I would say financial advisors are not worth it. Just invest the money, don’t try and pick stocks, and wait. When the time comes to retire you will know it.
I am currently age 30 with $650K. Basically all I do is max out my 401K, HSA, and IRA. Whatever I have left over goes into my brokerage account (I buy VTI). My asset allocation is 100% equities, no reason to hold any bonds since I want to retire as soon as possible.
It is hard to predict when exactly I will be able to retire, but as long as there isn’t a massive recession I think it is safe to say that I will be retired at age 40 with $1.5M-$2.5M. If the markets get clobbered maybe it will take until around age 50.
I am not sure what a financial advisor can offer me. I have access to ETFs with .01% fees or mutual funds with 0% fees (Fidelity FTW). I already know I am on track to retire (and young) I don’t need someone to tally up my account values and tell me what I already know. In terms of helping you project your retirement date, their guess is as good as yours.
Take that $1,200 and stick it in low fee or no fee index fund (ideally tracking the SP500 or Russell 2000).
I’m not looking to buy for 2-3 years but assume it will still largely be a seller’s market (I’m in Nashville). Apparently I’ll be excited about that if inspections are standard again…
Take a look at where you fall in the marginal tax bracket ranges.
Currently I have several tens of thousands until I hit the next bracket, so I’m 100% Roth. Once I start to hit that next cutoff, I’ll transition to Traditional to reduce my income and not get the extra hit. Also, whenever I plan to sell my non-retirement stocks, I’ll heavily hit up that Traditional (plus, probably sell over 3-4 years).
I think my rough idea rattling around my head was basically as follows. Assume I’m no longer a donkey at the corporate feed trough, but I’m making a few bucks here and there.
Use income plus brokerage for five years, during which time I establish the Roth ladder. Then use some combination of brokerage/withdrawing the Roth contributions that are penalty free/income until I’m 59.5. I’d prefer not to 72t things but it’s an option, bridging the gap from ‘retirement’ to 59.5 is probably the trickiest part given my current asset allocations. But I’m adding ~$30k/year to brokerage, so I’m working on it!!!
This year I picked up the option to defer compensation, and 15% of my salary and 100% of my bonus is going there. I can adjust the number next year if need be. It will then grow with the stock market and be paid out in five annual installments once I quit/retire a.k.a. at ages 57-61 before social security kicks in.
Forgot about deferred comp! I’d do this now if I could, my last employer offered it and I jumped in the year I quit, so that just got paid out. My current employer doesn’t offer it. It’s a very useful tool for FIRE.
Anyone else out there still have an employer who does not offer a 501k match but DOES still have its own defined benefit plan?
Every recommendation everywhere is to match employee contribution first, but I don’t have one to begin with. I have not seen any real public discussion about where to put assets, or what % to put in a 401k in the absence of an employer match before doing other things.
At 32 I’m putting 10% in the 401k, an amount I’m ok with in a 529, and leftovers into a brokerage. I think I need to max a Roth before doing more brokerage stuff though as tax hedging is one thing I really don’t have currently. But other than that I don’t see much additional nuance in my decisions at this point.
No match into the DC plans, employer puts in the same amount (11-12%) I do into the DB plan.
We have two DC plans, one has the normal limits, the other has an age limited irrevocable choice (no increase/decrease/stopping) that doesn’t have the normal limits. I put 20% into the weird one, and another 6% into the normal one (Roth version). When we have extra money, we do Roth IRA contributions. Have not gotten to the point where we have extra money past fully contributing to the Roth IRAs for non-tax-preferred accounts.
We also max the HSA and haven’t pulled out of it for almost 2 years (I used to need to pull from it for expenses). I should probably pull from it every year that I’m not maxing out our Roth IRA contributions, and convert that HSA money into Roth IRA money. Adding that to the list of things I need to remember to do going forward.
If no employer match, skip that step. Assuming no HSA I would go (1) max Roth IRA (maybe Trad IRA if helpful for taxes), (2) max 401k, (3) max 529, (4) brokerage accounts.
Maybe put the 529 before 401k if you’re quite certain it’ll be used. Put HSA first if available.
This is more or less what I’d figured. Started the 401k when I got the job just because it was offered, but I’ve never actually convinced myself it’s the best place to put my first dollar of retirement.
In the event of moving companies (which happens) is doing one first any more beneficial than the other? I again can’t think of anything here either.
The oft-mentioned benefit to maxing the IRA over the 401k is that 401ks lock you into a narrower band of investment options. At a shitty company you could be looking at >1% expense fees. Not likely IMO - I’ve never seen this at 4 companies - but it’s possible, and with an IRA you have more autonomy.
I think he’d be in a tough spot if his parents have decent income. Many scholarships are need based and federal lending is need based so if you tell him he’s on his own he’d be in a tougher spot than being on his own with poor parents.
