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I’m 26 and I max my 401k, IRA, and HSA.
Rising Star
This is the way. Start that as early as you can afford it and you will be really grateful years down the line.
When I was 22, I put 6% in because I didn’t work in consulting yet. I made about 53k, no debt. LCOL city. I should have done more at 10-15% because I would have been able to afford it, but I just wasn’t sure at the time if I could. I did spend a bit more to get my own apartment, which I loved, and honestly I wouldn’t trade that now for the increased savings.
Just wish I would have tried bumping it up slowly, like maybe 2-3% every few months until I found the amount that I could afford while still feeling comfortable.
Oh well - either I got lucky or made the right moves because here I am 13 years later, NW is easily 1 million between my SO and me. Do the best you can right now, save as much as you can, but as you grow in your career, your ability to save more will increase, as long as you have cultivated the discipline to do so.
I'm 33 and put in the max, which is about 7.5% for me, and I also put the max for HSA (family) in. If you're 22, and can max out 401k and HSA, go for the IRA too if you want - you'll put yourself way ahead by doing all that. Just keep in mind that even if you retire early, you can't access the 401k and IRA funds early without paying a penalty.
You can also do a Roth IRA ladder to withdraw the money early
I do 10% into my 401k and then I throw the max Roth IRA as well. I’m in mid twenties and want to fund as much as I can into my thirties
For spouse and I: Max put 401ks (x2) , Max IRAs (x2), Max HSA account.
I never thought of it as a percentage, just think of it as paying myself first and have done this since I began working
Pro
Maxing 401k, 33. I couldn’t afford to do this until this year (not a consultant) & I’m trying to catch up for my early years in media/HCOL city where I didn’t contribute
When I was 22 I was making about 50k in a MCOL city so was only doing about 10-12% but as I got my raises I kept increasing and started maxing by the time I hit 26.
Even if you’re not super high income yet, the most important thing to know is that time is your greatest asset. Sock away as much as you can - at least 10-15% into tax advantaged accounts (401/Roth), even when you’re simultaneously paying off student loans or balancing other “just starting out” expenses. That amount is so small you won’t miss it, but invested and compounded, it’ll change your life. My spouse and I both come from lower middle class families and didn’t have much financial literacy, and work in medium-income fields (took us both about 12-15 years of work to break 6 figures). But we saved as I outlined above, and we just crested 1M net worth, early 40s. (I know that’s small potatoes compared to some of you, but for us, it’s huge — and it’ll change our family tree.)
Always max out your 401k ($19,500 per year)
Lots of people don’t have the disposable income to do that, especially when they’re just starting out. If you’re in that position, prioritize 1) getting your 401 match, 2) max your Roth IRA, and 3) anything else you have available can go back to your 401.
35, making 150k—i put in 50% of my paycheck to hit the 58K 401k max did the year.
Above 19.5 is are all post tax dollars that i convert to Roth 401k via a mega backdoor.
Rising Star
My husband and and I are 25 and 26. We contribute 15% to retirement. Mostly in our Iras, but some in our 401k. My husband and I know we have large expenses in the next 10 years, so we invest lot just in the normal market to we have better access to that money.
Whatever you land on find a way to “automate” tour savings. Increase the contribution % by 1% semi-annually/annually until you hit the max. You’ll hardly notice the difference. Took me 3-4 years of this and then I hit the max while also paying off remaining grad school loans.