What Happens if I Stop Investing for a Year?

All right, the first question is from Josette.

She said, the one money problem I'm trying to solve right now is investing for the first time.

My specific issue is understanding not just the asset allocation, which I pretty much grasp the concept that the S&P 500 is basically unbeatable, but more importantly, I'm trying to understand asset location.

I am a government employee with with a pension and I'm maxing out my 457B plan, which is 100% invested in the key row price retirement 2055 trust class J.

Not sure if I should be managing that myself or allowing it to choose the right investments for me.

Now, as a government employee, I do not qualify for an HSA, so I am limited, I believe, to my backdoor Roth IRA and taxable brokerage accounts for retirement preparation.

However, I'm not sure how much of which ETF slash other investments belong in which account.

I have heard that SCHD and SCHG are great, but have too many dividends for a taxable brokerage account.

BND is good for balance and diversification, but also should not go in your taxable brokerage account.

I just want to make sure I am investing in the smartest way that produces the largest retirement portfolio possible without costing me a ridiculous amount in taxes.

I also want to make sure that I am utilizing all of my retirement resources I have at my disposal.

So this is a wonderful, wonderful question, Josette.

And I think you thinking about this is really, really important, especially as you start to build out a portfolio, which I think based on how much you're investing currently is is probably gonna be pretty large.

So for many people out there listening, the 457B, at the time I'm recording this, has a $24,500 per year yearly max.

And if you're over the age of 50, you also have what is called a catch-up contribution at $8,000 per year.

And if you're over the age of 60, there is now a super catch-up contribution that's $11,250 that you could also put in.

And just for reference, the IRA max out is going to be $7,500 per year.

Now, making sure that we use every single resource available to us when we do have extra income coming in during our highest income years is going to be super, super important.

And for Josette, she wants to make sure that she is getting as much as she possibly can into these accounts.

so one of the things that you could ask is can you stack a 403b and a 401k so 457b limits are separate so you could defer 24 500 to each of these if you wanted to but you want to ask hr hey do we offer a 403b or a 401k or even a 401a besides the 457b that is one of the options just to see if you can request it is not very common yet but it is something that can be offered from time to time Now, a couple of other things to think through is maybe a Roth 457B.

If you have that available, that could be a good option or a mega backdoor Roth.

Now, a mega backdoor Roth is unlikely for a 457B, but if they do have 401k or 401a options, then that may allow you to do after tax contributions, which would allow you to then transfer some of those to the Roth and be able to do a mega backdoor Roth if that is an option for you.

So it's worth looking into that as well.

And if you have no HSA, a health FSA still leaves tax on known medical costs.

You know, you could go look at $3,400 per year right now at the time of recording this.