3 ms·

Good point, I forgot to mention that. I think that it's possible for a lot of young people in our industry to save significantly more than 15% of their income,

by jrheard 10y ago

Good point, I forgot to mention that. I think that it's possible for a lot of young people in our industry to save significantly more than 15% of their income, and so I should have said: max out your contributions to retirement accounts every year and then set things up such that you're automatically saving as much of your remaining salary as is comfortable (e.g. if you're a recent college grad working in SF, and you have roommates, you might find that this percentage is pretty high!).

shostack 10y ago
I was on the "max out retirement accounts" train when I was younger. When I got older and home prices got massively inflated, I wished I kept more of that in non retirement accounts to be made more easily liquid for a home without steep penalties. Saving tax while something grows is great, unless you need that cash sooner. Then it is not too helpful. I wish there were a tax advantaged vehicle to use for setting aside money for a home. So yes, definitely invest in tax advantaged accounts, but do so with a solid understanding of your expected financial needs as best you can model for the next 5-10 years. If you need access to that money sooner, what you'd lose on tax may be worth the flexibility of having those investments somewhere more easily liquidated.
- breckenedge 10y ago
  You can avoid the 10% tax penalty for early withdrawal for your first home if it's in a Roth IRA, up to $10k. It's not very tax advantaged though. [1] https://www.irs.gov/publications/p590b/ch02.html https://www.irs.gov/publications/p590b/ch02.html
  - closeparen 10y ago
    $10k is well within the variance of fees and fluctuating interest rates on a home purchase. On the scale of real estate (in and around the cities that have significant tech employment) it's pocket change.
  - kobeya 10y ago
    This is confused. EVERY contribution you make to a Roth IRA/401k can be pulled out, tax-free, at any time for any reason. It's the earnings you have to be careful about. But for example if you have contributed $20k to your Roth IRA or Roth 401k, and it is now worth $35k, then you can pull out $20k at any time for any reason, while for the other $15k you have to wait until 59 1/2, or use SEP withdraws, etc. In addition, for a first-time home purchase you can pull out up to $10k without penalty (but with normal income tax applied) from a traditional IRA or 401k.
- iloveluce 10y ago
  You can also loan yourself a bit of your 401k to buy a home. It's not a lot but at least helps https://smartasset.com/mortgage/when-to-leverage-a-401k-for-a-home-down-payment https://smartasset.com/mortgage/when-to-leverage-a-401k-for-...
deleted 10y ago
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by jrheard 10y ago

shostack 10y ago

I was on the "max out retirement accounts" train when I was younger. When I got older and home prices got massively inflated, I wished I kept more of that in non retirement accounts to be made more easily liquid for a home without steep penalties. Saving tax while something grows is great, unless you need that cash sooner. Then it is not too helpful. I wish there were a tax advantaged vehicle to use for setting aside money for a home. So yes, definitely invest in tax advantaged accounts, but do so with a solid understanding of your expected financial needs as best you can model for the next 5-10 years. If you need access to that money sooner, what you'd lose on tax may be worth the flexibility of having those investments somewhere more easily liquidated.

breckenedge 10y ago
You can avoid the 10% tax penalty for early withdrawal for your first home if it's in a Roth IRA, up to $10k. It's not very tax advantaged though. [1] https://www.irs.gov/publications/p590b/ch02.html https://www.irs.gov/publications/p590b/ch02.html
- closeparen 10y ago
  $10k is well within the variance of fees and fluctuating interest rates on a home purchase. On the scale of real estate (in and around the cities that have significant tech employment) it's pocket change.
- kobeya 10y ago
  This is confused. EVERY contribution you make to a Roth IRA/401k can be pulled out, tax-free, at any time for any reason. It's the earnings you have to be careful about. But for example if you have contributed $20k to your Roth IRA or Roth 401k, and it is now worth $35k, then you can pull out $20k at any time for any reason, while for the other $15k you have to wait until 59 1/2, or use SEP withdraws, etc. In addition, for a first-time home purchase you can pull out up to $10k without penalty (but with normal income tax applied) from a traditional IRA or 401k.
iloveluce 10y ago
You can also loan yourself a bit of your 401k to buy a home. It's not a lot but at least helps https://smartasset.com/mortgage/when-to-leverage-a-401k-for-a-home-down-payment https://smartasset.com/mortgage/when-to-leverage-a-401k-for-...

deleted 10y ago

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