#401k #retirementplanning #financialplanning
Maximizing Your 401(k) Contributions: Is It the Right Move?
Understanding Your Current Financial Situation
At 25, with a new job and a six-figure income, you have an excellent opportunity to set yourself up for a secure financial future. However, it’s essential to evaluate your current financial situation before deciding whether to max out your 401(k) contributions.
Assessing Your Savings and Investments
Take stock of your $30k in Roth IRA, $5k in personal savings, and other investments like the 529 and HSA accounts. Having a solid foundation in place is crucial before focusing on maximizing your 401(k) contributions.
Weighing the Options: Emergency Fund vs. 401(k) Contributions
Considering your age and financial goals, it’s commendable to prioritize building up your emergency fund. While the employer match is enticing, having a sufficient safety net in place can provide peace of mind and financial security in case of unexpected expenses.
Planning for the Future
Looking ahead to 2025, when you can comfortably max out your 401(k) contributions, it’s essential to strike a balance between saving for retirement and building your emergency fund. By creating a financial plan that accounts for both short-term and long-term goals, you can set yourself up for success.
In conclusion, while maximizing your 401(k) contributions is a sound financial move, it’s crucial to prioritize building up your emergency fund and other savings accounts before committing to higher contributions. By assessing your current financial situation, weighing the options, and planning for the future, you can make informed decisions that align with your goals and priorities. Remember, financial planning is a journey, and it’s essential to adapt and adjust your strategy as needed.
With that match and your age/salary… if you cant max, id be as close as possible to maxing without sacrificing your life quality too much (Id actually sacrifice certain things specifically to get closer to maxing). Thats a very good match that id be super enticed to take up
That match is insane, you really should do everything in your power to take advantage of it by contributing as much as you possibly can. You will be set up for a very early retirement if you do.
For reference, I make $180k for a financial services firm in NY, I max out my 401k and my employer match is only $5k. You have a really good situation so take advantage of it.
Immediately earning 50% is awesome. Max out the 401k. Build up the emergency fund more slowly if necessary.
It’s a financial crime not to get 50% employer match. You have to do it as number priority, other expenses come later on. Your next job may not have this lucrative match, take advantage while you can
Finance FlowChart
1. Get health insurance
2. Pay off bad debt
3. Three to six month emergency fund HYSA or Money Market Account
4. Max employer matched 401K
5. Max Roth IRA
6. Max out HSA (if possible)
7. Max megabackdoor 401k (if possible)
8. Down payment for house
9. Non tax advantage ETF or Mutual Fund
10. 529 for kids
11. Real estate investing
Max that 401(k) to get the employer match, it’s free money!