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Should I put all my retirement savings into my 401k?
“Should I put all my retirement savings into my 401(k)?” Not necessarily. Here is what you should evaluate. A 401(k) is one of the best retirement tools available, especially up to your company match. That match is like free money and it's usually the first place you should save. But after the match, the decision gets more interesting. Traditional 401(k) contributions lower your taxes today, but those dollars will generally be taxed as ordinary income when you withdraw them later. And unlike Roth accounts, you'll eventually be required to take distributions whether you need the income or not. Forcing you to increase your taxable income (and taxes) on money you might not need. So how do you decide? Start with one question: What tax bracket do you expect to be in during retirement? If you expect to be in a lower bracket, continuing to fund your traditional 401(k) may make a lot of sense. If you expect similar or higher tax rates in retirement, you should be looking at Roth accounts or building additional flexibility in taxable accounts. The goal is twofold. To save as much as you will need AND to save it in the right type of accounts. That way you can generate the income you need and not give away more than you should in taxes. In this week's video, we walk through a simple framework for evaluating the proper mix of traditional, Roth, and taxable savings to fund your retirement. Link in bio if you'd like help running the numbers for your situation. #retirementplanning #401k #rothira #rothconversion #financialplanning #wealthmanagement #retirement
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