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Personal Finance 8w
23, no debt/rent, expenses come out to roughly under $400/month. Semi monthly paycheck is $3250. How much should go into my 401k
#poll
6% (max match)
10%
15%
25%
Other (comment)
44 votes
comment

12
upvote 4 downvote
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Anonymous 8w

Put enough in to get your match, beyond that save outside your 401k for whatever you want next. Match is free money, let it sit and multiply for 40 years.

upvote 7 downvote
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Anonymous 8w

Do not max out your 401k at 23 years old. If you have any plans of purchasing a home, car, etc. in the next 5-10 years just setup a secondary brokerage account that you can actually withdraw from penalty free. It’s still money saved, you just aren’t locking it up in a tax deferred account. I personally do 12% (6% max match + 6% extra to keep my hands off). My expenses should come out to ~20-25k this year. 75k-82.5k salary but I make several thousand dollars investing in my separate brokerage

upvote 3 downvote
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Anonymous 8w

1. Max your ROTH 2. Put maximum match into standard 401k 3. Put the rest in brokerage

upvote 2 downvote
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Anonymous 8w

401k annual contribution limit is only 23.5k, just max it. If your expenses numbers are right then that’s only 1/3rd of the amount you have to invest so you’ll still have plenty of liquidity

upvote 0 downvote
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Anonymous replying to -> #1 8w

Personally would max out Roth IRA too. But that’s only like 3 months of extra money for him. T-Bills, CDs, and HYSAs are safe ways to make money on the rest if he doesn’t want to take risks + it’ll be available to him immediately or in the near future

upvote 4 downvote
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Anonymous replying to -> #3 8w

That’d be roughly $979/paycheck

upvote 1 downvote
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Anonymous replying to -> OP 8w

Yeah. If you’re saying you have $2,850/check to invest, might as well max the tax shield

upvote 3 downvote
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Anonymous replying to -> #3 8w

That’s my gross paycheck

upvote 1 downvote
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Anonymous replying to -> OP 8w

Oh okay, I thought you were saying you get 3,250 post tax, then 400 expense/month would’ve left you at 3,050 excess per biweekly check

upvote 1 downvote
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Anonymous replying to -> #3 8w

Yeah posttax is more like 2,400

upvote 1 downvote
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Anonymous replying to -> #4 8w

My reasoning for not maxing out at 23 beyond medium term large purchases is also that if you have your retirement saved up solely in a retirement account you are going to end up in a position where you either A) have to open a secondary brokerage closer to retirement in order to retire early or B) have to take penalties for early withdrawal. I’d also rather take higher risks at this age with the freedom of a non-retirement brokerage account

upvote 4 downvote
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Anonymous replying to -> OP 8w

Idk, if you think your income will trend up soon (probably since you’re fresh out of school) you’re probably fine to just start maxing today and will build up enough liquid buffer by the time you’re buying a house

upvote 1 downvote