Originally Posted by
tennisguru
Boy this is the truth with this job. Rough math puts me at over 100k going into tax-advantaged vehicles every year for the rest of my career. Max out my and wife’s 401ks, + 50k company DC, + 2 backdoor Roth IRAs, + 8k HSA. All of that will be millions of dollars at retirement. And really other than the IRAs I don’t really feel the money loss since everything else comes out of my paycheck or is from the company. That’s one reason I’ve gotten away from doing straight budgets because I know that money in my bank account is already after a significant amount of savings, and even then we done spend all our take home pay each month so savings are still going into other buckets for extra investing or big future purchases.
That was sort of the genesis of this thread. Once doing all of that stuff, what’s the next logical step, given the great likelihood that it’s my kids that will be the beneficiaries.
Higney’s “why” question is apt. Barring wanting to spend a lot more money every year - we don’t - it comes down to where is the most appropriate place to put excess savings.
I’m sure there are 17k different answers to this question but most will fall into 3 buckets:
1. Don’t quite have this ”problem” yet, still building up savings, paying off house, whatever. Not yet saving beyond the buckets tennis mentions above. Still pretty awesome compared to most other jobs.
2. Do have this “problem” but have a use in mind for the excess, thus not wanting it all locked away in retirement accounts. Willing to trade some tax efficiency for access to the capital.
3. No specific need in the foreseeable future for the excess, combined with a wide(ning) delta between income/expenses. All other things being equal why not save in the most efficient way possible. I think the mega has some potential utility in this specific case.
Realistically #3’s could get another ~$60k extra into Delta sheltered accounts if you want to. Those saving a lot more annually might preference this. Others might split the baby and not go so hardcore.
To bring it all the way back around, it only applies to pilots in the #3 case above that are weighing 401a-to-Roth vs Brokerage (both will be taxed this year) and consider the savings otherwise equal, either due to proximity to retirement (50+) or confidence that they have enough other liquid $ to not need the Roth money until retirement. Or at least 5 years when you can pull out converted contributions.
It’s avoiding tax on capital gains by trading some liquidity for 5 years. True first world problem.