Wednesday, November 3, 2010

Maxing out 401(k) contributions

Peanut and I had a fun little exercise yesterday, seeing what it would take for me to max out my 401(k) contributions. While I'd be contributing $1375 per month (to hit the $16,500 limit for 2011), my take-home income would only go down about $800 -- that's $575 going straight to retirement instead of taxes!
We are already each maxing out a Roth IRA each year, but because he's just starting a freelance business, my 401(k) is really our only option for pre-tax retirement savings (we'll look into SEP accounts and other freelance options later, once his income levels out). However, because he's just starting a freelance business, there's no way I'm tying up our only reliable source of income like that. I'll leave it for now at the 6% I'm contributing, which my company matches. Maybe when he gets a long-term contract, I'll up my contributions temporarily, but I think until our loans are paid off, that's a goal that will have to wait. Still, it'll be fun to aim towards that!

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