More on the topic of 401k saving: Can there be an “optimal amount” to have in a traditional 401k? At the very least, adjustments can be made to get close-to-optimal. And timing wise with the calendar approaching mid-year there is ample time (unless you have already maxed out your 401k) to make meaningful adjustments to your 2019 401k elections and start the optimizing process.
This topic is especially important for those who take saving seriously and who have at least $400,000 TODAY in a 401k or IRA Rollover accounts combined with a 401k account. (For those with less, these concepts still matter but with less urgency.)
First: How old are you?
- Age matters because TIME is one of the biggest determinants of how much a 401k balance can potentially grow.
- If you are younger than 40, these concepts could affect you A LOT as the power of compounding can kick in over multiple decades (this does not mean trading; rather saving, allocating and allowing compounding to do its work).
- If you are older than 60 and nearer to retirement or selling a business, these concepts matter greatly but the solutions will be slightly different.
- If you are in your 50’s, a combination of strategies can work – and keep in mind the “catch up” that allows you to save more.
