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Comment by bluGill | Hacker News Reader

If your 401k is maxed out it is probably wrong to save anything more in general. Maybe you are planning an expensive vacation so you save for a few months, and everyone should save a small emergency fund. However there is no reason to think you will live to see tomorrow and if you are one of the unlucky who don't wake up again any savings will be lost. A 401k is for most the right level of compromise unless you start late in life a maxed 401k is probably slightly too much savings. If you have the 401k maxed it is time to start living on whatever money is left - buy toys you will enjoy, donate to a good cause, I don't care, but if there is money left over after paying for normal life enjoy it as you can't take it with you (see religion for possible exceptions - you get to figure that out on your own)

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// If your 401k is maxed out it is probably wrong to save anything more in general.

This sounds like really bad advice. 401K limits are 22.5K this year. If you are making 100K and you are able to put away over 20% of it, maybe that gives you a reasonable probability of maintaining your lifestyle in retirement. If you're making good money and you're only saving 22.5K, you are probably going to take a serious hit whenever your income stops.

You are also completely undervaluing having "dry powder." Let's say interest rates go through the roof and "nobody" can afford to take out a mortgage, being the one guy with cash-on-hand will let you capture some once-in-a-lifetime real estate deals.

Also, freedom. Under your scenario, someone working a decade will have saved 220K in their 401k and that's it. Now they want to quit their job and start a business. They have to cash out their 401k just to sustain ~1 year of them not drawing a salary. Who's gonna do that? Versus, imagine the same person has a ton of additional savings - they can take the risk because it's a much smaller risk to them (longer runway)

// if there is money left over after paying for normal life enjoy it as you can't take it with you

You are probably undervaluing the "enjoyment" people get out of deep financial safety.

To say nothing of the fact there is an guarantee your tax rate once you retire will be less than it is now. In theory we all asume it will be, but like all other financial decisions, past performance should not be assumed to be future results. Factor in Uncle Sam is the tax rate decision maker and anything is possible.

In short, saving taxed income is a form of diversification.

If you max out your 401k from 25-62 you will have a nice nest egg - that is 8 million dollars assuming 10% returns and constant contributions. Realistically the max will go up over time, so you will contributing more money - inflation will eat some of the gains, but even still the extra contributions will make that up. That should make for a comfortable lifestyle if you retire early.

The key is to save all a long. If you start saving for retirement at 50, even with catch up contributions you are probably not going to have a nice retirement.

What you're saying here is that you can be OK if a lot of things go perfectly. Which is probably true. I am going to assume your math works out, but what if (1) you are unable to work a chunk of that period due to illness, unemployment, etc. Saving beyond your 401k contrib when you're able can mitigate some of this risk (2) the 10% rate is a very nice assumption. What if it doesn't hold up, or doesn't hold up for the period that matters to you. What is the impact on your life if this number ends up being 5% instead? (3) Are you under-concerned about inflation in these projections. I am not totally convinced 401k limits have risen in tandem with the real inflation rate.

So let's say your number is 2x optimistic and someone retires with 4M instead - whatever that means in a bunch of decades from now. Then you pay tax. Depending on where you live, between federal, state, and city that can be close to 50% especially if rates go up. So that leaves you with 2M. Then say you end up living to 90, that's like 71K per year take-home. I guess you can live on that today. But for example my taxes for the house are like 20KL. So almost a 1/3 of your take-home goes to that. it's not SOOOO cozy.

You should be earning returns on your investment while retired so you get more. Plus you get social security as well.

It's also possible to save another ~$30k (depending on employer match) if one's 401k offers the "mega backdoor" option. It's definitely a great option if one can afford it (after regular pre-tax 401k), as it's basically a gigantic Roth IRA (with no RMDs during retirement, like a Roth).

2013 - $220,000

2023 - $293,319.96

Federal minimum wage 2013 - $7.25 an hour

Federal minimum wage 2023 - $7.25 an hour

https://data.bls.gov/cgi-bin/cpicalc.pl

This is bad financial advice. I recommend to anyone reading to not do this lest you become the subject of another crappy CNBC headline.

Relying on a 401k alone means that in the best case scenario means you're all but guaranteed to work until 60. Being on this site, you're statistically likely to be a person that can retire on great sums long before 60 and be both financially secure and have many healthy years to enjoy your life.

> Relying on a 401k alone means that in the best case scenario means you're all but guaranteed to work until 60.

This isn't actually true. I don't mean to suggest that the GP is good advice, but:

1) Many companies offer "mega-backdoor Roth" 401k, with in-service conversion from regular after-tax dollars to Roth after-tax, meaning you can contribute a total of ~$53k annually or whatever the number is now.

2) When you separate from your employer, you can roll over your Trad and Roth 401k into Trad and Roth IRAs.

3) After 5 years (which clearly won't be an issue), the principal contributed to a Roth can be withdrawn tax and penalty free even before retirement age.

4) You can always convert Trad IRA dollars to Roth IRA dollars by paying tax. These dollars become principal in the Roth and therefore eligible for early distribution.

Assuming you haven't retired incredibly early or made highly unusual gains, a combination of continued Trad->Roth conversion and Roth principal distribution can get you to retirement age even without any additional savings.

Retiring at the youngest age possible isn't the be-all-to-end-all and I will continue professional activities for at least a time at some level after "retirement." But, yes, giving yourself options is good advice generally.

Just FYI, you should definitely do your own research and your own planning for what's right for you / what your trusted financial advisor says. For example, this comment is completely wild financially to me to read for advice.

- You will live to see tomorrow.

- If you are high enough income, maxing 401k, an IRA, and an HSA every year is sadly still not enough.

- Location variance makes it really hard to find comparable intel online for a right path. Cost of living, job market / income levels, family situation and size, etc...

- Although sometimes extreme, the Bogglehead and FI/RE communities are great.

I agree you do need to do your own research about what is right for you. However I still think that my advice is right for most people - it gives a comfortable retirement without sacrificing too much of the now. If you are starting to save at 50 it doesn't work of course, starting young is continuous savings is key.

> You will live to see tomorrow.

statistically yes, but there are outliers who won't.

> If you are high enough income, maxing 401k, an IRA, and an HSA every year is sadly still not enough.

Sure, but few people are that high. Even of those who are, 22k (adjusting upward every year) from 25-65 is a lot of money. You can save a little more if you want to retire early, but you are only young once and your time is better spent enjoying youth while you have it.

Paradoxically, if you max your 401k/IRA/HSA every year, the higher your income, the less that money is going to be enough in retirement. If you earn 400k/yr and only save ~30k/yr, then that implies you spend 370k (incl taxes, so ... say, 250k) per year. You need MUCH more retirement savings than 30k/yr to manage that, unless you want to take a drastic lifestyle cut when you retire.

Unless most of that is going to pay down a huge mortgage, pay for childcare, and pay off student loans?

Paying off incurred debt is saving, especially if you pay it off early. If you retire without a mortgage but own a house, then you effectively have reduced your expenses by that much.

The only thing to keep in mind is that debts like that contribute to negative net worth/retirement savings. If you have 200k in student loan debt, you have a -200k net worth (even if it costs ~250-300k to pay off due to interest...)

>If your 401k is maxed out it is probably wrong to save anything more in general

The path to freedom is max, not min or mean.

The path to freedom is being content with what you have. More only means you can have more expensive tastes when you are free - if you ever get free.

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