Woah, now! I know what you are thinking. There is no way in hell you could max out your 401(k) by the middle of March. How did you do that? Or, why the heck would you not just steadily invest in your 401(k) throughout the year and hit the max contribution by your last paycheck?
Well, as so many other things I am currently doing, I want to swim outside of the normal path to retirement. Does retiring at the age of 65 and then living your best life sound appealing to you? How could it when you have the ability to do it while you are young and have your whole life ahead of you!
At the end of 2018 I (for the first time in my life) outlined goals I had for myself for 2019. If you want to see all my goals, checkout the article here 🙂 One of the major goals I set out to complete was to max out my 401(k) by the end of March!
Why? Why would I want to max out my 401(k) so early in the year you might ask? Maxing out your 401(k) at the beginning of the year allows for that money to potentially grow for a longer period of time! I would also get the matching 6% from my employer so I am essentially double dipping in how my money is performing for me. Another great benefit of completing this early in the year becomes having a huge paycheck for the back half of the year! While I have been used to paychecks being the same all year, I can now invest much more for 75% of the year. Can’t wait to see what all that entails this year.
Here is a snapshot of how much $$$ I ended up investing from each paycheck to reach the maximum of $19,000 for 2019!
That ends up bringing my total contribution this year, for both my individual maximum of $19,000 and my companies match of $6,474 to $25,474.
Now here is the great thing that is going to blow your mind. My company is going to match 6%. Since my current salary is $170,000/year, that equates to $10,200 of company match! Since my company isn’t used to individuals maxing out their 401(k) this early in the year, they won’t end up paying out the full $10,200 until my last paycheck of the year. I should see my 401(k) grow another $3,726 by the end of the year.
Can’t wait to see what my account looks like by the end of the year, here is a current snapshot as of 5/27/19.
Do you agree with the strategy outlined above? I would love to hear your thoughts!
If I were to start over again, the advice I would give my 22 year old self would be:
- Max out your 401(k) every year – period. Learn to live below your means.
- Allocate your 401(k) funds to a low cost index fund if available
- Try to max out your 401(k) as early in the year as possible so your paychecks grow later in the year and you can invest that money elsewhere
