The Art of Knowing When to Save or Spend

April 10, 2025·21 min·1 clip

The combined 401(k) bucket can reach $70,000, and catch-up contributions sit on top of that.

1. Real Personal Finance frames The Art of Knowing When to Save or Spend around the tension between consumption now and saving for the future. 2. Scott Frank, founder of Stone Steps Financial, hosts with Nick Cavio, founder of Swell Financial Partners, and both answer a listener question from Nathan. 3. The episode asks how much Nathan can contribute to his workplace retirement plan and whether employer contributions count toward the same maximum. 4. Scott says the 2025 employee limit for 401(k) and 403(b) plans is $23,500. 5. Nick explains that workers age 50 and older can add a $7,500 catch-up contribution. 6. The hosts note a Secure Act 2.0 wrinkle for people ages 60 to 63. 7. They describe that narrow age band as getting an additional catch-up amount on top of the standard age-50 catch-up. 8. Scott separates employee contributions from employer contributions and says those are different parts of the plan. 9. Nick says the total qualified-plan bucket can reach $70,000 in a year. 10. The hosts mention mega backdoor Roth and after-tax contributions as another way people use that larger limit. 11. Scott says someone over 50 could potentially put away up to $81,250 when catch-up rules are added. 12. The episode notes that catch-up contributions above a $145,000 income threshold must go into a Roth portion of the 401(k). 13. Scott applies the rules to Nathan’s salary and says a mid-$150,000 income with 5% saving equals about $7,750 a year. 14. He says Nathan could still contribute an additional $15,750 before hitting the $23,500 employee cap. 15. Nick highlights that Nathan also invests $1,000 a month in a brokerage account. 16. The hosts say brokerage money adds flexibility because qualified plans can trigger taxes and penalties on distributions. 17. Scott and Nick stress that savings should serve future flexibility instead of becoming a hard rule with no room for life changes. 18. The episode keeps a conversational advisory tone, with Scott and Nick checking each other’s numbers and refining Nathan’s question as they talk. 19. People comparing 401(k), Roth, and brokerage savings will get the most from it. 20. Listeners looking for story-driven narrative or entertainment may skip it.

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