Are you curious how to make the most out of your Roth IRA and 401k? If not, you should be! Having a good investing process that you can use in your Roth IRA and get matched by your employer in your 401k is monumental for building wealth and saving for retirement. Watch the video above for more!
0:00 What to do with your 401k?
1:35 Roth IRA vs Traditional IRA
2:25 Calculating what you need for retirement
4:48 Why you need to look at retirement this far
6:32 Major changes coming to Social Security
7:29 Invest in a variety of ways!
#rothira #401k #valueinvesting
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Saving for retirement can be a daunting task, but having a Roth IRA and 401k can make the process much easier. These retirement accounts offer tax benefits and can grow over time if managed properly. Here are some tips on how to make the most of your Roth IRA and 401k.
Maximize contributions
One of the best ways to make the most of your Roth IRA and 401k is to contribute the maximum amount allowed each year. For 2021, the contribution limit for a Roth IRA is $6,000, and for a 401k, it is $19,500. If you’re 50 or older, you can also make catch-up contributions of $1,000 for a Roth IRA and $6,500 for a 401k. Contributing the maximum amount each year will allow you to take full advantage of the tax benefits and help ensure you have enough saved for retirement.
Take advantage of employer matching
If your employer offers a 401k with a matching contribution, make sure you contribute enough to receive the full match. Employer matching is essentially free money, and not taking advantage of it is leaving potential retirement savings on the table. If your employer matches up to 3% of your contribution, for example, contribute at least 3% of your salary to take full advantage.
Invest wisely
Investing money in your Roth IRA and 401k is one of the best ways to grow your retirement savings. Make sure to choose investments that align with your goals and risk tolerance. A well-diversified portfolio can help mitigate risk and maximize returns. Consider working with a financial advisor to help you create an investment strategy that works for you.
Monitor and adjust your investments
While investing in your Roth IRA and 401k is important, it’s also important to monitor and adjust your investments regularly. Market conditions and your own financial situation can change over time, so make sure to review your investments periodically and make any necessary adjustments. Don’t make drastic changes based on short-term market fluctuations, but make sure your investments are still aligned with your long-term goals.
Avoid early withdrawals
While your Roth IRA and 401k are meant to be used for retirement, there may be times when you’re tempted to make an early withdrawal. Avoid this if possible, as you will face taxes and penalties on the amount withdrawn. If you’re facing financial hardship, consider other options like a personal loan or a home equity line of credit.
In conclusion, maximizing your contributions, taking advantage of employer matching, investing wisely, monitoring and adjusting your investments, and avoiding early withdrawals can all help you make the most of your Roth IRA and 401k. Remember, starting early and being consistent will go a long way in ensuring you have enough saved for a comfortable retirement.
You forgot to mention the HSA.
Great video !!
What do you think of a 401K rollover to a new employer 401k plan who has low cost investments, for me to do a three fund portfolio? Versus a IRA rollover? I’m leaning towards the 401(k) rollover because I am able to contribute a lot more money than I can a IRA rollover. What would you suggest?
problem is when companies don't vet your 401k for a decade and lay you off since job security is a joke these days.
I'm 40 and have 20k in 401k. Looks like I need to retire in a cheap country.
Does this assume you invest none of your money after retirement?
you confuse currency creator vs currency user SSI will exist but the inflation will likely be a permanent state of things, in my opinion.
Max them out. 401k, Roth's plus if you have an HSA (Health Savings Account).
5:00 That retirement calculator hypothetical was fairly disingenuous. $6m at retirement is FAR more than enough. Look at the columns, at age 65 you saved 59k, and starting at age 66, you start burning 300k a year?
At age 83 you have 3.1m left and at age 89 you finally hit -300k? Must be a banger retirement to spend $3.4m in 6 years during their 80s. In reality though, as people grow older, their spending decreases. 9.5% annualized returns is also pretty high, general conservative estimates are 7-8%.
That being said, Roth IRAs and 401k are extremely important. Max them out if you can. Overall great videos, shows the power of compound interest overtime.
That is why we need to privatize social security. Us young generation paying for the older generation.
Love the videos – but if you got 6M in retirement this is assuming you are not getting any return on this money. Not even 3-4% in a conservative investment portfolio?
Max to the max. We maxed em all (Roth 401k’s/backdoor Roth IRA’s and the HSA) and saved another 350k in brokerage this year. Our burn rate is about $5500/mo. Load those boats.
Some 401ks have crappy options. I recommended to my daughter she invest up to the match, and put the rest in a Roth IRA,‘where she has unlimited options.
You are great teachers Paul and Mo! Love your channel!
thanks a lot of sharing. I am only a few years out to retirement, but still very useful
I'll save you the trouble. If you can max them out, do it.
Great channel! Glad I found you guys
Great stuff. Thanks for sharing. What's really cool is the $22,500 limit is the same for both pre-tax and post-tax 401(k) accounts. So anyone contributing at the limit can get more into and out of the Roth than out of the traditional. (You need to project out to retirement to understand this. Keep the tax rate the same so you don't muddy it up.)