What’s the best next step for my 20-year-old son who’s already hit $100k savings milestone, maxing out his Roth IRA and 401k? Looking for advice

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  • #95764 Reply

      Through the advice of this community my son hit his first goal and milestone of $100k. He is 20 and has been working for 2 years as he decided not to pursue college. Fully funds his Roth IRA and company’s Roth 401k. He had a goal of reaching this milestone by 21 and he surpassed it. Any advice on what he should do next is greatly appreciated.

      #95765 Reply

        Outstanding. He is well on his way. My only advice would be to make sure he enjoys his 20’s as well.

        #95766 Reply

          He should be giving us advice.

          #95769 Reply

            Awesome. First hundred K is the hardest. There are things he could do to build more longtime wealth for sure, start loading money is an after tax account. Definitely an HSA if he has one (although he might be in your plan still at 21?). do monthly budgets, etc.

            He’ll probably want to get married and buy a house at some point. Getting married doesn’t need to cost much, and shouldn’t, imo. We spent than 10K and had a great wedding.

            But buying a house is becoming a doozy, so probably wise to start saving some money outside of retirement for that.

            Obviously should set up an emergency fund too if he doesn’t have that.

            Just some thoughts.

            Read on: Considering FZROX and FZILX in Roth IRA. Why diversify with FZILX alongside FZROX?

            #95770 Reply

              He worked for 2 years and saved $100k?!? In manufacturing and warehouse? That sounds too good to be true, can you fill us in —>was he working mad overtime? Did he already have some savings? Is he paid extremely well for that job?

              #95771 Reply

                Enroll in a high deductible insurance plan and max out his HSA.

                #95772 Reply

                  Get to 250k, and then the real Kickstart begins. I wish I would’ve known the first 100k wasn’t nearly as important as the first 250k. I mistakenly celebrated that milestone by buying a new car at 23 for 21k financing it at 1.99% , had I waited until I had the first 250k I’d be retired today.

                  #95773 Reply

                    Roth IRA, 401k and HSA. Max all 3 annually. Then brokerage with any spare. Invest in low cost index funds.

                    #95774 Reply

                      This kid could retire by 30, maybe even 25 at this rate. He can teach us lol

                      #95775 Reply

                        A lot will hate me for this but I would say since he’s 20 he has that much saved up compounding will work its magic from here on out he should go ahead and open up a whole life insurance policy That way in 10 years if you ever need to borrow money he can borrow from himself that money will keep compounding as it builds interest. (You pay interest to yourself) The average dividend is abou 6 vs 8.5 but if you ever becomes disabled they’ll continue paying the premium And he may still have cash option loan options and retirement cash assistance.

                        Those benefits dollar for dollar comparison on a 500,000 You would end up with around $1.75 mil compared to 2.1. working those numbers on top of my head. It’s just a thought Play with calculators see if the benefits are worth it to you.

                        I would say seriously play with a a compounding calculator and look at what that 100,000 will already turn into in 35 years.

                        At one point in time I was a full-time FF/EMT and worked private transport an the amount of people that I’ve seen that medically became disabled that were young around their ’30s in the early ’40s, I found shocking. So my perspective might be a little bit skewed but I know that bad things happen good people and if you have the ability why not prepared to make life a little bit better

                        Useful: Is rolling over an old 401k to a current 403b with the same employer a better option for potential backdoor Roth IRA later on?

                        #95776 Reply

                          Congrats to him and you on raising a determined kid! He should keep maxing out investment accounts but also invest in life if he isn’t yet. Travel, go to concerts, spoil himself, have a good vehicle that will keep him safe and eventually look into real estate like a multi-family unit to live in and rent out and give diversification.

                          Just my two cents!

                          #95777 Reply

                            Next goal should be to not spend that principal money but invest in himself with new money he makes, figure out what’s worth spending on and what’s not, and figure out what’s a life worth living now that retirement is covered.

                            #95778 Reply

                              We all start life “retired” we sell our services in order to pay our expenses otherwise known as a job – plan is to invest so that you achieve financial independence ie you no longer need a job to pay your expenses – there after use the freed up time to do what you feel you need to do and yes that can mean continuing to sell your services – FI is the only goal – retirement is a marking concept to sell financial and related products – take the red pill

                              #95779 Reply

                                Need to be sure to be a disciplined investor and ride out the ebbs and flows. Use index fund etf in a mix like 80% VOO, 10% VCR and 10% VGT which will yield 10% return on average. Use the rule of 72 to determine how quickly the investment will double and triple in value.

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