Fifth Avenue Forum

How much is too much for a 401k?

With company match, right now I am putting $2,000 a month into my 401k. I mean this is great, but should I back this down to say $1500 (my match wouldn't change, I'm way over the minimum amount needed) and put $500 a month into say a Roth or somewhere else?

Right now the 401k is my only retirement account aside from a pension that is capped out at a current value of ~$45k and nothing being added to it ever again.

Just curious if I have the right approach here or not. I'm really a "set and forget" type of person but also wondering if I need to have someone managing my finances at this point.

I wouldn’t change your contribution under the condition that

A. You have a rainy day/emergency fund set up. The general rule is that the rainy day fund should be very liquid (i.e. a savings or money market account) and be 6 months of expenses. I generally keep 6 months of paycheck in my rainy day fund, just to be conservative.

B. You don’t have any high interest debt floating around out there

If you put $2K/month in your retirement at a 6% returns (which is conservative), you’ll have about $1.7 million in your retirement account after about 30 years. That is a lot of money, but you can certainly spend that much in retirement. Reducing that to $1500/month drops it to $1.34 million. Still not chump change, either, but not as much as $1.7MM.

I wasn't going to reduce the total amount, but rather open a second retirement account to put money in.

Is there an option to do a Roth 401(k)? For my firm's benefit plan, I can contribute either to a conventional 401(k) or a Roth 401(k) and can split contributions if I want to. I've always exclusively gone Roth because I don't see taxes getting any lower in the future.

Also, I can say from my mother's estate there are advantages to heirs for a Roth. Because a Roth 401(k) has already paid income tax, your heirs / beneficiaries don't pay income tax on distributions in the event of your death. Conventional 401(k) distributions to an heir are taxed as ordinary income. Also, Congress changed the law for inherited IRAs in 2020 to make beneficiaries take the money out faster, which means paying more income taxes faster. It used to be that one could spread the distributions for an inherited 401(k) out over the recipient's own lifetime, which meant that an heir could take small distributions over many years and delay big distributions until the heir was also retired or at least earning less money. Now, all money in an inherited 401(k) has to be out in 10 years from the death of the original owner. For me, that means that the money I get from my late mother's 401(k) goes on top of my regular income here in my peak earning years and is all at the 24% tax bracket, so nearly a quarter of it goes instantly to the feds. It was a major "stealth" tax increase on inherited IRA money.

I don't believe my employer offers a Roth 401k

@NTP66 is on vacation, but he should be aware that our Marcus accounts interest rate went up again - now at 1.0%

Marcus accounts are great places to stash your emergency funds. I just wish they had debit card services.

No place is a good place to stash an emergency fund. A 1% interest rate in an age of 8%+ inflation is like trying to bail out the Titanic with a bucket.

Serious question, in the age where they hand out 0% interest for 18 months on mostly all credit cards is there a reason to even have a cash emergency fund?

Mines in I bonds. I think I'll be fine.

For responsible people, probably not. For the ones those are targeted at, bad idea.

The high majority of people going after those credit cards are not using it for emergencies. They don't have the money to begin with upfront and good chances are they won't have it to keep up with the payments after the fact. Then those 18 months hit and it's a raining benjamins for the card company.

You in the worst case scenario are cashing out some I bonds in month 17 to pay that off.

Also, maybe around the city it's different, but if I have an HVAC emergency or something like that, the guy isn't taking credit cards for payment so even having some cash liquid is a good thing.

Every time I open this thread, man I'm doing it wrong. That said, anyone got a recommendation for a financial advisor north or west of Pittsburgh? I feel like we make enough money that we should be doing better than we are.

Source of the post
Also, maybe around the city it's different, but if I have an HVAC emergency or something like that, the guy isn't taking credit cards for payment so even having some cash liquid is a good thing

Fair point here, yes.

I don't want credit card debt or accounts on my credit report. I'd rather have easily accessible cash on hand, making a slight amount of interest. When I first signed up for the Marcus account, the interest rate was 2.65%. It's probably not going to get that high again for a while, if ever, but I can get to the cash quickly and it's for longitudinal savings that started before the inflation uptick and will last for many years after the upcoming recession.

Availability on credit cards can help boost ur credit score

More accounts on your credit report is better for your score, right?

If they have a longer history yes, but lots of accounts with shorter histories brings down your average length of credit history which hurts you I believe.

The whole thing is weird honestly. When I finished paying off my school loans my score dropped like 20 points for a short time because that was my longest open line of credit and paying it off made the average length of my accounts shorter overall.

If they have a longer history yes, but lots of accounts with shorter histories brings down your average length of credit history which hurts you I believe.

The whole thing is weird honestly. When I finished paying off my school loans my score dropped like 20 points for a short time because that was my longest open line of credit and paying it off made the average length of my accounts shorter overall.

On the flip side, mine jumped 20 points after I bought my first house

Being an old **** with several 30+ year old credit card accounts that have been paid off in full every month for decades and no other debt sure does wonders for your FICO score. Anyone here that can beat an 840?

I think mine is around 820.

I got to around 800 - and that's without really paying student loans for any appreciable amount of time...but now it's time to eat **** on wedding expenses and new credit accounts...

I was 820+ and then got married…

Im like 810 or 820 right now. Wife is around the same. Fluctuates a few points here and there with usage, but for the most part we are both in good shape.

In my 20's my credit score was garbage. Even in my early 30's it was not great. I worked hard to build it back up.

Im like 810 or 820 right now. Wife is around the same. Fluctuates a few points here and there with usage, but for the most part we are both in good shape.

In my 20's my credit score was garbage. Even in my early 30's it was not great. I worked hard to build it back up.

Yes, same. In my 20's and early 30's mine was trash too. Mrs. K really helped get me turned around - when I actually started listening to her. I think it kinda pisses her off that I am now consistently 10 - 20 points ahead of her.

Just checked… 819. Not bad.

760, recent refi including cash out and the inquiries, cosigning my kid’s student loans, too much on credit cards brought me down. Hoping for a bigger bonus next year to crush some debt.

796 on karma down a good chunk month over month because I bought a car.

Was 820 something at one point last year

I was in the mid 800s at one point but now in the mid to high 700s after opening a few 12-18 mo SAC cards. Couldn’t really care, as this is not normal for me to open more than just one cc or to have anything under finance.