Last Updated: July 15, 2025
Retirement Accounts
| Account | 2024 Limit | Tax Treatment |
|---|---|---|
| 401(k) | $23,000 (+$7,500 catch-up 50+) | Pre-tax in, tax-deferred growth, taxed on withdrawal |
| Roth IRA | $7,000 (+$1,000 catch-up 50+) | After-tax in, tax-free growth, tax-free withdrawal |
| Traditional IRA | $7,000 (+$1,000 catch-up) | Pre-tax in (income limits), tax-deferred growth, taxed on withdrawal |
Savings Targets by Age
| Age | Target (× Annual Income) |
|---|---|
| 30 | 1× salary |
| 40 | 3× salary |
| 50 | 6× salary |
| 60 | 8× salary |
| 67 | 10× salary |
The 4% Rule
| Concept | Explanation |
|---|---|
| Safe withdrawal rate | Withdraw 4% of portfolio in year 1, adjust for inflation thereafter |
| Example | $1M portfolio → $40K/year. $2M → $80K/year. |
| Success rate | ~95% over 30 years with 50/50 stock/bond portfolio |
Order of Operations
1. 401(k) matchContribute enough to get full employer match — it's free money, 100% immediate return
2. Emergency fund3-6 months expenses in high-yield savings
3. Max Roth IRATax-free growth — especially valuable for young investors
4. Max 401(k)Up to the $23K limit
5. Taxable brokerageAnything beyond tax-advantaged limits
Pro Tip: Start investing early. $5,000/year from age 25 to 35 (then stopping) grows more by 65 than $5,000/year from 35 to 65 — because of compound interest. Your 20s are a compounding superpower you can never get back.