Hello. My wife and I are both 27 and make a $85,000-$90,000 per year. We max out our HSA and both of our Roth IRAs. We both have 401k with our employers who both match 6%. Should we contribute up to the match and then put everything else in our brokerage or focus just maximizing the 401ks? We are hoping to retire around 45. Thanks for your input.
Hey @crettger!
I would always max out any tax-advantaged accounts first. So I wouldn’t bypass your 401k to put money into your brokerage account. Basically having too much money in retirement accounts is a good problem to have. If you’re going to retire that young, and have a lot of money in a 401k, a Roth IRA ladder may be the perfect strategy to retire off that investment.
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I’m currently doing a Roth 401k. Would that be a problem with the Roth ladder?
Ah, so the “ladder” involves doing a conversion from traditional to roth. After that conversion (you have to wait 5 years) but then you can access all the money tax/penalty free.
If you contribute straight to Roth, then there’s no 5 year waiting period, you can instantly access the principal tax/penalty free any time, but you basically wouldn’t be able to touch the growth of the money until age 59.5. It might be worth doing some back of the napkin excel sheet kinda projections to see if the principal alone would be enough to get you to 59.5. If you drain the principal on all your Roth accounts and need to get to the growth before 59.5… I suspect you might not actually be in a strong enough position to live indefinitely off those investments anyway?