🔺 r/personalfinanceuFirm-Look940·16 days ago
Should I contribute my whole salary to my 401k?
My wife and I have a unique situation. We work together for a non-profit. Our salary is extremely low ($20k each), but the vast majority of our other expenses (home, food, vehicle, gas, insurance, kids current secondary and future college education) are provided, but not counted as taxable income. We are also completely free of debt. Our primary expense is actually personal travel when we are on vacation. We currently have the proceeds of the sale of our last home (about $300k) invested in index funds in a taxable account. Because of our low income, any realized capital gains are tax free. I have been adding $300/week into this account for the last year or so. Here's my question: what would happen if we invested almost all (we can actually invest 99%) of our salary into our company's Roth 401k? For living expenses, we would systematically sell the necessary amount (maybe $2000/month) out of the taxable account. This would allow the maximum amount to grow tax free for when we distribute at retirement. We would also sell a chunk each year to fully fund our Roth IRAs. I'm the older of the two of us, at 46. My goal is to be with this organization for the next 10 years or so. After that…