TheHaitian
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Post by TheHaitian on Oct 15, 2015 9:25:23 GMT -5
Your 401k, 403b or Roth IRA's?
Did you notice the money being gone or was it a gradual increase?
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The Captain
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Post by The Captain on Oct 15, 2015 9:44:38 GMT -5
At my first job I signed up to contribute enough to get the maximum match (6% of salary). Every other year or so after that I added about half my raise and hit the max sometime in my early 40's.
Current employer is top heavy so I don't get to contribute much to the 401(k) on a pre-tax basis. Fortunately we have a roth 401k and I'm not limited as to how much I can stash in there (it's not deductible though).
If you start and keep building then you really don't notice it. Unless you look at your paycheck and see how much is going into retirement.
The trick is to not let your standard of living increase as fast as your salary.
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alinal
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Post by alinal on Oct 15, 2015 9:49:32 GMT -5
I started maxing 401k this year. My salary is $98k, but I only started once my mortgage was paid off.
Technically, I do notice it (2wk pay is $2,000 instead of $2,400), but since I was paying $2k+ to the mortgage each month, I end up with more free money. I'm hoping to "notice it" in my taxes this year, more than anything.
ETA: I started maxing my Roth long ago - probably when my salary was around $60k.
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ArchietheDragon
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Post by ArchietheDragon on Oct 15, 2015 9:49:14 GMT -5
A working couple can put $47k into 401ks and IRAs.
If you save 15% of your gross you need to be making $313,000 to max. If you save 20% of your gross you need to be making $235,000 to max. If you save 25% of your gross you need to be making $188,000 to max. If you save 30% of your gross you need to be making $156,000 to max. If you save 35% of your gross you need to be making $134,000 to max. If you save 40% of your gross you need to be making $117,500 to max. If you save 45% of your gross you need to be making $104,000 to max. If you save 50% of your gross you need to be making $94,000 to max.
No matter where you are on the spectrum you are doing well if you are maxing.
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midjd
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Post by midjd on Oct 15, 2015 9:58:10 GMT -5
We have maxed both Roths since 2012, we were at around $85K then. I started maxing my 457 and HSA in 2013, so we were probably at the $100K mark. Since then we've added DD's 529, a flex spending account, and a few others, but income has increased to allow it. Damn expensive kids. I think I was contributing 15 percent to the 457 before I started maxing, so it was an easier transition. It is funny to look at my pay stubs and see that I was bringing home about $300/week more in 2010, when I was making significantly less. IMO the bonus of a high savings rate is that it also lowers the amount you "need" in retirement, since you're not forced to replace your entire gross income.
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HoneyBBQ
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Post by HoneyBBQ on Oct 15, 2015 10:08:38 GMT -5
As soon as I was out of school (at 25) and had a job. But, my first job was 6 figures and I was single, no kids, no dogs. So it was not a hardship at all.
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Lizard Queen
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Post by Lizard Queen on Oct 15, 2015 10:09:38 GMT -5
Someday...hopefully. I always saved 15% in my 401k, and I maxed my Roth as well for a couple of years. My salary maxed out under $41k, while DH's was about $38k at the very peak, and we had 2 babies at the time. I suppose we could have cut everything to the bone to max at least one 401k. Problem is, we have 2 very old vehicles and a fixer-upper house that still needs "fixing-upping".
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Post by mojothehelpermonkey on Oct 15, 2015 10:14:17 GMT -5
I started putting 15% in a 401K (no match ) when I was making $55,000. I didn't notice the missing money because I had just moved from a low paying academic job, so my paychecks were still bigger than before. At my next job, they didn't offer a 401K, but I was used to living on my salary - 15% for retirement, so I started maxing out my Roth every year and putting the rest in a non-retirement brokerage account. (Disclaimer: I don't have a mortgage or student loans anymore.)
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Post by mojothehelpermonkey on Oct 15, 2015 10:18:33 GMT -5
We have maxed both Roths since 2012, we were at around $85K then. I started maxing my 457 and HSA in 2013, so we were probably at the $100K mark. Since then we've added DD's 529, a flex spending account, and a few others, but income has increased to allow it. Damn expensive kids. I think I was contributing 15 percent to the 457 before I started maxing, so it was an easier transition. It is funny to look at my pay stubs and see that I was bringing home about $300/week more in 2010, when I was making significantly less. IMO the bonus of a high savings rate is that it also lowers the amount you "need" in retirement, since you're not forced to replace your entire gross income. This is what I tell myself when those retirement calculators start making me nervous.
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Deleted
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Post by Deleted on Oct 15, 2015 10:20:49 GMT -5
Started maxing Roth 401k/Roth IRA/HSA at 160k combined income. That is kind of misleading because previously the money was going to debt and paying off the house (but that answers your other question, no we didn't notice it because it was going to debt).
Stopped contributing to Roth IRA once we hit the salary cap because a backdoor is unpalatable with an existing IRA that I don't want to roll back to my 401k, what was invested in the Roth IRA now goes to a taxable account.
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movingforward
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Post by movingforward on Oct 15, 2015 10:24:22 GMT -5
I work for a small company and do not have a 401K. They offer a SEP IRA and put 7% of my salary in each month. I am limited to the max $5,500 contribution. I started maxing that about 5 yrs ago when I was making 48K. I now make 60K and just opened my taxable account a few months ago.
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Lizard Queen
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Post by Lizard Queen on Oct 15, 2015 10:24:17 GMT -5
We have maxed both Roths since 2012, we were at around $85K then. I started maxing my 457 and HSA in 2013, so we were probably at the $100K mark. Since then we've added DD's 529, a flex spending account, and a few others, but income has increased to allow it. Damn expensive kids. I think I was contributing 15 percent to the 457 before I started maxing, so it was an easier transition. It is funny to look at my pay stubs and see that I was bringing home about $300/week more in 2010, when I was making significantly less. IMO the bonus of a high savings rate is that it also lowers the amount you "need" in retirement, since you're not forced to replace your entire gross income. "End Of Year Income Expenses 5% ROI Percent Of Expenses Covered By ROI Change In Networth (Savings + ROI) Networth 0 - - - - - 0 1 70,000 25,200 1,120 4% 45,920 45,920 2 70,000 25,200 3,416 14% 48,216 94,136 3 70,000 25,200 5,827 23% 50,627 144,763 4 70,000 25,200 8,358 33% 53,158 197,921 5 70,000 25,200 11,016 44% 55,816 253,737 6 70,000 25,200 13,807 55% 58,607 312,344 7 70,000 25,200 16,737 66% 61,537 373,881 8 70,000 25,200 19,814 79% 64,614 438,495 9 70,000 25,200 23,045 91% 67,845 506,340 10 70,000 25,200 26,437 105% 71,237 577,577 11 70,000 25,200 29,999 119% 74,799 652,376 When your annual return on investments cover 100% of your expenses you are financially independent. The above table will likely show you need to work slightly longer because your withdrawal rate should be less than your return on investments. " networthify.com/calculator/earlyretirement?income=70000&initialBalance=0&expenses=25200&annualPct=5&withdrawalRate=4
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grumpyhermit
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Post by grumpyhermit on Oct 15, 2015 10:27:23 GMT -5
Just started maxing my Roth.
My employer does a flat 12%.
I had been saving an additional 13% (between Roth and 403b) but it was more weighted toward the 403b. This past year I swapped it around so the amount being saved is the same, but the Roth is getting more than the 403b.
I will never max the 403b, my goals is more to keep the percentage the same going forward so about 25% total is going in between my employer and my contribution.
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giramomma
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Post by giramomma on Oct 15, 2015 10:27:44 GMT -5
For us, we'd have to be making 150K or so to be able to put 50K in retirement. I actually have access to 403b Space and 547 space.
This is also with three kids. If we were DINKS, it would be less.
We'll be lucky if we ever get to a gross household income of 100K.
For our needs, right now, I think we're doing good enough. And, well, that's good enough.
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simser
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Post by simser on Oct 15, 2015 10:28:36 GMT -5
As soon as I was out of school (at 25) and had a job. But, my first job was 6 figures and I was single, no kids, no dogs. So it was not a hardship at all. This, except I was 28. I also overnight went from 24k a year to 100+k a year.
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yogiii
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Post by yogiii on Oct 15, 2015 10:37:05 GMT -5
Maxed my 401k right away, was making 50k I think. Didn't max a Roth until 5 years later but only because I didn't know it existed. Next year instead of contributing to a taxable I may try 401k, Roth and Mega Back Door Roth which I only just found out about recently.
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Post by mojothehelpermonkey on Oct 15, 2015 10:45:39 GMT -5
"End Of Year Income Expenses 5% ROI Percent Of Expenses Covered By ROI Change In Networth (Savings + ROI) Networth 0 - - - - - 0 1 70,000 25,200 1,120 4% 45,920 45,920 2 70,000 25,200 3,416 14% 48,216 94,136 3 70,000 25,200 5,827 23% 50,627 144,763 4 70,000 25,200 8,358 33% 53,158 197,921 5 70,000 25,200 11,016 44% 55,816 253,737 6 70,000 25,200 13,807 55% 58,607 312,344 7 70,000 25,200 16,737 66% 61,537 373,881 8 70,000 25,200 19,814 79% 64,614 438,495 9 70,000 25,200 23,045 91% 67,845 506,340 10 70,000 25,200 26,437 105% 71,237 577,577 11 70,000 25,200 29,999 119% 74,799 652,376 When your annual return on investments cover 100% of your expenses you are financially independent. The above table will likely show you need to work slightly longer because your withdrawal rate should be less than your return on investments. " networthify.com/calculator/earlyretirement?income=70000&initialBalance=0&expenses=25200&annualPct=5&withdrawalRate=4Thanks for posting this! I think it will be really helpful for me in terms of deciding what kind of salary I really need while I am job searching.
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Deleted
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Post by Deleted on Oct 15, 2015 11:10:49 GMT -5
I've always been a saver. I started working a few years before 401(k)s were common. I think I first had one offered by an employer in 1985. (Income was too high for an individual IRA to be deductible.). Once offered, I probably starred maxing it out
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haapai
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Post by haapai on Oct 15, 2015 11:12:05 GMT -5
I made the max IRA contribution once but it was a fluke. Money dropped into my lap late in the tax year (Christmas). It sure wasn't coming from the $20Kish salary that I was making at the time.
I gross about $30K a year now, with no real salary growth expected, and 15% going into a 401(k) so it will take another flukey set of circumstances to max one of those buggers ever again. I've considered (ab)using a Roth IRA to store car replacement and big repair funds and withdrawing only contributions prior to retirement age but that strategy won't bring me close to the annual maximum. ETA: There's an HSA that I max annually that takes priority over Roth contributions.
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garion2003
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Post by garion2003 on Oct 15, 2015 13:08:02 GMT -5
A working couple can put $47k into 401ks and IRAs. If you save 15% of your gross you need to be making $313,000 to max. If you save 20% of your gross you need to be making $235,000 to max. If you save 25% of your gross you need to be making $188,000 to max. If you save 30% of your gross you need to be making $156,000 to max. If you save 35% of your gross you need to be making $134,000 to max. If you save 40% of your gross you need to be making $117,500 to max. If you save 45% of your gross you need to be making $104,000 to max. If you save 50% of your gross you need to be making $94,000 to max. No matter where you are on the spectrum you are doing well if you are maxing. I'll never be able to max.
I am least maxing a ROTH.
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thyme4change
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Post by thyme4change on Oct 15, 2015 13:20:42 GMT -5
We started maxing our 401ks when my husband and I both got a nice bump in pay within weeks of each other. I think I went from $32k to $50k, and I think my husband went from $30 to $45 or something like that. The only changes we made were to pay more taxes, pay off debt faster and bumped our 401ks up to $15k each. We have pretty much maxed out ever since. When my hubs was in law school, I was the only one working, so maxing was $16k or something like that. We don't put anything in IRAs, and I am kind of glad. We have such a large percentage of our assets in retirement accounts, I am worried that if we need money before we can access it - we might be a little hosed. College is coming soon. I have considered cutting our contributions a bit and stashing money in a more accessible place.
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souldoubt
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Post by souldoubt on Oct 15, 2015 13:32:29 GMT -5
I started a Roth IRA when I was 18 that I contributed very little to while working through college. I started maxing it out annually about 6 years ago. I will be contributing over 16K this year between the traditional/Roth 401K options while my employers contributions put me over 20K for the year. I could afford to max it but opt not to while I build my taxable account and also have some expenses coming up in the next 12 months.
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Tiny
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Post by Tiny on Oct 15, 2015 13:55:03 GMT -5
I set up a "5 year plan" to get to maxing my 401K and a Roth IRA. I think my salary back then was a bit over 85K - with bonuses (we get a fixed Christmas bonus and then a "merit bonus") and a 5 day vacation cash out. I had always contributed 8% to the 401K. The first thing I did was to increase my contribution to 10% and an automatic $250 transfer to the Roth I had set up years before and then ignored. I knew I had a lot of "fat" in my spending... so having less money available to spend made it easier to remember/pay attention/document what I was spending. I opted to 'find money' to pay for savings AFTER I had committed to saving. That was my first pass at a Budget. The first 2 months were a little rocky - but I didn't incur additional debt and I managed to increase savings. It got easier - I didn't really notice that I wasn't 'frittering' so much money. I then basically bumped up my 401K contribution 2% every July (raises) and my Roth contribution by $50 every January - and then made due with what was left over. Over an 18 to 24 month period, I did do all the 'cut the fat' things you should do - I reviewed my bills and expenses (saved money on insurances, canceled some services I wasn't really using, paid more attention to my grocery spending, cut out eating out so much, etc). I managed to get to saving 28% of my gross income (between 401K and Roth) and managed to max both of them within the "5 year plan timeframe"! and then the Great Recession hit. I opted to hold the line and left everything as it was - I didn't get a raise one year, and then got a 2% raise each year for a couple of years... and then got back to the 3 to 3.5% raises... meanwhile my fixed expenses went up - property taxes!!!! insurances!!! cost of utilities. Arrghhh.. money got alittle tight in there (but that was because I was buying investment properties with some savings/some home equity). Last year I backed down to saving 25% of my gross income. I'm over 50 and there's no way I can max the 401K (with catch up contributions). I'll be close to the under 50 yo max amount this year. I do max the Roth (with catch up contributions). I have also shifted to saving more in after tax accounts (not much but a little). I'm very heavy in Retirement account $$ and very light in after tax $$. I contemplate 'retiring' at 55 - but I won't have much in after tax $$ available (to bridge me to 59 1/2) - unless I start saving some I expect to NOT hit the max on the 401K going forward - especially if the max allowed keeps increasing. I'm going to focus on maxing the Roth AND creating some after Tax investments. I'm really really really glad I got serious about 'retirement savings' and 'what am I doing with my money?!?!' back 10 year ago (or so). It truly wasn't that hard to bump up the 401K contributions by 2% each year. I would imagine for a youngster with a 30 year retirement horizon - that a 1% bump every year would barely be felt... If they could "tough out" an initial 3% or 5% contribution and then do the yearly 1% (and stop when it hits 10% or 15%), by the time "retirement" starts to become something that crosses their mind every now and then - they might have been painlessly saving 10 to 15% a year for a few years.
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teen persuasion
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Post by teen persuasion on Oct 15, 2015 22:36:47 GMT -5
Well, I don't have access to a 401k at work, and even if I did I don't make enough to max one, so...
I began maxing Roth IRAs when we paid off the mortgage (using the extra I was putting towards the mortgage). I'd already been bumping up DH's 401k contributions a bit at a time: reworked medical deductions and withholdings to painlessly go from 5% to 10%, then doubled it again to 20% when student loans were paid off, doubled it again, and finally up to 55% to max it when the mortgage hit 0.
Unfortunately DH is no longer maxing his 401k; the new job's healthcare contributions are much higher, and we've shifted to maxing the HSA first (and previous employer kicked in a few k there, too, while new one does not, which is another effective pay cut). We're saving the same total, just in different buckets. DH hates negotiating, and it's been an expensive lesson for him to realise total compensation is what counts, not JUST salary and match.
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Deleted
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Post by Deleted on Oct 15, 2015 23:14:05 GMT -5
30-35K. That's been about where I've been for a long, long time. I just work less hours than I used to for the same money. I've never maxed my 401K, but I've been maxing my IRA most years since 95? I'm not exactly sure what year I started without digging through files, but the max for an IRA was only 2K until 2001 or so. 401K has been all over the place, but usually at least 10%. Right now it's 15% and I'll start out 2016 with it being at 20% after cutting the dependent care FSA.
As for did I notice, the first year with the IRA I sure did. I had scrimped and saved and had a few thousand saved up, then did my taxes and realized I was going to have to pay a bunch in, but if I opened an IRA and stuck 2K in it I'd get money back. That was a lot of money back then (my 5% house down payment was 2K!), so it really sucked to send it off not to be seen again for 35+ years, but in hindsight, I'm glad I did it.
For the 401K, the amount to get the match never was enough to miss. I tend to just dive in with it at the rate I want it right away, but I think upping one or two percent a year would be a rather painless alternative. At my income level, maxing is difficult and a bad idea tax-wise anyhow, so I'm not even trying.
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justme
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Post by justme on Oct 16, 2015 8:08:58 GMT -5
It'd be 25% just to max my 401k. I'm not there yet, especially with just taking on a mortgage. Right now I'm at 6 with 3 matching. Debating whether part of next raise should increase that or go a Roth account.
If I got married I'd immediately start maxing both with someone able to split my expenses with. And I'd be opening a taxable account in the near future too. Being single it's going to be a slower go at it, but the goal is to get there.
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gooddecisions
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Post by gooddecisions on Oct 16, 2015 9:56:32 GMT -5
I contributed 20% until I hit an $80k salary (including bonus), at the point I could finally max my 401(k) to the IRS limit.
I definitely missed the money as my starting salary was only $23K and it took a long 10 years to even get to $80K, which was really $70K with a $10K bonus. I missed a lot of destination weddings and probably wasn't the good friend I could have been if I had the money to spend instead.
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bobosensei
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Post by bobosensei on Oct 16, 2015 11:28:04 GMT -5
We started maxing two roths in 2006 when I was unemployed and DH made about 50k. We added maxing the 401ks in 2010 when DH made about 90k and I made about 35k. We also started a taxable account in 2008 that we put money into on and off.
We have 30+ years to retirement, and more and more I am thinking that maxing all your retirement vehicles is not the end all be all. I don't want us to end up with tens of millions at retirement and having to take RMDs that let taxes eat up everything.
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Ombud
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Post by Ombud on Oct 16, 2015 11:32:13 GMT -5
I never noticed it coming out bc I divided all raises into 3rds: ♤ to retirement ♡ to mortgage / debt ◇ to lifestyle creep (after paying off 32 cc's )
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yogiii
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Post by yogiii on Oct 16, 2015 12:08:41 GMT -5
I don't understand not wanting to have money in retirement accounts. You can do Roth conversions (or a Roth conversion ladder) and start taking out the contributions after 5 years if you're under 59.5.
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