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Where Do I Invest After I've Maxed Out My 401K? | Our Top 5 Ideas - YouTube
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are you able to
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max out your retirement savings yet you
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still want to save more
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in this episode we'll reveal what we
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tell clients who are in this situation
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we've got our top five ideas for what we
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tell people to do after they've maxed
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out their 401k or 403b savings accounts
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hi i'm bridget sullivan rimmel and i've
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got a field of financial planning
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practice in chicago illinois and i'm
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john shearer i have a fee only financial
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planning practice in middleton wisconsin
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and before we get any further bridget i
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want to remind viewers to hit that
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subscribe button that helps other people
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find this information helps increase our
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rankings on youtube so hit subscribe and
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let's get on to talking about what to do
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when you max out your 401k right a great
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situation to be and listen you're doing
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a super job of savings got a good income
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or maxing out now you go geez i'd still
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like to save more money what places do
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you tell people like where do people go
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once they've maxed out the 401k bridget
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my number one suggestion is either
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backdoor roths or
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sometimes you can just do a regular roth
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contribution so looking into those two
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options is my number one uh
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thing and we work with clients on this
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all the time yeah that's right and roth
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ira right where all the future growth is
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going to be tax free and sometimes
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people don't know that even if their
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income is too high there's ways this
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back door raw thing right there's ways
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that you can do roth contributions and
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so that that's also that's our number
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one place to go with things is you max
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out the 401k plan if you're not already
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doing roth ira look to do that thing and
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you can do what another six thousand
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dollars into that
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seven thousand for certain people i'm
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not gonna say uh
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how that goes
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if you're over 50 years old you can do
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right and so that's i mean and if you're
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part of a married couple that's 14 000
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maybe that you can put money that's all
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going to grow tax-free right and so
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that's the the first best place that i
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look to do that also with things
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the other place that we look and say
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listen can you do you know if you're
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maybe you're already doing that fourteen
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thousand dollars if you're a married
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couple into
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roth or back door roth that then he's
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still got some more money to save what
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to do with it and at least for our
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business i say listen just doing it into
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a taxable account right putting money on
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a consistent basis
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so it's not tax deductible like your 403
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b or 401k
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it's not tax-free in the future like
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your roth it's kind of in this middle
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ground where it's not tax deductible but
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there are some other tax advantages to
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investing in that so that's that a good
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middle ground to do is after maxing out
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those 401ks 403 bs and we're doing the
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back door things that's clearly number
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one in my mind then just investing in a
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portfolio right that's the place to go
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with it for us i they we the way you've
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described it it's like goldilocks
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account you know it's like not too
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you know it's not tied up
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you know that's the thing about these
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retirement accounts is that you're
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really supposed to wait until you're
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retired to use them that's right so if
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you want more flex the taxable accounts
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are great because you do get some
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there's some tax advantages to them yet
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they're available so you can get you can
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get the money right and they can also
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help you in the future you can
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do fun tax planning things like um
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donate stocks that have gone up or
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create a donor advice fund so there's a
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lot of more tax planning opportunities
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in the future i can't believe you just
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said fun tax planning what is wrong with
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these people in front of the camera here
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right it
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is kind of important when you say it
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like this is something oh get excited
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about that right that's the those are
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fun things on our site well we look at
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it as they're
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great because you can use them but
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they're also great donation
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opportunities too and a lot of our um
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viewers like to give money so
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that's one of the things i really love
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talking about with our goalie last year
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the the other thing like one we've got
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some clients where um in addition to
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their 403 b plan it is in this case for
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university employees here in the madison
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area they're also state employees and
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certain state and federal employees
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qualify for a different type of
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retirement plan around here they refer
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to it as deferred comp uh technically
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the legal language it's a 457 plan but
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what that means is that in this weird
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sort of angle on things if somebody's
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working at the hospital as a typical one
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maxing out their 403 b they can also do
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the 457 plan or deferred comp and they
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can put another 20 or 25 000 into that
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so it's one of these little kind of
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angle things i'm sure you have some
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similar stories down in the chicago area
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that uh golly it can be a really great
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deal to sort of double up on your
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retirement not a lot of people know
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about that that angle on things yeah if
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you work for
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um
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like the people that i've seen uh
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typically either work for a university
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or a municipality like it and
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uh
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they
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have 457s or i saw
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an interesting plan once that was
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taxable but it had a guaranteed rate of
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return on it
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and
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it was cute i liked it make some sense
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you know i had to look into it because i
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hadn't heard about this kind of plan
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before so it's not like uh even planners
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might not know about it but
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if you work for
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a
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um
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yeah particularly a university or in the
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um i guess they call it public
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sector
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if you're a public sector employee
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you can uh
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start diving into those uh
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employee benefits a little bit more and
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see if there's any kind of obscure plans
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that are available to you and they can
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be great
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and the big one for us too is university
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employees right they've got the 403 b
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plan clearly through as a school right
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and then they've also as a state
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employee at least in wisconsin with a
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lot of the state universities and where
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you know as i was hearing us describe
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this hey we've got experience like where
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does this come in right geez i'm working
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for a university how does i'm going to
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save 50 000 a year or something like
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this and we've got clients where you
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know one spouse is working and uh
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they're they're running a business and
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they have make make a good income or
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we've got a client where uh was a
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stay-at-home mother in this case and uh
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you know and the
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dad was working supporting the family
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kids are out of the house mom says hey
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i'm going to go back and i'm going to
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work in the at the uw hospital as a
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nurse right we don't really need my
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income at all but you know what they go
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okay well geez you know we're going to
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make 50 60 70 000 working my my schedule
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and we don't need the money what do we
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do with it well does it make sense to
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look and you know we can put a lot of
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money into this tax deferred thing geez
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yeah i'm earning an income it's all
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going to build retirement things in the
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right circumstance i mean that can be a
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huge deal to defer income into the
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future when maybe you're in a lower tax
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bracket right that's a whole other topic
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but there's these opportunities that are
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there so i think it's a great thing for
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those university and public employees to
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at least consider yeah and i had a
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public employee who
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we just did it for one year because they
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also had a rental property and if they
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uh contributed a lot they could get
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their income low enough so that they
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could deduct some of the losses on the
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rental property and so then everything
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went down lower you know and so it was a
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great opportunity but they couldn't
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maintain it but they did it one year it
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was awesome this this that this great a
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great description right you have these
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changes in income you got some things to
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do and that's a reminder to me that
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uh this isn't sort of well if you max
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out your 401k plan then do this right
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everybody should do it like no you need
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to think about this stuff and it and
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this thing impacts that thing and that
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thing impacts the other and your rental
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property and then your spouse's business
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and then my employment and the it's not
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a straightforward thing it just takes
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planning it takes some some thought and
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some detail in it so these are great
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ideas
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but you know your mileage may vary right
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you need to look at your situation and
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do a plan for what you what your
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situation is and think about how that
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moves forward and just remember that one
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moving part here changes that moving
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part changes the other moving part and
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everything is connected it's not these
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things decisions can be made in a vacuum
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right so fourth idea is eye bonds okay
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so
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we love vibe right and we've we've done
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several videos about ibuns and we'll be
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doing more
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uh and
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i bonds you can contribute each person
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can contribute ten thousand dollars and
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uh
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that you're it's tied up for a year but
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they're earning very high interest rates
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right now uh because they're tied to
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inflation inflation happens to be high
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so i'm bonds
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that gets you another ten thousand a
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year without doing any kind of things
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fancy there's other ways you can
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contribute more to ibonds too
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uh but
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easy you can do ten thousand a year
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that's right so yeah i bond's a great
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short-term investment and what getting
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nine plus percent these days it's
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ridiculous
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i'll throw one other thing out there
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that we talk about with people it
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happens in a narrow sliver of things but
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uh actually life insurance that has cash
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value this can be a place that fits in
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and i know bridget is looking at me like
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i just grew a third eyeball over here
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in general right you know we recommend
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term insurance get lots of insurance buy
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term don't buy cash value it's usually a
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better deal for the agent selling it
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than for the customer buying it
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but in a certain circumstance you say
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listen i'm maxing out my 401k plan i
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don't have access to a 457 plan we're
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doing backdoor roths we're already doing
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some other investing for college let's
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say
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and i've got young kids and i need i
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need the insurance it's at least a place
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where it makes sense that's the one of
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the kind of narrow slivers in my mind
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where oh now it's an option don't know
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that it's the first option or the best
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but it's something where okay now that
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can be on the table and when you already
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need the life insurance you know i again
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kids are out of the house no way you got
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young kids like i do hey it's an option
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for somebody who's a little bit older
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and has more you know more their
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earnings have gone up um and that rate
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of return inside there when you take a
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look at it with all those other factors
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hey i got to buy insurance anyway
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and that investment component can be a
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decent deal so that's at least on the
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table for people in that situation for
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me it's interesting it is
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the
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uh it's a great idea but the thing is
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that people need to understand that it's
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the fifth idea after you're already
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saving a whole lot of money
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my i had a client once who
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wasn't contributing to a 401k
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didn't have anything else and their
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insurance agent recommended this as a
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great retirement planning tool right
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okay so this is where
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this is where the third eyeball comes in
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but in fairness it was a great
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retirement plan for the agent yeah
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that's right
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that's exactly right like and we i see
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this uh oh geez you should be how much
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can you put in your life insurance as a
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23 year old for retirement like no that
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is not the deal i'm glad that you
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brought that up right it's after you've
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done all these other things and hey i'm
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in a really high tax bracket i already
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and i need the insurance right how many
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people are in that high tax bracket and
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still need the insurance right not
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everybody didn't have that this is
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they've saved all these others saved all
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these other ways and really okay so yeah
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it can be in there but it is definitely
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the fifth option but something that you
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know could fit in the situation yeah i
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you know my suspicion unfortunately is
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that the vast majority of the policies
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sold are not to this little sliver of
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people it's to the great majority of the
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other people so that's again back to the
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third eyeball right
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that's a great place to wrap up i'm
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brigitte sullivan mermail and i have a
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family financial planning practice in
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chicago and i'm john shearer i have a
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fee-only financial planning practice in
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middleton wisconsin and before we go i
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just one more reminder hit that
[705]
subscribe button help other people find
[707]
this information
[709]
and if you like what you hear on friends
[710]
talk financial planning both bridget and
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i are members of the alliance of
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comprehensive planners nationwide group
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of fee-only tax-focused planners who
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think similar similarly to us
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visit
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acplaners.org to find an advisor in your
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area and with that until next time
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