401K Nearing The $100K Mark

I’m so close I can almost taste it.  (Although, I’m not really sure what $100,000 tastes like).  After almost 6 years on the job, my 401k is about to hit $100,000.  I would have already hit the mark if I hadn’t scaled back my contributions to help offset our vacation home purchase (scaled back to 8% to get all the company match) but I expect that we’ll more than make up the difference in additional equity on the vacation house.  It’s really kind of amazing how quickly the 401k balance can add up when you are contributing to it every two weeks.  My contribution level has varied over the last 6 years but here are a few of the details around what I did to reach this milestone.

-Contributed as much as my budget would allow (up to the IRS maximum) for part of the time

-Made sure to get every cent of the company match

-Made a few strategic trades in my account during wild swings in the market

-Diversified across large cap, small cap and international index funds

-Bought a large chunk of company stock in the 401k after 9/11 and then moved out of it after a significant increase in value

Overall I’m quite happy with the 6 year performance of my funds.  I definitely made some mistakes along the way too though.  For quite some time I was way too heavily invested in a large cap S&P 500 index.  While that gave me “okay” returns, I missed out on massive returns in some of the international and small cap funds.  I corrected that a couple years ago though and have been happy with the overall returns since.

While the 401k is an important part of my investment portfolio, it isn’t the only part.  We are also funding a ROTH ira which, when added to the 401k balance, puts us well above the $100k mark.  I like the idea of having multiple potential income streams during retirement, some taxed and others not.  What I haven’t done a good job of is funding a conventional brokerage account.  I plan on using some of the real estate equity we have and will have in the future (potentially sell the vacation house years down the road) to help fund our after tax needs from the time we retire to the age that we can start withdrawing pretax retirement income.  This is probably a flawed approach for a number of reasons and we intend to diversify further by getting more money put in to a standard brokerage account soon.  The other investment that we are funding is a 529 college savings plan for our daughter.  While there isn’t a ton in there, we are investing in that monthly and will probably contribute some lump sum money in there over the years as well.  Between the 529 plan and paying off our home before our daughter goes to college, we hope to have the cash flow necessary to help her get through college.