Hi Folks,
I'm looking for input on a debate I've been having related to 401ks and taxable accounts and it seems like a lot of the conventional wisdom isn't geared toward our situation. In short, We've been maxing out our 401ks and also contributing to taxable accounts and a post-tax IRA but we're starting to wonder if that makes sense given our shorter-term priorities. I work in a stable position in real estate and would like to keep more liquidity to capitalize a couple of deals/projects if/when there's a downturn and pricing becomes more reasonable here.
Here's the situation:
We're both 31 and on track to contribute $18,500 each ($37,000 combined) to 401ks this year. In addition, my company will make a $12,000 profit share contribution and a $4,200 match. My wife's company will make a $2,500 match. That's a total of $55,700 going into a 401k annually if we continue to max out. The current balance of our retirement accounts is $165,000 because we've only been doing this for a few years after paying off our student loans.
In addition to the above, we save about $4,000/month that we've been putting into taxable brokerage accounts, a post-tax IRA and a money market account for short term liquidity. We have about $65,000 readily available there. This year I'll receive about $30,000 in post-tax bonus income that will also go to those accounts. They should reach $125,000 by the end of the year.
We own a home in Seattle and have about $550,000 in equity (<50% LTV mortgage at 3.8%). We don't plan to use the above funds for a residential downpayment so that isn't a consideration.
I'm wondering whether there are others out there that think you can be putting TOO MUCH into 401ks as a young professional. Given the harsh penalties for touching that money in the next 20 years it seems like prioritizing a more accessible nest egg mike make sense given our skillsets and interests. We're also very much in an accumulation phase now that we're done with student loans and have eliminated non-housing debt.
Any thoughts or input would be much appreciated!