Money Guy Show Should I Slow Down Saving to Buy a Car?
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Dec 18, 2024 A listener seeks advice for their newly married daughter balancing car savings with 401(k) contributions. The hosts break down strategies for optimizing retirement savings while managing immediate expenses. They share insights on Roth conversions and the importance of maximizing employer matches. There’s a humorous glimpse into the production team’s antics and the challenges of handling concentrated stock holdings. Practical advice flows freely, ensuring confident financial decisions for young adults navigating their future.
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Prioritize Pre-tax 401k
- Prioritize pre-tax 401k contributions, especially if you're a high-income earner.
- This is because the tax benefits are significant in higher tax brackets.
Avoid Crowding Out Employer Contributions
- Be cautious not to over-contribute to your 401k and crowd out employer contributions.
- Ensure there's room for matching dollars and profit-sharing.
Roth Conversion Considerations
- Consider if your current tax situation is lower than it will be in retirement before converting traditional or employer match to Roth.
- Analyze the tax implications of a Roth conversion, such as bracket changes or lost credits.
