“I’m wanting to start a separate investment account to somewhat pad retirement.”: I have a good start with my 401K, but how can I best prepare for retirement with fluctuating income?

Hey Money Minder,

I’m 27 and have $40,000 in my 401K. I chuck in 7%, and my company matches 4%, plus they match 3% more at the end of the year. My salary is $70K a year, but with bonuses and OT, I’ve hit $100,000 in the past. So, it’s a bit up and down. I’m thinking of opening another investment account to boost my retirement savings. I’ll do it once I’m in a better spot financially (like paying off my car). No credit card or student loan debts, just the usual life stuff. Any suggestions for me? What should I aim for with that second account? Thanks a ton!

Catch you later,
Dreaming of Retirement

Response from THE MONEY MINDER:

Hello There,

Firstly, congratulations on being proactive about your finances and seeking ways to secure your future! Your current situation seems to be on the right track with $40,000 in your 401K and a company match that is quite generous. The fact that you are looking to start a separate investment account to supplement your retirement savings is a wise decision.

Given your varying income and the goal of starting a secondary investment account once you are more financially secure, it sounds like a solid plan to pay off your car and any other outstanding consumer debt first. This will free up more funds that you can then redirect towards investments.

When considering what type of secondary investment account to open, you might want to look into a brokerage account where you can invest in a mix of stocks, bonds, and other securities. This way, you can diversify your portfolio beyond what your 401K offers and potentially achieve higher returns over the long term. Additionally, considering your shift work and potential for fluctuating income, having a financial cushion in the form of liquid investments can offer you more flexibility in times of need.

Remember, the key is to continue to save and invest consistently, monitor your expenses, and adjust your financial plan as needed based on changes in your income or goals. All the best from THE MONEY MINDER as you navigate this journey towards financial security!