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> I would've thought that some level of liquid savings would (on average) come before locking up money in a 401k This is correct. But most personal finance wis

> I would've thought that some level of liquid savings would (on average) come before locking up money in a 401k This is correct. But most personal finance wisdom advises keeping no more than 6 months - 1 year of expenses in liquid savings. After that, funding your 401k to get the maximum company match, then your IRA and Roth IRA, and maxing out 401k, is preferred. If there's still money left over after that, it goes into post-tax investments.

wutbrodo 7y ago
> most personal finance wisdom advises keeping no more than 6 months - 1 year of expenses in liquid savings I was unclear: by "liquid" I didn't mean in cash equivalents like an emergency fund. I just meant "not locked away until retirement, under threat of penalty" the way tax-advantaged retirement accts are. At the very least, I'd expect that most people with a 401k have a ton of assets tied up in houses that are often to big for them after eg their children move out: downsizing and unlocking those assets is a pretty common sense move in the context of "not having enough saved for retirement". I think the high level point I'm going for here is that I'm not sure that 401k balance is a good proxy for overall retirement savings, as implied by the comment I originally replied to. I don't have the data on this though
madengr 7y ago
Problem is you can’t fund a 401k and traditional IRA at the same time. Then you can’t fund a Roth IRA if you make too much (and it’s only $3k/year anyway). The government has rigged it so they are getting a cut of your retirement savings, one way or the other.
- jogjayr 7y ago
  You can fund a traditional IRA and 401k up to a certain MAGI.[2] If your spouse doesn't work, or their work doesn't offer a 401k, you can fund a traditional IRA for them as well. Roth IRA is $5.5k/year.[0] If your 401k plan allows in-plan conversions you can also do mega backdoor Roth IRA contributions up to something like $37k. [1] 0. https://www.nerdwallet.com/blog/investing/roth-ira-contribution-limits/ https://www.nerdwallet.com/blog/investing/roth-ira-contribut... 1. https://thecollegeinvestor.com/17561/understanding-the-mega-backdoor-roth-ira/ https://thecollegeinvestor.com/17561/understanding-the-mega-... 2. https://www.quickanddirtytips.com/money-finance/retirement/can-you-contribute-to-a-401k-and-an-ira-in-the-same-year https://www.quickanddirtytips.com/money-finance/retirement/c...

wutbrodo 7y ago

> most personal finance wisdom advises keeping no more than 6 months - 1 year of expenses in liquid savings I was unclear: by "liquid" I didn't mean in cash equivalents like an emergency fund. I just meant "not locked away until retirement, under threat of penalty" the way tax-advantaged retirement accts are. At the very least, I'd expect that most people with a 401k have a ton of assets tied up in houses that are often to big for them after eg their children move out: downsizing and unlocking those assets is a pretty common sense move in the context of "not having enough saved for retirement". I think the high level point I'm going for here is that I'm not sure that 401k balance is a good proxy for overall retirement savings, as implied by the comment I originally replied to. I don't have the data on this though

madengr 7y ago

Problem is you can’t fund a 401k and traditional IRA at the same time. Then you can’t fund a Roth IRA if you make too much (and it’s only $3k/year anyway). The government has rigged it so they are getting a cut of your retirement savings, one way or the other.

jogjayr 7y ago
You can fund a traditional IRA and 401k up to a certain MAGI.[2] If your spouse doesn't work, or their work doesn't offer a 401k, you can fund a traditional IRA for them as well. Roth IRA is $5.5k/year.[0] If your 401k plan allows in-plan conversions you can also do mega backdoor Roth IRA contributions up to something like $37k. [1] 0. https://www.nerdwallet.com/blog/investing/roth-ira-contribution-limits/ https://www.nerdwallet.com/blog/investing/roth-ira-contribut... 1. https://thecollegeinvestor.com/17561/understanding-the-mega-backdoor-roth-ira/ https://thecollegeinvestor.com/17561/understanding-the-mega-... 2. https://www.quickanddirtytips.com/money-finance/retirement/can-you-contribute-to-a-401k-and-an-ira-in-the-same-year https://www.quickanddirtytips.com/money-finance/retirement/c...