Hello all.
Important info:
Salary - 80k
Career: Engineer
Age: 25
Retirement goal: 50s? Really the work is fun so this is subject to change
Goal Salary before retirement: 200k+
Goal salary after retirement: 100k+
Current Traditional 401k contrib: 6%
Company match: 4.5%
Roth 401k contrib: 5%
ROTH Ira contrib: 0%
Fund Breakup
10% - s&p 500 large cap index fund
30% - company stock (no fees, large corporation)
60% - 2060 fidelity target date fund
On this subreddit, I’ve read advice stating that it’s a good strategy to contribute to my 401k up until company match, then max out a Roth IRA if you believe you’ll be in a higher tax bracket when you retire, then max out 401k.
I’ve recently finished paying off ~80k of private student loans over the last 3 years. I still have 24k left in federal, but that’s another story. With the private loan gone, I’ve wanted to increase my retirement contribution by 5% (was only doing 6% company match beforehand) to get above Fidelity’s recommended 15% (6+4.5+5==15.5%).
I use fidelity NetBenefits provided by my company. We have an option for Roth 401k contributions. There’s not too much info on Roth 401ks, but I’m curious what people might think I should do in regard to my current status and goals.
Does anyone know if I could change my entire contribution to 11% Roth 401k? I understand the company match is pre tax.
So the benefit of Roth is paying tax now in hopes that I will have higher tax rate at the time of withdrawal, correct? So I’d essentially be saving money on taxes in the future.
The benefits of pretax is reducing my taxable income which generally means the government will give me a slightly larger refund because I’ve paid more taxes than I am required based on new lower taxable income.
Would anyone recommend me changing my current contribution status, perhaps changing to a more flexible Roth IRA with better investment options? Did I provide enough information?
My goal is every 5 years to increase my contribution 2-5%. I typically receive an annual raise of 3-8%. Moving jobs would garner a much larger raise, but I am currently in a program where my company is paying for my masters degree. Not sure if this info matters.
Thanks all. You’ve been great to me. I recently hit a huge student loan payoff milestone, so I’m back for some more good stuff.
I apologize for any format issues. Posting on mobile.
Submitted January 28, 2018 at 10:04AM by fiziks_is_fun http://ift.tt/2rLVjRC
