Vanguard Immersion Day Prep

401k deferral limit

23k

401k catch up

7.5k after 50

Roth

tax free growth

Traditional IRA

tax-deferred growth

employer match

free money, always capture it first

when do RMDs start?

age 73

Rule of thumb

4% withdrawal rate for sustainable annual retirement income

529 plans

tax free growth if used for qualified education expenses

529 contribution limits

vary by state, no annual federal cap

investment growth

key to beating college cost inflation (5-6% a year)

FAFSA

529 count as parental assets (less impact on aid vs student assets)

asset allocation

% mix of stocks, bonds, and cash depending on risk aversion

stocks

higher risk, higher growth

bonds

stability, income

time horzon

determines allocation (long-term = more equity)

life insurance

proetcts dependent’s income needs

disability insurance

income replacement if unable to work

long term care

becomes relevant in retirement planning

insurance

risk transfer tool, not an investment

tax deferred (401k, traditional IRA)

taxed when withdrawn

tax-free (Roth IRA, Roth 401k)

contributions after-tax, withdrawals tax-free

brokerage

taxable, capital gains/losses taxed annually

short term gains

ordinary income rates; long term gains: preferential rates

time horizon

define short term (<5), mid (5-10), long term (10+)

goals

quantify with dollar amounts and time horizons

goal alignment

find resources and savings capacity

goal prioritization

1. retirement

2. education

3. lifestyle

protect needs first, fund wants come second