Radio: Savings Waterfall for 2021

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On Tuesday, February 9, 2020, David John Marotta appeared on Radio 1070 WINA’s Schilling Show with Rob Schilling to talk about what accounts to use in 2021. This was largely a discussion of the article “Account Funding Priorities for 2021” where we discussed some general guidelines you can follow to make your decision.

These kinds of recommendations are sometimes called a “savings waterfall,” as the idea is when new money flows your way into which account should your current of savings drop those new dollars.

Here is an outline of the discussion:

[1:20] 1. Pay off any credit card debt. See also our Cost of credit card debt calculator.

[2:45] 2. Flow qualified education expenses through a 529 plan.

[3:45] 3. Budget at least 10% for unknowns.

[5:05] 4. Defer to Roth 401(k) or 403(b) for full employer match.

[6:12] 5. Fund your Health Savings Account (HSA).

[8:30] 6. Contribute to Roth IRA or use a Backdoor Roth IRA strategy.

[11:30] 7. Finish funding your Roth 401(k) or 403(b).

[12:25] 8. Defer to a Roth 457 plan.

[13:04] 9. Contribute to a SEP IRA.

[13:29] 10. Save for future education expenses in a 529 plan.

[14:38] 11. Save in a regular, taxable brokerage account.

[16:00] 12. Consider a systematic Roth conversion plan.

[16:36] 13. Paying down debt.

You can listen to the audio here:

 

Photo by Angèle Kamp on Unsplash

 

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President, CFP®, AIF®, AAMS®

David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. In addition to his financial writing, David is a co-author of The Haunting of Bob Cratchit.