Step 5 of 7 · Stage 2 Growth

Tax-advantaged accounts

Is there unused room in my retirement accounts or HSA?

4 questions
The order
  1. One-month bufferOne month of spending, in cash. It keeps an unexpected bill off a credit card, which is what ends most payoff plans.
  2. 401(k) employer matchWhatever your employer adds to your plan at work when you contribute. It is the only return here that arrives the day you claim it.
  3. High-interest debtAnything above about 10%. No portfolio reliably earns what a balance at that rate costs you.
  4. Emergency fundThe rest of your emergency fund, three to twelve months of spending depending on what you would have to recover from.
  5. HSAOnly with a high-deductible health plan. Untaxed going in, growing, and coming out for medical costs, which no other account does.
  6. Roth IRA / IRAUp to $7,500 this year. Above the income cap it is a backdoor Roth rather than a direct contribution.
  7. Max 401(k)The rest of your plan at work, up to $24,500 this year across a 401(k), 403(b), 457 or TSP.
  8. Mega Backdoor RothAfter-tax contributions converted to Roth, if your plan allows both. Worth asking HR, because most plans do not.
  9. Taxable brokerageNo allowance and no rules, which is why it is last. Everything above it is finished first.
What this step is
Your account order
Employer match, then debt above 10%, then the emergency fund, then an HSA, an IRA, the rest of your plan at work, and finally a taxable brokerage.
Room you have not used
Each account has a yearly allowance that does not roll over. This year it is $7,500 for an IRA and $24,500 for a plan at work, both higher from 50.
Recommendations
Where to open an IRA or brokerage accountWhat each provider charges, and what it takes to open oneNet worth projectionYour net worth at 10, 20, and 40 years.Tax calculatorYour take-home pay after every tax.Retirement drawdownHow many years your savings last.
Next and previous
← Previous · step 4Budgeting & savingsAm I keeping enough of what I make?Next · step 6 →Savings goalsCan I afford the house, the wedding, the car?
The whole playbook
Stage 1 · Foundation
First dollarsWhere do the first dollars go?Debt payoffPay it down, or invest?Emergency fundHow much cash should I keep?
Stage 2 · Growth
Budgeting & savingsAm I keeping enough of what I make?
Tax-advantaged accountsThis pageIs there unused room in my retirement accounts or HSA?
Savings goalsCan I afford the house, the wedding, the car?
Stage 3 · Retirement
Retirement planningAm I on track for retirement?