This is more of a general question, but here's some background just in case: I'm 27. I want to max out my 401(k) until there's enough of a balance that by the time I'm 60, I'll have enough old man money to last me forever with a 4% withdraw rate. But, if I do that I will easily have enough well before age 40 with not much in after-tax investments. Once I achieve the 401(k) balance I want, I would transfer those savings into after-tax investments that I would use to retire before age 60. Here's the hangup though. I would need many years to build up after-tax investments to the point that I could confidently retire early and have enough to last me until age 60. If I get the after-tax account building earlier, then I could retire earlier because the after-tax account would begin growing sooner.
So here's my question: Is it really *best* to max out the 401(k)? Would it be better to find a balance between the after-tax investments and the 401(k)?
I ran some numbers and that seems to be the case. If I contribute $13k per year until age 40, I'll have a large enough balance by age 60 to have a $40k age 60 income at a 4% WR (I am including employer contributions, 2%, and matching, 5%, in my calcs). By not maxing the 401(k), I have the extra after-tax cash to invest which will also enable me to have an after-tax balance high enough to give me $40k per year until age 60.
When I max the 401(k) until the balance is high enough and then shift to after-tax investments, I'd have to work several more years to get that after-tax balance high enough.
Am I missing something?