FedRetired50
Recycles dryer sheets
I've always actively engaged my now-grown daughters on financial topics. Basic stuff when they were younger, like earning their allowance and then saving/budgeting. When they were still in high school I occasionally gave them hour-long talks on more in-depth topics.
Now they are in their early-mid 20s and my youngest is already making almost 6 figures (!). I made sure she signed up for her company's 401k plus she's been saving some outside of that. She clearly knows my mantra "money gives you options"; she saw me retire early and wants to do the same. She mentioned she was about to meet with a financial advisor and I had an unexpectantly visceral reaction to that - apparently I didn't go deep enough on investing or it didn't sink in. I asked if I could give her another talk, which has now grown to include her boyfriend, her sister, and my fiancé.
Over my career my investment method was to put at least 10% + 5% employer match into a standard retirement account, and let it ride with a spread of small/mid/large cap, and a little in international (which I later stopped due to so much exposure to Japan). I didn't have access to Roth for 18 years, and once it was available I didn't use it. I dabbled a bit with stocks in a post-tax investment account with good results. I keep thinking about what I would have done differently with my investments, starting at 22, knowing what I know now and with what is available now. I wish I had put some in Roth and some in a post-tax investment account - dedicated for retirement - to give me more options.
I have a nice list of topics so far and more keep popping in my head every time I get in the shower. I need to stop taking showers, or I'm going to overload them with info, LOL. So, my question. I want the collective mind's input on the following suggestion on where to stash one's money, which will balance taxes and provide options when the time comes to start spending it. This is assuming an employer match only on a regular 401k up to 5%, and basically the same tax brackets during and post employment. A future pension is in the mix, and hopefully most of Social Security too.
1. 6 months living expenses, money market
2. 401k 5% employee + 5% match
3. 401k Roth 5% employee
4. Investment account 5%, Boglehead method, light on bonds, mostly total US or total world (this is slated for retirement)
5. Investment account, a mix of future savings (Boglehead again) and maybe play money to dabble in the markets, if desired
If retirement happens before age 55 then they can pull Roth contributions tax free, do SEPP/72t without penalty, and pull from the investment account at LTCG rate. Near-term $10k can come from the 401k towards a house down payment without penalty. Thoughts?
Now they are in their early-mid 20s and my youngest is already making almost 6 figures (!). I made sure she signed up for her company's 401k plus she's been saving some outside of that. She clearly knows my mantra "money gives you options"; she saw me retire early and wants to do the same. She mentioned she was about to meet with a financial advisor and I had an unexpectantly visceral reaction to that - apparently I didn't go deep enough on investing or it didn't sink in. I asked if I could give her another talk, which has now grown to include her boyfriend, her sister, and my fiancé.
Over my career my investment method was to put at least 10% + 5% employer match into a standard retirement account, and let it ride with a spread of small/mid/large cap, and a little in international (which I later stopped due to so much exposure to Japan). I didn't have access to Roth for 18 years, and once it was available I didn't use it. I dabbled a bit with stocks in a post-tax investment account with good results. I keep thinking about what I would have done differently with my investments, starting at 22, knowing what I know now and with what is available now. I wish I had put some in Roth and some in a post-tax investment account - dedicated for retirement - to give me more options.
I have a nice list of topics so far and more keep popping in my head every time I get in the shower. I need to stop taking showers, or I'm going to overload them with info, LOL. So, my question. I want the collective mind's input on the following suggestion on where to stash one's money, which will balance taxes and provide options when the time comes to start spending it. This is assuming an employer match only on a regular 401k up to 5%, and basically the same tax brackets during and post employment. A future pension is in the mix, and hopefully most of Social Security too.
1. 6 months living expenses, money market
2. 401k 5% employee + 5% match
3. 401k Roth 5% employee
4. Investment account 5%, Boglehead method, light on bonds, mostly total US or total world (this is slated for retirement)
5. Investment account, a mix of future savings (Boglehead again) and maybe play money to dabble in the markets, if desired
If retirement happens before age 55 then they can pull Roth contributions tax free, do SEPP/72t without penalty, and pull from the investment account at LTCG rate. Near-term $10k can come from the 401k towards a house down payment without penalty. Thoughts?
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