Y'all are awesome, thanks for all the replies.
Not sure why you can't split between 401k and taxable until you have enough in both to retire.
Oh, I absolutely can, that's just not the strategy 1 outlined in the MMM post, that's what I was responding to. The trick is deciding _how_ to split it. 50/50 sounds good to me, I just have the sort of brain that wants to know _why_ that's optimal or not.
Now, suppose you are 25 years old,
Ah, if only :) I'm 31, though fortunately I need a lot less than you mention. Like the numbers I mentioned, maxing it out for 3-4 years would leave me set for 60. I find it less easy to account for the 25 years until then which was why I was wondering if doing it in that order made the most sense but it doesn't change much when I run numbers, they just both end up short. I do understand the concept of breaking up "retirement" like that, though. Psychologically I like the idea of having a stashed stash that picks up at 60, particularly as I might plan my ER to require some part-time work just to get myself out of the house. And at first glance it makes more sense than a rollover + 72(t) situation since it's giving the tax-advantaged money the biggest amount of time to compound, plus early distributions might actually screw me with taxes if my spouse keeps working and his income goes up a lot (which contingency is quite possible).
Sheepstache, do you have access to a Roth 401k?
+1. Regular IRAs/401ks don't make too much sense when you're already in a low tax bracket. Plus you're insuring yourself against future tax hikes.
I would think that the advantage of tax-deferred growth made up for a (potential) difference between tax treatment of dividends/gains vs. income, but I'm not sure how to calculate to what extent. Then again, I understand why my Roth IRA is good and figured I would be hedging my bets by continuing to max that out.
But to answer the question, no, I don't believe I do. I could check with Principal, which administers the plan, but my employer only ever refers to a regular 401k. Is it something that's available to the self-employed? I don't know if I'd qualify but I do have some self-employment income. My employer's payroll department is one woman in an office under the stairs so I wouldn't bet money on in-service distributions but it's neat to hear about.
So what it comes down to is people are saying a Roth-type post-tax contribution account would be the best, but once I've maxed out those options, when to decide between pre-tax and taxable accounts is the trick.
For me i literally had to squirrel money away where i couldn't get to it. Otherwise, i'd keep dipping into it. It's been a few years now and i have far better self control; in the beginning 401k all the way, no take backs. :)
This is good advice but I don't have a problem with self control. My spouse does so I'm encouraging him to save in his 401k, but then he's also the one who still has to save up his half of a house down payment :) Ain't that a bitch?