Life Situation:
27 y.o. female. Files "Single", no dependents. Engineer, living in Oakland, CA
Gross Salary/Wages:
$55,000
($3202 / mo. after taxes and 401k contribution)
Pre-tax deductions:
401k w/ 4% match: contributing 4%
Other Ordinary Income:
No other income. (Wealthy parent owns my car (1998 Jetta) and pays my car insurance ($10/mo.), but gives me no other income).
Taxes:
Federal: (25%), state/local: (9.3%)
Current expenses:
All on a per month basis and are MY cut of expenses. Boyfriend's income and expenses not included. (Side note: we split everything 50/50 except I pay slightly less for food).
Rent for studio (including utilities): $335 (After split with bf, crazy good deal)
Gym membership: $70 (No start up fees, $5/ mo. discount. I had a hard time justifying this at first, but my health has definitely benefited from belonging to a gym that I enjoy going to (and actually use). Price includes: yoga classes, rock climbing, crossfit, cardio boxing, TRX, full set of cardio and weight machines. I go there 3 - 4 times a week.)
Cell Phone: $28 (Republic Wireless)
Food/Groceries: $200 (After split with bf, mostly from Costco)
Food/Drinks Out/Movies/Etc.: $100
Internet: $20 (Split with bf)
Car: $20 (This is an OVER estimate. I bike to work/gym/bars/movies or take BART (I stocked up on commuter credits (pre-tax) and have $240 left. Technically, it's my dad's car and he also pays insurance (see 'Other Income'). I drive it to the grocery store about 2 times / month and across the street for street cleaning. I've filled my tank 2 times in 2015).
Clothes/Furniture/House Shopping/Trips/Misc: $400 (This has been crazy high since I moved to Oakland 9 months ago without furniture, bought a bike, re-vamped my wardrobe (although all highly discounted or 2nd hand), and went on a few trips.)
Medical/Dental/Vision Insurance: $0 (My company pays for everything for medical and up to $1500/yr for Dental and Vision)
Total: $1173
Assets:
$10,000 in a betterment account (Since Jan, 2015 (when student loans were payed off), I've saved about 2k / mo.)
Debt:
None. Finished paying off my student loans!
As the sole heir to a wealthy parent, what is the best way for me to plan for retirement? What I'm doing is putting 4% into my 401k and, after living expenses, investing the rest of my monthly paycheck in taxed investments (betterment.com). That's $2,200 per year in my 401k ($4,400 once I have full matching - after 5 years) and $20k per year invested in betterment. I could easily max out the $18,000 yearly limit for my 401k, which would put be in a lower federal tax bracket however...
If I maxed out my 401k every year, I wouldn't be able to touch it without penalty until I'm 59.5. With such a low cost of living, I expect to retire within the next 10 years (37) and then live off a combination of dividends and side jobs. Also, at age 59.5, I will probably have inherited more money than I know what to do with. My wealthy parent also lives an MMM lifestyle (although I'm sure he's never heard of the blog). He's made it repeatedly clear that I will inherit everything (he recently got engaged and has gone over all the details of the prenup with me. She's independently wealthy and will get nothing).
I know that nothing is certain, and I definitely would like to have a contingency plan, however I just don't think it makes sense for me to max out my 401k and not be able to use my money for over 20 years after my planned retirement age. However, it pains me that the majority of my savings has been taxed at 25% and gains from my investments will also be taxed. Any suggestions?
BTW: my income is for a first year engineer (no master's degree, no P.E. yet). I estimate that if all goes well, it should increase by about 10% every year for at least 7 years.