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Should I reach the maximum contribution to my 401(k) account or continue to grow my short term investments?

My wife and I are in our late twenties. We have both maxed out our Roth IRAs. I'm currently contributing 3% of my salary towards my 401(k) with no match. When I retire, I will collect a pension and 99% of my salary. I feel comfortable about my retirement plan: a full lump sum pension, a salary of $7,500, and a maxed out Roth account with 25 years of contributions. I also have an emergency fund. Should I work towards increasing my 401(k) contributions until I reach the maximum (to limit my taxable income)? Or should I continue to grow my short term investments? Or is a combination of both recommended?

Pensions, 401(k), IRAs
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January 2019

Great work being so on top of your retirement plan! It’s great you have such a clear idea of what your future would look like. Without knowing more information, I think that splitting your extra cash between short term and long term investments is a good idea. You clearly have a plan for your career, but it would be a good idea to continue to contribute to your 401(k), at least as a back-up plan. If, for whatever reason, you didn’t have the pension at retirement, you’d want the extra money in your 401(k). that being said, this is a great time to achieve some of your shorter term financial goals. I would encourage you to consider how you invest and make sure all of the “extra” money you have is going into good investments that will grow and ultimately create some passive income for you. You’re on your way to financial independence, but you’ll need to be sure your putting your money toward things that will continue to appreciate in the long term.

January 2018
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January 2019