Rob Base 2.0
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Post by Rob Base 2.0 on Aug 7, 2017 13:12:22 GMT -5
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Deleted
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Post by Deleted on Aug 7, 2017 13:21:00 GMT -5
My company matches the first 4%. I know several that don't do it. I've heard every excuse from "I can't afford it," to "I'm too young to worry about that" (or "I won't live long enough to retire") to "I don't trust the government". My buddy with the two broken feet has used all of them at one time or another over the past 15 years. Not sure which one he's on now. I should ask him.
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ken a.k.a OMK
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Post by ken a.k.a OMK on Aug 7, 2017 13:24:03 GMT -5
I agree if your company offers a match you need to invest enough to get that match. It is indeed a raise. Move savings around to do this first.
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midjd
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Post by midjd on Aug 7, 2017 13:31:22 GMT -5
So for all the grousing about the "everyone gets a trophy" generation, I guess we win at some things. Then again, not sure how much credence should be given to a BoA "study" on savings rates.
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Post by The Walk of the Penguin Mich on Aug 7, 2017 13:33:50 GMT -5
Actually, we are backing off and are in the age group where there are less participating. The 401k that TD had last year had no match and very high fees. It really wasn't worth it, so money went into taxable accounts.
Money for retirement isn't an issue.
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resolution
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Post by resolution on Aug 7, 2017 13:46:34 GMT -5
We are in the 35 to 49 range and DH doesn't participate in his. A number of years ago we caught his employer withholding his contributions and then keeping the money instead of depositing it in his account. We worked things out with them to compensate us for what they had taken, but we won't be trusting them with any kind of withholding.
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gs11rmb
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Post by gs11rmb on Aug 7, 2017 14:23:42 GMT -5
We are in the 35 to 49 range and DH doesn't participate in his. A number of years ago we caught his employer withholding his contributions and then keeping the money instead of depositing it in his account. We worked things out with them to compensate us for what they had taken, but we won't be trusting them with any kind of withholding. Do you mean your husband is still with the employer who stole his funds?
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resolution
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Post by resolution on Aug 7, 2017 15:58:30 GMT -5
We are in the 35 to 49 range and DH doesn't participate in his. A number of years ago we caught his employer withholding his contributions and then keeping the money instead of depositing it in his account. We worked things out with them to compensate us for what they had taken, but we won't be trusting them with any kind of withholding. Do you mean your husband is still with the employer who stole his funds? Yes. He left them for about a year and they paid us back and then he really started missing working there and went back. So this time around we only use my benefits and nothing from his.
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CCL
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Post by CCL on Aug 7, 2017 16:59:05 GMT -5
it's crazy. DW used to do personell stuff and found a lot of fairly highly compensated people wouldn't put anything in the 401k despite a standard match that was pretty good (I think dollar for dollar on 3%). AND the company had a history of doing SIGNIFICANT safe harbor deposits in a fixed dollar amount to any employee who had put even $1 in the 401k that year. let's review.. the employee makes say 70K they put in 3% = 2,100, (probably lowers their take home for the year by $1,500) Company adds 2,1000 company does a $7k safe harbor donation so in the typical year, the employee could forgo $1,500 in takehome, in exchange for $11,200 in their 401k, and yet some still didn't do it. insane in the membrane According to my Phil Script, a yearly investment of $11,200.00 bearing an annual return of 11% could grow to $2,474,227.55 in 30 years! at a 4% safe withdrawal, this would give them about 100K per year in investment money. they'd basically be replacing their income with SS plus this, for LITERALLY $200/month of savings That's a sweet deal!
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phil5185
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Post by phil5185 on Aug 7, 2017 17:04:37 GMT -5
When 401k's were first started (about 1982 to 84 for most corporations) the company that I worked for said that about 35% participated. The 'match' was invented in about 1998 - I retired that year so I never received a match.
ETA - also, the 'over-50 catch-up' feature hadn't invented when I retired. But even w/o the 'math' & the catch-up my fund had close to a million in it. So don't look for excuses - eg, no match, no catch-up - do it anyway!
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plugginaway22
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Post by plugginaway22 on Aug 7, 2017 17:33:46 GMT -5
I oversee HR for about 30 employees and am always baffled by what many of them choose to contribute or not contribute. They don't see it as 'leaving money on the table', they see only making their take-home pay less.
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Post by The Walk of the Penguin Mich on Aug 7, 2017 17:55:30 GMT -5
When 401k's were first started (about 1982 to 84 for most corporations) the company that I worked for said that about 35% participated. The 'match' was invented in about 1998 - I retired that year so I never received a match. ETA - also, the 'over-50 catch-up' feature hadn't invented when I retired. But even w/o the 'math' & the catch-up my fund had close to a million in it. So don't look for excuses - eg, no match, no catch-up - do it anyway! Sometimes, contributing to a bad 401k is worse than contributing to none. The offering that TD got last year really sucked (both in funds offered and expenses of said funds). After running the math, it was better to make post tax contributions.
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alabamagal
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Post by alabamagal on Aug 7, 2017 18:01:16 GMT -5
I did not contribute when I worked for a small employer and they stopped the match. I did not need tax break in those years due to college tax credits putting me in negative tax bracket. Current employer with good plan and good match plus tax breaks gone I contribute.
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tskeeter
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Post by tskeeter on Aug 7, 2017 18:28:44 GMT -5
So for all the grousing about the "everyone gets a trophy" generation, I guess we win at some things. Then again, not sure how much credence should be given to a BoA "study" on savings rates. Looking at 401K activity only is like looking only at the Mona Lisa's left ear. 401K's are just part of the retirement picture. Maybe those older workers are investing in taxable retirement accounts. A worth while approach if you think income tax rates will increase significantly in the near future. Tax diversification is a fundamental retirement investment strategy. Or, maybe the old timers are well covered by a defined benefit pension plan. (We old timers are the most likely of any age group to have pensions.). Or, maybe the old timers are investing in income producing assets, such as rental property. The writer of the article really can't draw any reliable conclusions about the data they have found unless they analyze all of the retirement information related to each age group.
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Rob Base 2.0
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Post by Rob Base 2.0 on Aug 7, 2017 18:31:40 GMT -5
Note the 2 posters (post 12 & 14) above, as I predicted in the OP.....
I should buy a lottery ticket today
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Deleted
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Post by Deleted on Aug 7, 2017 19:23:57 GMT -5
Sometimes, contributing to a bad 401k is worse than contributing to none. The offering that TD got last year really sucked (both in funds offered and expenses of said funds). After running the math, it was better to make post tax contributions. Did they have a money market fund option? I've used that where there was a good match but lousy investment choices. Fortunately I was never in one long enough for it to be a serious issue; one was at a company where I worked for only 3 years; with the other plan, the company was acquired and the new plan was much better. The sale also allowed us to take what we had in the old plan and roll it over elsewhere, which I did promptly.
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hoops902
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Post by hoops902 on Aug 7, 2017 19:36:02 GMT -5
So for all the grousing about the "everyone gets a trophy" generation, I guess we win at some things. Then again, not sure how much credence should be given to a BoA "study" on savings rates. Looking at 401K activity only is like looking only at the Mona Lisa's left ear. 401K's are just part of the retirement picture. Maybe those older workers are investing in taxable retirement accounts. A worth while approach if you think income tax rates will increase significantly in the near future. Tax diversification is a fundamental retirement investment strategy. Or, maybe the old timers are well covered by a defined benefit pension plan. (We old timers are the most likely of any age group to have pensions.). Or, maybe the old timers are investing in income producing assets, such as rental property. The writer of the article really can't draw any reliable conclusions about the data they have found unless they analyze all of the retirement information related to each age group. Unless the employer offers a match, which was the point in the OP about "most people turn down free money". None of those other options are ever going to approach the returns that an actual match would at least up to the matched %.
Looking at 401k activity is exactly what the article is doing, and exactly the focus...the focus is not on "retirement readiness"...or something larger. It's really about people making a bad financial decision by turning down free money. Regardless of what older workers are doing for retirement...if they're turning down free money from a 401k match, then none of the other options you're citing are better financial decisions.
The problem is those older workers as a group aren't saving up in other ways...they aren't saving nearly enough at ALL. And despite that, they're not even saving in ways that are no-brainers.
There has been study after study on these boards about how those in the 50-80 age range aren't nearly prepared for retirement. Do you have a source for all these "maybe they're doing this" thoughts that show they actually ARE?
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thyme4change
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Post by thyme4change on Aug 7, 2017 19:37:38 GMT -5
People are dumb.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Aug 7, 2017 19:38:38 GMT -5
My company matches the first 4%. I know several that don't do it. I've heard every excuse from "I can't afford it," to "I'm too young to worry about that" (or "I won't live long enough to retire") to "I don't trust the government". My buddy with the two broken feet has used all of them at one time or another over the past 15 years. Not sure which one he's on now. I should ask him. How's ole footless doing these days?
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hoops902
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Post by hoops902 on Aug 7, 2017 19:47:31 GMT -5
I'm not someone who generally "cares about people", but the one thing I tell EVERYONE new who starts in my area is "Put 6% into the 401k". That's the match, it's 100% up to 6%...you'll never miss the 6% and it's basically a 100% guaranteed return. If you're not going to do that, you might as well go live under a bridge because if you can't manage that simple thing, you're never going to be even moderately successful financially. There's a lot of "I can't afford it"..."can you afford to turn down a 100% guaranteed immediate return?".
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TheHaitian
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Post by TheHaitian on Aug 7, 2017 21:10:21 GMT -5
I'm not someone who generally "cares about people", but the one thing I tell EVERYONE new who starts in my area is "Put 6% into the 401k". That's the match, it's 100% up to 6%...you'll never miss the 6% and it's basically a 100% guaranteed return. If you're not going to do that, you might as well go live under a bridge because if you can't manage that simple thing, you're never going to be even moderately successful financially. There's a lot of "I can't afford it"..."can you afford to turn down a 100% guaranteed immediate return?". I don't envy much reading money boards but I always envy reading other people 401k plans. I get a stupid 2% for 6% contribution, yes still free money and I do it. But my wife gets 5% automatically at her current job, her new job offer is 5% without contributing nothing, 10% if she just contributes 3%. Yep contribute 3% and the company puts in 10% for you... You know what I could do with an extra 10% in my 403b each year? And it goes up to 200k... so someone making 200k gets an extra 20k in their 403b? WTF??? The best I have read about is a company marching dollar for dollar up to the max, you put 10k in they math 10k, you put in the full 18k (24k above 50) and they match that full amount. WHY WOULD YOU NOT PUT MONEY IN? And the person said they company still had people not contribute nothing because like some said: cannot afford to take less home. ETA: that is why I promise myself in my future jobs hunts it is not just about the salary (and vacation)... it is the total Package (insurance - will matter less with my wife current offer if she takes it, retirement match, bonus, etc). And I will ask about that at the interview.
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Deleted
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Post by Deleted on Aug 7, 2017 21:50:25 GMT -5
My company matches the first 4%. I know several that don't do it. I've heard every excuse from "I can't afford it," to "I'm too young to worry about that" (or "I won't live long enough to retire") to "I don't trust the government". My buddy with the two broken feet has used all of them at one time or another over the past 15 years. Not sure which one he's on now. I should ask him. How's ole footless doing these days? Well, he finally sold his house last month, so that's good. The latest bad decision though is with his wife's job. She had a bunch of major medical issues earlier this year (lots of bad infections and ended up having three surgeries, including an ostomy). Well, they had all these big medical bills and met the max OOP for the year on her insurance, so at least all her physical therapy and future care would be covered 100%. Well, while on STD for this, she decided she didn't like working at this place and quit and got a different job with no insurance. He had to add her to his, but now they're starting all over with the OOP and of course she ended up back in the hospital again. Their "bad luck" again.
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tractor
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Post by tractor on Aug 8, 2017 6:33:42 GMT -5
My employer offers a 5% match on top of a generous pension. You can participate in both, but a surprising number don't do the 401K relying on the pension instead. These are all professional types, still don't seem to get it...
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gs11rmb
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Post by gs11rmb on Aug 8, 2017 7:10:30 GMT -5
My employer offers a 5% match on top of a generous pension. You can participate in both, but a surprising number don't do the 401K relying on the pension instead. These are all professional types, still don't seem to get it... I don't get that. MrSroo has one of the most stable pensions out there and we're still not counting on it so we both are contributing to max into our respective 40xX accounts. Using a basic 8% return calculations I should end up in th $2m range in mine at retirement and his should be in the $1m range. Our 3 legged stool has morphed into a 4 legged stool, his pension, both retirement accounts, and my SS. I've been procrastinating setting up a non qualified account and matching what I'm putting into my 401K. So once I do that we'd have the 5 legged stool. I want to be you when I grow up...
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Phoenix84
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Post by Phoenix84 on Aug 8, 2017 7:42:16 GMT -5
Some 401k plans aren't worth it. If there's no match and fees, it may not be worth it.
But there are a lot of excuses too. If there's a match, you definitely need to contribute what they'll match as a minimum. That's like giving up free money.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Aug 8, 2017 11:01:57 GMT -5
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micky
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Post by micky on Aug 8, 2017 11:04:04 GMT -5
I work in retail and I beg people to participate. Our company matches 100% up to 5%. I try telling people even just putting in 1% they won't notice it on their check because it is pre-tax and they are getting 100% match!!! That's free money and they just tell me they can't afford it. And yes it is a cliche but many of these people have no trouble spending on cigarettes and beer (I know this because they smoke and tell me about their weekends - not judging just sayin forego one weekend night out a month to fund your 401k and have some retirement). Oh well, whatcha gonna do.
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haapai
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Post by haapai on Aug 8, 2017 11:18:15 GMT -5
So for all the grousing about the "everyone gets a trophy" generation, I guess we win at some things. Then again, not sure how much credence should be given to a BoA "study" on savings rates. Looking at 401K activity only is like looking only at the Mona Lisa's left ear. 401K's are just part of the retirement picture. Maybe those older workers are investing in taxable retirement accounts. A worth while approach if you think income tax rates will increase significantly in the near future. Tax diversification is a fundamental retirement investment strategy. Or, maybe the old timers are well covered by a defined benefit pension plan. (We old timers are the most likely of any age group to have pensions.). Or, maybe the old timers are investing in income producing assets, such as rental property. The writer of the article really can't draw any reliable conclusions about the data they have found unless they analyze all of the retirement information related to each age group. I clicked on the link to the ML study in the Motley Fool link. After scrolling through some salesmanship, you can find what the difference in participation rates is by age bracket. It's not a dramatic difference in participation, not at all, and the age categories are very broad.
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resolution
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Post by resolution on Aug 8, 2017 12:01:48 GMT -5
We actually have a lot of people find new jobs and quit when they hit the six month mark. That is when their mandatory pension contributions (100% matched) start to be withheld. Even though we stress the withholding at employee orientation, some employees get used to spending their whole check, and when the withholding starts they can't cover their expenses.
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haapai
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Post by haapai on Aug 8, 2017 12:28:04 GMT -5
At my workplace, the match is 20% of the first five percent. New employees don't get matching for a year and it vests on a five or seven year schedule. Then there's the amazing number of funds with expense ratios of over 1%. When you start doing the math for what kind of return you can expect in the early years, it's not pretty.
But the most common reason for not participating that I have heard is "They'll only let me borrow half".
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