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How soon to max out 401k contribution?
stenor
10-25-2008, 12:38 PM | Post #2583544
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So I'm a believer in contributing the maximum possible to my 401k. The question here is how *soon* to reach the maximum limit of 15.5K, etc per year.
For the last few years I've made my percentage contribution aggressive, with the outcome that I reach the limit in September or October of each year. This has the nice effect of forcing me to live on a tighter budget early in the year, and then towards the end of the year getting a boost in take home pay just as the holiday season approaches :-)
But for the longer term investment consequences, is it better to max out early as I'm doing, or set the contributions so that they are spread out over more of the year (while still maxing out by year end) ? My thoughts prior to the last year or two have been that, on average over the very long term, the market will be increasing more often than decreasing, so better to get the contributions in early at what is more likely a lower price. But last year, and especially this year with the recent crash, I'm wondering if this is such a great idea. I'm missing out on DCA'ing into the current low market (which would be some welcome silver lining to all the losses taken on earlier contributions).
Anyone have thoughts on this issue, or know of any studies that have looked at this to see if it makes a difference one way or another?
Scott
Topics
401(k)
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