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Money Guy Show
"We Make $250k - What Should We Do Next?"
May 8, 2024
Financial advisors discuss strategies for a 26-year-old couple making $250k/year, exploring options like pre-tax 401k contributions, backdoor Roth strategies, and maximizing financial potential at a young age. They also delve into topics like financial resilience, Tesla ownership, decision making on car repairs, and optimizing tax benefits in retirement savings.
25:50
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Quick takeaways
- Prioritize pre-tax 401k contributions if tax rate exceeds 30% for significant benefits.
- Utilize backdoor Roth or conversion strategy for tax-free contributions when exceeding income limits for direct Roth contributions.
Deep dives
Optimizing 401k Contributions for Tax Efficiency
Considering a household income of $250,000, it is suggested to review last year's tax return to determine the marginal tax rate. If the combined federal and state tax rate is over 30%, prioritizing pre-tax 401k contributions may offer significant tax benefits. This approach allows for immediate tax savings, especially advantageous at a younger age.
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Discover
highlights
Listen to the best highlights from the podcasts you love and dive into the full episode