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Financial Planning / Foolish 401(k)s
|Subject: Re: Roth 401k vs Regular 401k||Date: 11/8/2006 11:12 PM|
|Author: whyohwhyoh||Number: 21193 of 25265|
Unfortunately I haven't been too good at contributing to my Roth IRA, since it is so much simpler just to have my payroll deduct the amount from my 401k....I'm currently 32 and as of now am only contributing the 6% that my company will match. Does it make sense to drop it down to 4% next year on a pre-tax basis since I will still get the company match and perhaps do another 4% to the Roth?
6% is too low...
I recommend increasing your percentage to at least 10% in your 401k assuming you have good investment options such as a low fee S&P500 index fund or target year retirement (ie 2045 retirement fund).
As for Roth versus non Roth 401K... if you think you are going to be a wealth machine and retire with a large nest egg then put a significant % into the Roth 401K; otherwise, if you think you will retire with a modest nest egg, like 10X your annual income, then I would stick with the non Roth 401K option.
Also if you think taxes will increase dramatically over your lifetime to France like levels, hedge some into the Roth 401K.
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