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I suspended my 401k contributions for 3 months to kill some debt that I had from over the holidays. By the end of March I'm ready to contribute again. Before I was @ 11% just going into my 401k in target dated funds. I'm thinking of doing 10% in 401k and 5% in a roth @ troweprice that holds my 401k. I'm 29 going on 30 this August being married with 1 child and hopefully have another one by next year. I currently make 66,000 before rental income. Rental income could be as high as 14,000/year but I never use it in my personal finances. Any profits are reinvested into more properties.My current 401k balance is 44k and have not started my roth yet. Thanks guys
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Do you get a match from your employer?
Does your wife work or stay at home mom (SAHM)? If work, does she get a match? What amounts is she contributing?
From your post, I would guess she's a SAHM...
As just a blanket statement without other knowledge about your situation - many people would be much better off if they would do 10% to 401k and 5% to a Roth. If everyone in America did that, our retirement picture would look much better
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I get a 6% match from my employer on my 401k. My wife works @ the same employer but works about 20 hours to my 40. She contributes 10%.Comment
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Ok that likely means your household income is a little over $100k (including the real estate income) - so you're not in a super low tax bracket, or a super high one.
The only thing you might want to consider is that you are building real estate income - which will be taxable income during retirement (obv). That increases the benefits of a Roth. (Higher income = higher tax bracket = higher benefit of tax free withdrawals)
401ks benefit investors the most when they are essentially the only source of income - because all withdrawals go directly to the lowest tax brackets first. In your case, due to the real estate income, they won't even be close to the only source of income - so all withdrawals will be taxed at the higher brackets. This lowers the value of the 401k.
So I actually think that taking the employer match (6%) and then attempting to max out both you and your wife's Roth IRAs would be in your best benefit.
You should always take free money
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