Maximize 401K Yearly after you are Debt Free
Maximizing your 401K each year after we are Debt Free is one of the rules and action steps that we teach our boys for them to head towards their Financial Freedom goals. It is Action Step 9 in our 10 action steps to Financial Freedom.
Action Step 9 is to maximize their Retirement Savings and Investments up to 25 times their expenses. There have been many examples that if you have 25 times your expenses and take out a 4% withdrawal a year it could last them the rest of their lives. Check with your Professional Advisor on what the maximum is that you can Invest this year in your 401K and IRA.
Investopedia said “if you have both a Roth 401(k) plan and a Roth IRA, your total annual contribution for all accounts in 2020 has a combined limit of $25,500 ($19,500 Roth 401(k) contribution + $6,000 Roth IRA contribution) or $33,000 if you are 50 or older ($19,500 Roth 401(k) contribution + $6,500 catch-up contribution + $6,000 Roth IRA contribution + $1,000 catch-up contribution).” For you fact checkers you can see the link in the below show notes.
As always, I am not giving you any Financial Advice and you should seek advice from your Professional Advisors to see what is best for your situation. See my Disclaimer at MillsWay.com. This is for entertainment only. Listen to my Podcast for the full show.
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Sources and Resources from Podcast (Available in Show Notes)
1. 2020 401K Limits by https://www.investopedia.com/ask/answers/102714/what-are-roth-401k-contribution-limits.asp
2. 4% Withdraw Chart “Portfolio Success Rates: Where to Draw the Line” 10/25/19 by Philip L. Cooney, Ph.D.; Carl M Hubbard, Ph.D.; and Daniel T Walz, Ph.D. https://www.onefpa.org/journal/pages/Portfolio%20Success%20Rates%Where%20yo%20Draw%20the%20Line.aspx