What are some strategies to save more for retirement, if I am contributing the maximum amount to my 401(k) and plan to retire in six years?
I plan to retire in six years at age 64. Fidelity recommends saving seven to eight times my annual salary in my 401(k) by retirement. My current annual salary is $65,000 and my 401(k) currently has $185,000 in it. I'm currently holding 10 of the 30 available investments offered through my company's Fidelity 401(k). I am currently contributing 29% of my salary bi-weekly to my account and my portfolio is moderately aggressive. What other strategies can I use to save more before I retire in six years?
Ok for starters it is important to understand what your retirement expenses will look like. I find that is the best way to figure out how much you should have saved. You'll need to make some assumptions like rate of return, other incomes like Social Security, inflation, and life expectancy. From there you can determine the rough amount of assets you'll need.
Now on to strategies to save more. First, make sure you are maxing out your 401(k) for you that would be $24,500 this year. From there I'd also make sure you are maxing out any HSA (health savings account) you might have. Now it gets interesting ideally getting some funds into a Roth IRA would be great, but this is contingent on income limits. If you fall under the limits you should be able to contribute another $6,500 there. If you are over the limits, and have no other IRA's, you could do a backdoor Roth contribution or if your 401(k) allows after tax dollars a Mega back door Roth contribution ( here is a blog I wrote on it http://lifelongadvisors.com/mega-backdoor-roth-one-mega-strategy ). If you have exhausted all these options your last resort is simply an after tax investment account. Sounds like you are on your way from a savings stand point I would just highly suggest you get a handle on what you will actually need to retire.
Great job with your aggressive savings rate! At your age, you can put up to $24,500 into your 401(k). If your 29% contribution is getting you there and you still want to save more in a retirement account, you can put $6,500 into a Roth IRA or Traditional IRA. The Roth may be the better option so you have a diversified pool of tax treatments in your retirement accounts.
If you have a side gig in addition to your regular job (Lyft driver, part-time sales), you may be eligible to open a small business retirement account like a SEP IRA or Self Employed 401(k).
If you've maxed out those options, you could open an individual brokerage account (or joint if you are married) and invest as much as you like there.
Hope that helps!