Your small cap fund has a high ER…that said, I do like small cap value but only about 10% when combined with the rest of the equity position being total market or SP500. I don’t like 50% weight of small cap, or even 20%. But that’s just me. See the moneychimp link below regarding small cap value (page thru tabs the right side of the page).I know it sounds contradictory but the cost of living in NYC is not conducive for thinking long term. I’m not living paycheck to paycheck but unfortunately at the stage in my life, very penny counts now when it comes to future purchases.I like lakpr's advice, skip the small cap and invest 20% into the 7% guaranteed return savings.I’m not familiar at all with this 7% guaranteed savings account option? Is this another fund of some kind? Do I contact NYC DCP/Voya Financial about it?Doesn't the NYC 457(b) plan have the 7% guaranteed savings account option? I would pile on to that option more than the stock index options.
If I were you, I would not invest in the Small Cap Equity Index option. I would do 80% Equity Index and 20% into the guaranteed interest fund. I would also max Roth IRA outside of the 401(k), as it appears at $33 per hour your income is going to be around $60k (52 weeks * 40 hours = 2080 hours, but subtract 80 hours for holidays and may be another 80 hours for vacation, so 1920 hrs * $33 per hr = $63k). Try to contribute at least $10k per year to 457 plan, which should drop you into the 12% bracket. Which means 15% of the pay,not just 10%.
My few W-2s have shown me making $100k/year before taxes (because of overtime). I forget it’s really less because of the 10% I’ve been able to contribute into my 457 plan ($90k/year). I’ve fallen squarely into the 22% tax bracket every year so far. My issue with opening up more retirement accounts is I still need to be able to save for marriage/home ownership. I can’t justify contributing more than 10% of my wages in a retirement account at this point in my life where I’m not established.
I guess my real question is based on all this information, am I saving aggressively enough with my 457?
That said, you seem somewhat conflicted in your thinking about this - see the red highlighted text in your comments above, they seem a little at odds with each other. If you can save 15% instead 10% of your income you'd be about "50% better off" down the line, if you save 20% then you'd be "100% better off" (overly simple, but you get the point).
If I were in your shoes I'd stretch myself to 15% in 2024, especially given the overtime on a regular basis, and see how that feels. I bet you get used to it and won't switch back in 2025. Personally, I'd put the extra 5% into pre-tax (457b) to get the tax benefit (approx. $1,400 tax savings on $5K; 22% US plus 5.85%+ NY state) and the easy autopilot contribution, but Roth would be good as well.
I will seriously think it over about increasing my contribution rate to 15%. Especially with the potential for future raises/promotions.
Out of curiosity, why don’t you like the small cap?
http://moneychimp.com/articles/index_fu ... _value.htm
I hear you on the COL in NYC. I get it. But even cranking the contribution up 2% is a good idea. Some people add a couple % a year or a good chunk of any pay increase. Every little bit helps, and the earlier the better.
At least you’re thinking about it now and not at age 40 or older. Good luck!
Statistics: Posted by peteyboy — Mon Dec 04, 2023 9:33 pm — Replies 17 — Views 821