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Spiritual_Jaguar4685 t1_j6ofkzg wrote

Reply to comment by BlueDoe1775 in 401k Noob Question - by BlueDoe1775

Ok, I didn't want to ask your salary, but since you offered it I can update my advice.

In theory, your debt is "bad" debt, meaning your interest is more than you'll likely get on the market.

The 401(k) is free money, so absolutely get that match first.

Then get rid of your credit card debt.

After that, shift to the Roth IRA. In theory you are in a "low" tax bracket at the moment, our current income taxes rates are historically low AND you're not a super high earner. That means the "smart" bet is paying your income taxes now rather than in retirement. Once you start to earn around $73k the law starts to reduce how much you're allowed to put into a Roth IRA, at ~$82k you can't anymore.

So here's the plan for you - get your match, pay off your debt, then start pumping up your Roth IRA. You're allowed to put in a maximum of $6,500 into your Roth IRA right now, I assume you won't be hitting that level but if you can, do it.

If you're a super-saver and you can save beyond the $6,500 or your get more compensation start going past the $73k limit, then start moving your contributions back to the 401(k).

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BlueDoe1775 OP t1_j6ohbqf wrote

This is exactly what I will do, thank you!

I chose FSKAX for my Roth IRA, is it suggested to invest in different things for the Roth IRA or keep it all dumped into one fund?

I'm going to try my hardest to max it out after I pay off my debts!

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BlueDoe1775 OP t1_j6p6xav wrote

I just got word back that they match 35% of whatever I put in, once a year.

Does that sound normal? Like if I put in $10,000 a year, they'll put in $3,500.

Does that mean I should max it out if I can afford that?

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