How do you make maxing out TSp/401K work?

[Anonymous]

29 year old fed, GS-14 attorney. We just bought a house, and have a 14 month old. Uncle Sam keeps getting me on taxes, and the CPA told me to max out tsp. Just curious how logistically others make it work, with young kids and childcare, etc... Luckily, we took a mortgage for a lot less than we qualified for. However, that money goes to savings in case of an emergency. If I keep increasing tsp, I won't have any savings of feels like.

[Anonymous]

We each max out, plus profit share, but that's because we paid off our mortgage and have only a part-time sitter for childcare.

[Anonymous]

What are you contributing now?
Are you taking full advantage of your agency match?
Do you budget based on two paychecks/month, and could you allocate the two extra paychecks in the year (or one of them) to TSP?
Are you maxing your dependent care FSA?
Is there a point in the year where you'll have a bit of extra income because you hit the SSA max? Can you allocate that extra to TSP?
When you get a raise, promotion, step increase, etc, can you allocate the extra take-home to TSP?

You may not be able to max out in the years when you have high childcare expenses. But these are pretty easy ways to "find" money in your regular salary/life.

[Anonymous]

Anonymous wrote:What are you contributing now?
Are you taking full advantage of your agency match?
Do you budget based on two paychecks/month, and could you allocate the two extra paychecks in the year (or one of them) to TSP?
Are you maxing your dependent care FSA?
Is there a point in the year where you'll have a bit of extra income because you hit the SSA max? Can you allocate that extra to TSP?
When you get a raise, promotion, step increase, etc, can you allocate the extra take-home to TSP?

You may not be able to max out in the years when you have high childcare expenses. But these are pretty easy ways to "find" money in your regular salary/life.

Op here: I was doing 6%, and just increased to 10%, for the rest of the year. I max out DFSA, I put $1000 in FSA. I have never put the grade increases towards tsp, but now as a 14 I've reached full grade, and will allocate steps towards tsp.

[Anonymous]

We only have one car, so that helps.

We're in a gov't subsidized daycare, so that helps.

We live in a 2 bedroom townhouse in S. Arlington, so that helps.

It all adds up and makes it not painful to contribute the max (HH of one GS14 and one GS15).

[Anonymous]

I wasn't maxing out at 29 with daycare costs. If you put i. 10% and the feds put in 5% and you have FERS if you stuck around that seems like plenty for now. In a few years you can add more.

[Anonymous]

Contribute enough to get your employer match.
The rest goes to Roth IRA.
If there's more left over, start adding more to 401k.

With this approach, I wasn't able to max my 401k until age 38 or so, when our childcare costs went way down. DH started maxing around 35. Do what you can. Every little bit helps.

[Anonymous]

Did you increase to 10% before or after your tax person told you to? Just trying to get a sense for if you've already adjusted to lower your tax burden.

If the 10% was before, then you can afford to increase your contribution. It will lower the amount of Fed taxes that you owe. Since you can afford to pay those, you need to look at it as you are redirecting what you would have paid in taxes to your own retirement. Don't pay the Feds when you can pay yourself.

[Anonymous]

Anonymous wrote:Did you increase to 10% before or after your tax person told you to? Just trying to get a sense for if you've already adjusted to lower your tax burden.

If the 10% was before, then you can afford to increase your contribution. It will lower the amount of Fed taxes that you owe. Since you can afford to pay those, you need to look at it as you are redirecting what you would have paid in taxes to your own retirement. Don't pay the Feds when you can pay yourself.

I increased after. But, that's a good way to look at it. Either try to lower agi now, or pay $4000-5000 every year in April.

[Anonymous]

Anonymous wrote:Contribute enough to get your employer match.
The rest goes to Roth IRA.
If there's more left over, start adding more to 401k.

With this approach, I wasn't able to max my 401k until age 38 or so, when our childcare costs went way down. DH started maxing around 35. Do what you can. Every little bit helps.

I would say the opposite. The immediate deduction of the 401k for people who arent matching is more important. Open a Roth once you've maxed out and need more space. Exceptions might be if your 401k investment options are terrible (high fee managed funds) or if you want the money available for college or something like that, rather than retirement.

[Anonymous]

Two GS-12/13s, 30 yo. We just make it work. We don't miss the money. We too got a mortgage for way less than we could have. It's scary how much we were approved for.

[Anonymous]

We do what we can, even if just a little. But we are handing over trucks full of money to day care and I've forgiven myself for not maxing out for the time being. Once the kids finish day care we will contribute more.

[Anonymous]

We made it a priority and cut our discretionary spending.

[Anonymous]

Anonymous wrote:We made it a priority and cut our discretionary spending.

Surprise no said it.
Easy go get a GS-15.

[Anonymous]

Anonymous wrote:We only have one car, so that helps.

We're in a gov't subsidized daycare, so that helps.

We live in a 2 bedroom townhouse in S. Arlington, so that helps.

It all adds up and makes it not painful to contribute the max (HH of one GS14 and one GS15).

We are a GS 14 and 15 family too. How do you get gov't subsidized daycare? What agency?