Front Loading 401k Contributions in 2018

We’re trying something new in 2018 with our finances and front loading 401k contributions. Front loading a 401k means to significantly increase our 401k contribution to hit the 401k annual contribution max as quickly as possible. The benefit of doing this is to get our pre-tax money into the market as quickly as possible to give us more months of possible growth. The downside is the risk of the market declining throughout 2018, which basically would mean that we bought when the market was high versus taking advantage of dollar-cost averaging by contributing consistently throughout the year. There’s also the downside of receiving zero cash for a few pay periods, but we can cover living expenses from cash for the time being.

Even though markets are at an all-time high and experiencing abnormally long bullish trends, I also know that we will always max out our tax-advantaged retirement accounts on an annual basis one way or another. That combined with some other changes to our lives in 2018 that we foresee but can’t accurately predict, I’m making the call that it’s in our best interest to max out my 401k contributions as quickly possible.

Of course, right out of the gate I made a rookie mistake by miscalculating how much I could contribute while covering my regular deductions.

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