lifestyle upgrade (better apartment) but would have to dip into the monthly allocation going to taxable brokerage. Would I be ok simply just maxing out my retirement accounts?
Maxing out retirement accounts enough?
byu/Puzzleheaded-Bus8922 ininvesting
Posted by Puzzleheaded-Bus8922
15 Comments
People on here will tell you “yes”, but the fact that you’re coming here to ask means that you’re needing to be convinced.
So the answer is “no.”
Welcome to the suck, buddy. You’ll constantly shift the goal posts of when you can justify liberal spending on lifestyle upgrades.
Yes it is. Thats almost 32k tax advantaged dollars. Life isnt only about investing and saving to retire/die. Live a little. Most people at your age don’t get near what you do
Furthermore, if your max investing is having you so tight with the cost of living, invest less and be more comfortable
The more you invest, the better your life should be down the road. But you shouldn’t live miserably under a bridge now. Live somewhere that makes you happy and then invest what you can so you can be happier and live better in the future.
That entirely depends on what age you want to retire, what lifestyle you want in retirement, what your partner has saved for retirement, and how many kids you want / how financially dependent on you they will be, + many other factors.
If you don’t want to retire early then this will likely be sufficient to be comfortable in retirement.
The more you save now, the more it compounds and the less you’ll need to save 20 years from now.
Less than like 10% of people max out their 401k and Roth. The fact you can do this at 25 puts you well ahead of the game. You’ll be fine just keep maxing out.
Want some real world ? 25 years of maxing out Ira 401k with both wife and i. Good company matches. Started at your age right out of college.
The answer is: not enough. Maybe 50% what i think i need in a retirement lifestyle. I won’t post the values but im sure many would consider it enough.
But that depends a lot on lifestyle where you live your family situation etc. and you really don’t know where you’re going to land at 25. I didn’t!
Again. Way too many it depends.
If you plan to work another 30 years and retire at 55 (which is pretty good), you will have about 5 million if you “only” max out your 401k and roth. That is $200k a year at the 4% rule. Only you can decide if that is enough. I will say that the thing that helped me the most over the years was delayed gratification. The money you invest in retirement now is worth soooo much more than the money you will invest in 10 or 20 years.
The best thing can do for yourself in invest as much as you can when you’re young. When investing time is your friend. My only regret is not starting earlier and I was about your age when I started seriously investing.
Short answer: Invest as much as you can. If the new apartment is a need, I.e need another bedroom etc, then do it. If it’s a luxury and you just want it… I’d hold off for now.
Tf is your salary
Think it depends a bit more on your goal, tolerance and personal Investment basis than we can provide.
I’d run it in a spreadsheet, forecast it out 10/20 years of each allocation amount effects retirement time, my debt repayment structure etc.
obviously ignores tons of data but, will give a nice guesstimate if the difference is large enough to warrant the extra expense etc imo.
The real answer is that it depends on your goals.
Want to retire at 45-50, no matter what? Save it.
Want to retire at 60, with a higher quality of life, spend it.
Real talk.. if you’re living in a shit hole, eating shit food, and not going out and enjoying life but can afford to max your retirement account? The fuck are you doing, we have one life. If you’re looking to upgrade your life just because you can financially, lifestyle creep can compound just as quickly as your interest.
IMO max out roth ira and do the minimum to get the company match in 401k. For me, maxing out my 401k is being too agressive with retirement investing. I do a 7% company match (14% total…10% traditional and 4% roth 401k) plus roth ira max contributions each year.
We plant to retire years before the normal retirement age and we dont want too much money invested in an account that penalizes us for making early withdraws. We also want to live our lives now.
There is no guarantee for tomorrow so my wife and I go on x2 week long vacations every year. Last year we went to Colorado and southern Cali. This year Vegas/Zion NP/Death Valley NP and probably the remaining 4 NPs in Utah for the second trip this year. We also eat out often. Is it the best use of our money? Maybe not but we enjoy our lives and are still in good shape for retirement in about 15 years.
It’s enough. I’m doing the same. Well a bit more. I also have a brokerage account where I invest in stocks and ETFs. And cds. But I also have everything paid off. You should also enjoy your younger years and live life the way you want. Enjoy it. You never know what the future brings.
You should learn how to project the future value of your investments and how to calculate the amount of savings you need in retirement. We can’t answer what’s enough for you without knowing things like what you’re investing in, when you plan to retire, how much you spend, and how long you think you’ll be retired.
According to one source, your net worth should be twice your age times yearly expenses divided by 10.
Without knowing your expenses we have no way of answering your question