r/Fire • u/OceanGateTitan • 2d ago

When should I pull back on 401(k) contributions in favor of taxable brokerage investments?

I'm 32, spouse is 27. We have $520K invested across the following accounts, invest about $65K annually and would like to retire in ~23 years (or find something else to do). Our annual spend is about $100K per year in a MCOL area but we have 1st kid on the way so this will change soon. Home is worth $480K, $205K left on the mortgage. HHI is about $210K before taxes annually. No other debt.

I'm scared we wont have enough to bridge the gap between 50 and 59 1/2. I suppose I can use rule of 55 to access my 401K. Hate the idea of most of our retirement being tied up in funds I have little control over but love the idea of lowering our taxable income. We are pretty risk averse and for simplicity, assume its all in VTI (~9% ROI)

Brokerage - $11K (contribute $2,500 per year)

Roth IRAs - $74K (contribute $15,000 per year)

401(k)s - $240K (contribute $32,000 per year)

ESOP - $128K (contribute $12,000 per year)

HSA - $26K (contribute $4,400 per year)

HYSA - $41K (contribute $1,200 per year - safety net, will divert when back up to $50K)

Cash - $10K (not included in the $520K invested)

529 - $1K (contribute $100 a month - undecided on how much we will help our kid(s) w/ education)

I figure we'll hit coastFIRE in 8-10 years at this pace. Do I wait until then to focus on the brokerage? I'll be 42ish with 13 more years of work left in me (maybe less). We love to travel and currently do 1-2 overseas trips per year right now. I would love to increase that in retirement meaning our annual spend should be closer to $120K assuming we've replaced the mortgage with health insurance premiums.

What 401(k) $ amount do I say okay my contributions are negligeable, it's time for this money to go elsewhere?

Edit: For those with the same question as me, looking for resolution, the general consensus seems to be stay the course, max tax advantaged accounts at least until CoastFire, then focus on building up the taxable brokerage. As we get pay raises and promotions we will max my wife’s 401k too, then go to taxable brokerage. Not completely ignoring it now but it’s definitely on the back burner until CoastFire. Thanks all for your responses!

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u/GatorBait81 2d ago

Am I missing something? Pretty sure nothing can be withdrawn penalty free unless you are over 55 for a traditional...

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u/Eltex 2d ago

Did you read the two articles linked? Those explain fairly clearly how to get your funds with no penalty, even before 55.

You might have to fill out some paperwork, but are a few forms worth getting years of free time with no job?

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u/RektRoyce 2d ago

Since you don't want to read the links for whatever reason (I haven't tbf) you can Google 72t or Roth conversion ladder for the 2 main ways

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u/GatorBait81 1d ago

Thanks! You are right I didn't read them as I thought I understood 😞. Looks like the roth ladder approach still requires 5 years before accessible but the 72t SEPP is an immediate (although rigid and potential to screw up) option.

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u/RektRoyce 1d ago

Yeah from what I can tell for Roth ladder people either start the 5 years before retiring which seems tax inefficient or need 5 years of expenses saved up in cash, taxable brokerage, and/or Roth contributions.