Should you Max Out and Frontload 401K early?
02-03-2021, 10:27 AM
#41
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Joined APC: Dec 2012
Posts: 2,103
Originally Posted by tnkrdrvr
My personal approach to this is to maximize money in tax advantaged accounts that will minimize my taxes in retirement on the assumption I will be in a high tax bracket in that phase of life.
In retirement I will have A plan and military pension benefits totaling roughly $140k/yr, B plan benefits that will have mandatory disbursement amounts, and maybe Social Security that’s been maxed out. In other words, my taxable income is likely to be above $200k/yr in retirement. In addition, I max out my Roth 401k, my wife and my Roth IRAs (back door), and our HSA. Our tax advantaged annual savings are approximately $75k between the Roth 401k, Roth IRA, HSA, and B plan. The advantage to the Roth accounts and the HSA is that tapping them will not add to my taxable income. The disadvantages have been discussed above. The exception being the HSA which is tax free going in and out, if used for qualified expenses.
In retirement I will have A plan and military pension benefits totaling roughly $140k/yr, B plan benefits that will have mandatory disbursement amounts, and maybe Social Security that’s been maxed out. In other words, my taxable income is likely to be above $200k/yr in retirement. In addition, I max out my Roth 401k, my wife and my Roth IRAs (back door), and our HSA. Our tax advantaged annual savings are approximately $75k between the Roth 401k, Roth IRA, HSA, and B plan. The advantage to the Roth accounts and the HSA is that tapping them will not add to my taxable income. The disadvantages have been discussed above. The exception being the HSA which is tax free going in and out, if used for qualified expenses.
02-03-2021, 12:16 PM
#42
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Joined APC: Dec 2020
Posts: 128
Originally Posted by tnkrdrvr
My personal approach to this is to maximize money in tax advantaged accounts that will minimize my taxes in retirement on the assumption I will be in a high tax bracket in that phase of life.
In retirement I will have A plan and military pension benefits totaling roughly $140k/yr, B plan benefits that will have mandatory disbursement amounts, and maybe Social Security that’s been maxed out. In other words, my taxable income is likely to be above $200k/yr in retirement. In addition, I max out my Roth 401k, my wife and my Roth IRAs (back door), and our HSA. Our tax advantaged annual savings are approximately $75k between the Roth 401k, Roth IRA, HSA, and B plan. The advantage to the Roth accounts and the HSA is that tapping them will not add to my taxable income. The disadvantages have been discussed above. The exception being the HSA which is tax free going in and out, if used for qualified expenses.
In retirement I will have A plan and military pension benefits totaling roughly $140k/yr, B plan benefits that will have mandatory disbursement amounts, and maybe Social Security that’s been maxed out. In other words, my taxable income is likely to be above $200k/yr in retirement. In addition, I max out my Roth 401k, my wife and my Roth IRAs (back door), and our HSA. Our tax advantaged annual savings are approximately $75k between the Roth 401k, Roth IRA, HSA, and B plan. The advantage to the Roth accounts and the HSA is that tapping them will not add to my taxable income. The disadvantages have been discussed above. The exception being the HSA which is tax free going in and out, if used for qualified expenses.
02-03-2021, 12:38 PM
#43
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Joined APC: Aug 2020
Posts: 76
Originally Posted by Aviator4life
I'll be the elephant in the room and say front loading this year with Biden in charge probably won't pay off.
I’ll save you a click...you’re VERY wrong.
02-03-2021, 12:44 PM
#44
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Joined APC: Dec 2017
Posts: 218
Originally Posted by ScrappyCocoa
02-03-2021, 01:11 PM
#45
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Joined APC: Aug 2020
Posts: 76
Originally Posted by ELAC321
Actually he's correct so far. S&P while doing well is lower than it was on Jan 20. Remains to be seen how it will react to new policies & capital gains+cooperation tax changes.
02-03-2021, 06:59 PM
#46
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Joined APC: Oct 2015
Posts: 751
Originally Posted by ScrappyCocoa
We both know he wasn’t referring to Biden’s first two weeks.
- the DJIA will be over 50,000;
- unemployment will be at 3.5%;
- and wages will increasing at more than 2.5% YOY. https://www.nytimes.com/2019/05/02/b...h-economy.html
02-03-2021, 07:39 PM
#47
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Joined APC: Dec 2012
Posts: 2,103
Originally Posted by NotMrNiceGuy
I think we also know that in order for Biden to outpace Trump’s economic performance, he has his work cut out for him. Of course, I’d love for him to do this. Of course! Who doesn’t want the country to be financially killing it? The economy will always be a top three priority for me. But to do so:
- the DJIA will be over 50,000;
- unemployment will be at 3.5%;
- and wages will increasing at more than 2.5% YOY. https://www.nytimes.com/2019/05/02/b...h-economy.html
02-03-2021, 08:16 PM
#48
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Joined APC: Oct 2015
Posts: 751
Originally Posted by fcoolaiddrinker
A 33% increase in the DJIA puts us around 40000. I’ll take that bet all day long. Anywhere between 3.5-5.5% unemployment is good. Below 3% is negative due to labor shortages stunting growth. 2.5%, that’s barely above inflation but nice to see. Pipeline is a whole different conversion. The lost economic value of that could be offset with private electric infrastructure. In short I would be surprised if the economy was worse in 4 years than it was Jan 20. We’ll see.
As far as the rise in wages, that number may seem small, but was never reached from 2010-2017. The entire Obama economy. It was over 3% in 2018 and 2019.
The pipeline was not mentioned for the $1.6B loss for the economy. That’s peanuts overall. It’s the tone. The pipeline lowered emissions and provided jobs. So why cut it? Symbolism. In politics world, a pipeline means oil, which means dirty pollution. So the symbolic meaning is putting climate change over the economy. This is what will happen going forward and it will be to the detriment of the economy.
02-03-2021, 08:45 PM
#49
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Joined APC: Dec 2012
Posts: 2,103
Originally Posted by NotMrNiceGuy
The DJIA on 11/7/2016 was 18,900. He left office on 1/20/2021 at 31,100. That’s up 64% cumulative. Not sure where you came up with 33%? Even if you took the market from Trump’s Inauguration Day at 20,100, it’s still a 54% increase. Either way, Biden needs to get to 47,750 by either metric to match Trump’s performance. Still want that bet?
As far as the rise in wages, that number may seem small, but was never reached from 2010-2017. The entire Obama economy. It was over 3% in 2018 and 2019.
The pipeline was not mentioned for the $1.6B loss for the economy. That’s peanuts overall. It’s the tone. The pipeline lowered emissions and provided jobs. So why cut it? Symbolism. In politics world, a pipeline means oil, which means dirty pollution. So the symbolic meaning is putting climate change over the economy. This is what will happen going forward and it will be to the detriment of the economy.
As far as the rise in wages, that number may seem small, but was never reached from 2010-2017. The entire Obama economy. It was over 3% in 2018 and 2019.
The pipeline was not mentioned for the $1.6B loss for the economy. That’s peanuts overall. It’s the tone. The pipeline lowered emissions and provided jobs. So why cut it? Symbolism. In politics world, a pipeline means oil, which means dirty pollution. So the symbolic meaning is putting climate change over the economy. This is what will happen going forward and it will be to the detriment of the economy.
Last edited by fcoolaiddrinker; 02-03-2021 at 08:59 PM.
02-04-2021, 05:37 AM
#50
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Joined APC: Nov 2012
Position: 1900D CA
Posts: 3,395
The ol' which president is better for the stock market game, huh?
Unfortunately, it's a nearly pointless game to play as there are too many variables outside of the Presidents control.
The good news is, the stock market gains on average every year regardless of who the president is. Just keep saving for retirement guys.
https://www.investors.com/etfs-and-funds/sectors/sp500-which-u-s-president-was-best-for-stocks-wasnt-trump/
Too long, didn't read: the stock market just keeps going up. Went up under Trump, Obama, and Clinton. Stop worrying, keep saving.
Unfortunately, it's a nearly pointless game to play as there are too many variables outside of the Presidents control.
The good news is, the stock market gains on average every year regardless of who the president is. Just keep saving for retirement guys.
https://www.investors.com/etfs-and-funds/sectors/sp500-which-u-s-president-was-best-for-stocks-wasnt-trump/
Too long, didn't read: the stock market just keeps going up. Went up under Trump, Obama, and Clinton. Stop worrying, keep saving.
Last edited by Aero1900; 02-04-2021 at 05:52 AM.
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