Question

So I will be debt free come april. I’m turning 40 this year and only have $4500 ish in my 401k. My company matches full contributions to 4% then 1/2 contribution up to 6%. Im going to max out for sure at 6% but I will have an additional $450 a month to invest once the debt is gone. Should I invest in a Roth IRA or money market so it’s more accessible if I need it?  

Answer 1

You are allowed to contribute up to 18k pre-tax. I would contribute as much as I could even without the match after you get a small savings cushion

Answer 2

Timely question for me too! From what I understand thing to consider is reducing taxes today versus when you retire.  

Answer 3

I think you should make sure you have an emergency fund set up for accessing if needed. I would diversify your retirement investments between 401(k), before tax, and Roth, after tax. I would try not to consider accessing these for the next 20-25 years.  

Answer 4

Be sure to have your 3 to 6 month EF and also get all the matching funds for 401k you can. Roth IRA for sure and max that out every year. Look into money market accounts for access to funds if need be.  

Comments

@peracid exactly what I was going to say

Answer 5

I would talk to a Financial Planner since you have to make up such a large amount in a relatively short amount of time for your 401k.  

Comments

I second this. I have both a 401k and a Roth. If you think you'd be tempted by being able to take out of the Roth then put more in the 401k. Either way talk to a planner for sure.  

Answer 6

Roth for retirement only with the intent NOT to take it out til then. If you plan on needing it sometime the good mutual funds

Answer 7

First have at least 6 months worth of expenses in an emergency fund. Stash it in a money market account or high yield savings account. You can compare rates at Bankrate. com You may be able to find higher rates at a credit union. Check for one near you at NCUA. gov Invest 6% in the 401k to get the match. Then any remainder to a Roth IRA.  

Answer 8

Roth IRA. You’ll get a better return for your money and build wealth faster.  

Answer 9

EF -> 401K -> Roth IRA -> Open/High Interest Savings is the general consensus from the advisors I know. (For Canadians it would be EF -> TFSA -> RRSP (if work has one, contribute to that first, then personal) -> Open/High Interest Savings)