Topic Guide
What Is Roth 401k?
Roth 401k is a subject covered in depth across 2 podcast episodes in our database. Below you'll find key concepts, expert insights, and the top episodes to listen to — all distilled from hours of conversation by leading experts.
Key Concepts in Roth 401k
Coast fi
Coast FI (Financial Independence) is a strategy where an individual saves and invests a substantial amount of money early in their career, then stops contributing to retirement accounts, allowing that invested sum to grow passively until traditional retirement age. This episode highlights it as a more obtainable goal than traditional FI, offering flexibility to continue working or pivot careers without the pressure of future contributions for retirement.
Praise folder
A 'praise folder' is an email folder where an employee saves positive feedback, compliments, and documented accomplishments from colleagues or supervisors. This episode suggests creating one as a powerful tool to quantify contributions and build a strong case for salary raises or promotions during performance reviews.
401(k)
A retirement savings plan sponsored by an employer, allowing employees to save and invest for retirement. The episode highlights its benefit when paired with an employer match, urging employees to "absolutely take advantage of it."
Roth ira
An individual retirement account that allows qualified withdrawals to be tax-free in retirement. The episode explains it as a tool for "after tax money that grows taxree," recommending it if an employer 401(k) is not available.
Employer match
A benefit where an employer contributes money to an employee's 401(k) plan, often matching a percentage of the employee's own contributions. It's described as "a great return on your investment" due to the immediate financial gain.
Roth 401(k)
A type of 401(k) plan that combines features of a traditional 401(k) with a Roth IRA, allowing after-tax contributions to grow tax-free. It shares the same "after tax money that grows taxree" principle as a Roth IRA.
What Experts Say About Roth 401k
- 1.Coast FI enables financial independence by accumulating a target investment amount early, allowing the money to grow passively for retirement while individuals continue working.
- 2.Evan Lawler plans to achieve his Coast FI goal of $500,000 by age 30, which is projected to grow to an inflation-adjusted $200,000 annual retirement income by age 65 without further contributions.
- 3.Aggressive savings in early career, such as Evan investing nearly $40,000 annually from a sub-$100,000 salary, is a critical component for hitting Coast FI goals.
- 4.Prioritizing Roth IRA and Roth 401k contributions, especially in early career, provides future tax flexibility and a hedge against potentially rising tax rates.
- 5.Keeping housing costs exceptionally low, as demonstrated by Evan's shared $1,195/month apartment in a medium-cost-of-living area, is the most significant lever for a high savings rate.
- 6.Adopting a "frugal but rich life" philosophy allows for strategic spending on joy-bringing items while cutting costs on non-essential amenities like an in-unit washer/dryer.