Officially surpassed $70k net worth today at 28 y/o! How am I doing so far?

[victoryforever]

Current salary is $75k w/ 8%-10% bonus

No debt.

BofA checking - $2.5k

BofA savings - $2k

HYSA - $31.5k (emergency fund money)

Roth IRA maxed out since 2022 currently at $21k

Brokerage account - $500 (just started putting money into it this month; planning to contribute $500/mo to mutual fund)

401k - $12.5k (contributing 6% w/ employer match of 3%)

Hoping to reach $100k by the end of this year. Any feedback/advice welcomed!

 

[steve77777]

@victoryforever you are doing great for your age!

Keep maximizing IRA, great decision.

And try to contribute more in the 401k - it is reducing the taxation.

 

[mrs94]

@steve77777 Your 401k should not be maxed unless you have maxed out a roth or HSA for the year first. Put enough to get max match and then contribute to a roth.you aren't paying taxes on the 401 now but you will be paying taxes on the growth when you withdraw from it.

 

[victoryforever]

@steve77777 Thank you so much! I currently put in 6% w/ my employer matching 3%. I've had conflicting thoughts about people telling me to max out my 401k because I feel like I will be left with nothing in my paycheck. Thoughts on that?

 

[catherinenosleep]

@victoryforever I would be purposeful with the left over savings. Clearly define goals for what you want to do with that money. This could be anything like a fund to buy a house or a vacation or a new TV. Then anything additional to that you can use to further max retirement. As your income increase, as it no doubt will, you will find that it becomes much easier to max your 401k while still having savings left over each paycheck. At that point, you can just max 401k without having to make compromises.

 

[victoryforever]

@catherinenosleep Thanks for that perspective. I think I will increase my 401k contribution by 3% every year until I make enough to max it out and have money left over which I will then invest in my taxable brokerage account.

 

[ksfaith]

@victoryforever I would try to increase your emergency fund to be equal to a year’s living expenses, if it isn’t already. If your employment situation changes you will need cash you can access without a penalty. A 401k has penalties for early withdrawal. You could access your Roth contributions (not the gains) without penalty too, so that could a secondary emergency fund. You’re doing great!

 

[victoryforever]

@ksfaith Thanks! Based on my budget, my expenses for 6 months are around $13k. I think $31k should last me a while hopefully. But yes, I'm definitely still contributing about $1k - $1.5k every month towards my savings

 

[dictionary]

@ksfaith Agreed, I would continue to add to your emergency savings until you have at least a years worth of living expenses (housing, food, bills, etc)

You’re in great shape otherwise, and are on a nice trajectory especially due to the fact you have 0 debts. So if you keep this up, by the time you’re in your mid 30’s you will be living very comfortably.

 

[saba]

@victoryforever I was only putting 4% into my 401K the first year I started, then I moved to 8% last year, and this year I moved it up to 15% on Jan 1st, but plan to increase to 20% stat.

My HR sat down with me and showed me a normal 40 hour paycheck at different percentages- it was basically a difference of $30 in my actual pay, since it's done pre-tax you BARELY feel it. I wish I had done this with her sooner so I could have seen the very small effects- I would have been maxing it out all this time if I was aware how little a difference it actually made in my take home.

Additionally, I looked at a 40 hour paycheck from a few weeks ago, when I was taking out 8% to 401k, vs the same 40 hour paycheck this past week at 15%, and I'm paying like $40 less state tax and $60 less federal tax bc it's helping to lower my income, so it's actually putting more money back in my pocket by putting a higher amount into 401k. In theory it should drop me from a 24% tax bracket to a 22% tax bracket.

 

[godswill1]

@victoryforever Work up to maximum. No need to “leave nothing in your paycheck”
Increase your % whenever you get a raise

 

[leseulloupgris]

@victoryforever Put $500 more a month in your 401k vs the brokerage. Reduces your taxable income by $6k, probably saves you about $1.2k a year in taxes or more depending on the state you live in.