Financial question

[SWPA Pilot]

This may not be the right board to ask this, but I figured that since pensions may or may not be there for retirement and social security may or may not be there, someone may have thought this through and has some info on this.

What would be a better option -

1. Max out 401K.

2. Max out Roth IRA, then put the rest in 401k.

I recently heard someone say the Roth IRA is the way to go since you have already paid taxes on that money, and who know what the taxes will be in the future. They may be more which would take a bigger cut out of your 401K fund. But I have also heard the arguement that the 401K is the way to go since it lowers your taxable income. The best way to go would be to max out both, but if I can't, which would be the best way out of the two listed above?

 

[Swaayze]

401k to the company match, then

max the Roth IRA (assuming you'll be in a higher tax bracket after retirement), then

401k to the max

 

[SWPA Pilot]

marrying into money would have been a good idea, but it is too late for that.

 

[Mooseflyer]

401k to the company match, then

max the Roth IRA (assuming you'll be in a higher tax bracket after retirement), then

401k to the max

Swaayze's idea is right on, but the reasoning is a little different, IMO. By maxing the company match, it's essentially a 100% return on your investment right away. The advantage of the Roth is generally considered that your return (reinvested) grows and is withdrawn tax free, not that you'll be in a higher tax bracket after retirement (although it would be nice).

BTW, there's a current 4 page thread on this subject in the General section.

 

[miles otoole]

marrying into money would have been a good idea, but it is too late for that.

Says who? Apparently you aren't a 50 year old captain yet.

 

[radarlove]

401(k) max first. You want company match (if you have one) and you want, want, want to use pre-tax dollars to invest. The secret is to push off taxes as long as you can.

Whoever told you to invest with post-tax money is not the sharpest tool in the shed.

 

[Whataburger]

Everything I have read says:
1. Pay off credit cards due to high interest rates.
2. Have 6mos living expenses liquid in savings/brokerage acct.
3. Max 401k to reduce taxible income plus get company match
4. Max Roth Contribution so money can grow tax free
5. Contribute to IRA or personal brokerage account
6. If you wanna keep the late J.C. happy, give 10% to your church.
7. Buy lottery tickets, loud motorcycles, old airplanes, muscle cars, and every Motley Crue and David Allen Coe CD on the market.

 

[Jim Smyth]

Max the 401K out when you get the chance. Its the only form of retirement that we have thats guaranteed. Profit sharing isn't a for sure but has historically paid pretty well. ESOP is also another tool that has done well for many Pilots if you want to put more of your retirement into the companies hands. Top Hat will become available when you get into the left seat. If you have a long career ahead and you plan and save as much as you can in the plans offered you will reitre very happy and secure.

 

[Capt.LongThrust]

Everything I have read says:
1. Pay off credit cards due to high interest rates.
2. Have 6mos living expenses liquid in savings/brokerage acct.
3. Max 401k to reduce taxible income plus get company match
4. Max Roth Contribution so money can grow tax free
5. Contribute to IRA or personal brokerage account
6. If you wanna keep the late J.C. happy, give 10% to your church.
7. Buy lottery tickets, loud motorcycles, old airplanes, muscle cars, and every Motley Crue and David Allen Coe CD on the market.

Hey Burger I thought beer and cigs were #1? Are you losing track of your priorities in the cold weather?

 

[TexaSWA]

I spend most of my money on fast cars and loose women. The rest I just blow.

Hey Jim, thanks for the beers in SAT.