Deleted
Joined: Jun 21, 2024 15:12:57 GMT -5
Posts: 0
|
Post by Deleted on May 13, 2011 8:20:34 GMT -5
is maxing your 401K to you? And how far would you go to do it?
At my job I don't have the option to max my 401k contributions since I can only contribute up to 25%.
My wife on the other hand can contribute up to 85% of her salary and it would take about 39% of her salary to max her 401K; maybe less if she get raise in september.
But I am thinking that is a bit going overboard. I feel we are both contributing 25% now and contributing 2K each to our 401K and that is enough for now.
What is the highest you would go (percentage wise) to max your 401K?
|
|
Deleted
Joined: Jun 21, 2024 15:12:57 GMT -5
Posts: 0
|
Post by Deleted on May 13, 2011 8:22:16 GMT -5
It would depend on the situation. Right now my wife and I contribute 8%. I would like that to be a little higher. Maybe in a few years.
|
|
Deleted
Joined: Jun 21, 2024 15:12:57 GMT -5
Posts: 0
|
Post by Deleted on May 13, 2011 8:24:56 GMT -5
DH and I both contribute to the point that our employers match, and not a penny more. My employer contributes 3.5% at 6% contribution and it stays flat after that, so I only contribute 6%. When I'm done with school I'll probably start an IRA.
|
|
alabamagal
Junior Associate
Joined: Dec 23, 2010 11:30:29 GMT -5
Posts: 8,128
|
Post by alabamagal on May 13, 2011 8:29:50 GMT -5
I think it is important to contribute enough so that you get the maximum employer match. If you don't do that, you are missing out on the "free money" that your employer is trying to give you for retirement.
Beyond that, it is a personal decision. I would not recommend contributing huge amounts if you have other "bad debts" - cc, car loans, etc.
|
|
whoisjohngalt
Junior Associate
Joined: Dec 18, 2010 14:12:07 GMT -5
Posts: 9,140
|
Post by whoisjohngalt on May 13, 2011 8:30:55 GMT -5
Well, I don't work, so for ME, maxing out my DH's comes before pretty much everything else.
Lena
|
|
ontrack
Familiar Member
Joined: Mar 21, 2011 9:44:36 GMT -5
Posts: 967
|
Post by ontrack on May 13, 2011 8:34:52 GMT -5
Reaching the max is important to me, and I have to withhold 20% to get there. I have reasons that having pre-tax retirement savings withheld makes more sense than opening a Roth (namely, one of my student loans is income (AGI) based.
|
|
Deleted
Joined: Jun 21, 2024 15:12:57 GMT -5
Posts: 0
|
Post by Deleted on May 13, 2011 8:35:13 GMT -5
georgiagal, we feel the same way. But we also want more freedom when it comes to choosing the stocks/bonds/funds in our IRA. Your employer only has a limited amount of choices. At least with an IRA you get more/different choices as to what you want to add to your portfolio.
|
|
CarolinaKat
Junior Associate
Joined: Dec 21, 2010 16:10:37 GMT -5
Posts: 6,364
|
Post by CarolinaKat on May 13, 2011 8:36:42 GMT -5
I think reaching the max is important, but it also can't negatively impact your life. I will eventually get there, just not soon. I want to get up to 20% then 25% before i worry about maxing it.
|
|
RoadToRiches
Familiar Member
Formerly "indebt"
Joined: Jan 4, 2011 11:08:00 GMT -5
Posts: 965
|
Post by RoadToRiches on May 13, 2011 8:38:01 GMT -5
Well, it is important to me and I intent to fully fund (16.5k) in 2012. Right now, this year, I put $0. I know mathematically it's bad, but this is more than math for me. I need to get rid of my consumer debt first. Part of me staying motivated to pay the debt off asap is actually being able to put in max in my 401k as soon as possible.
|
|
Deleted
Joined: Jun 21, 2024 15:12:57 GMT -5
Posts: 0
|
Post by Deleted on May 13, 2011 8:42:23 GMT -5
Maxing my 401K would mean putting over 50% of my income in it. It's not important enough to me to do that! I need to live now too. I put 11% with a 4% match and fund my Roth as well. I don't think it's necessary for me to save at the same rate as someone making 3 times my salary.
|
|
HoneyBBQ
Junior Associate
Joined: Dec 27, 2010 10:36:09 GMT -5
Posts: 5,395
Mini-Profile Background: {"image":"","color":"3b444e"}
|
Post by HoneyBBQ on May 13, 2011 8:44:30 GMT -5
I am fortunate that I can contribute the max and not miss it.
If I made less, I think that it would be important to go the employer match and then consider what else was going on in my life. I already own a house/cars/no loans so my calculations are much different than someone just starting out.
|
|
Deleted
Joined: Jun 21, 2024 15:12:57 GMT -5
Posts: 0
|
Post by Deleted on May 13, 2011 8:46:33 GMT -5
This isn't a priority for me at all. Every online retirement calculator I've played with shows that there will be plenty of money to support my needs in the manner to which I have become accustomed, and I don't come close to the max. If I needed to support more than just me in retirement or I had less time between now and retirement, I might be more concerned with maxing my contribution.
I think you are a few years younger than me, cawiau (I'm 32) - are you sure you need to be maxing your 401k contribution? You and your wife have long careers ahead of you. That may be the right figure to target for savings and investments - but you may want to have some of it be more liquid for your pre-retirement savings goals. (But that's a Phil question - it is distinctly possible that I am just trying to make myself feel better about not contributing more)
|
|
daisylu
Junior Associate
Enter your message here...
Joined: Dec 27, 2010 6:04:42 GMT -5
Posts: 7,055
|
Post by daisylu on May 13, 2011 8:49:26 GMT -5
I do 6% to get the match. Other retirement monies go elsewhere. I do like having all my ducks in one basket.
|
|
Deleted
Joined: Jun 21, 2024 15:12:57 GMT -5
Posts: 0
|
Post by Deleted on May 13, 2011 8:49:39 GMT -5
It's important to me to max it out so that my taxable income is as low as possible. For tax year 2010, I had $672 too much in taxable income to take any tuition credit (screwed up because I didn't understand the difference between 401K and roth 401K). I'm hoping to be able to take some of the tuition credit this year.
|
|
spartan7886
Familiar Member
Joined: Jan 7, 2011 14:04:22 GMT -5
Posts: 788
|
Post by spartan7886 on May 13, 2011 9:07:53 GMT -5
Like honey, I can contribute the max and not miss it. DH does not max, because he feels that a 20% contribution + 4% match is more than sufficient, which I don't argue, because while I contribute more dollar wise, maxing is only 17% of my salary. Truthfully, between that and two maxed out Roth IRAs at 24/25, we probably don't need him to max his 401k for a comfortable retirement. We put more than the difference in after-tax investments anyways.
|
|
giramomma
Distinguished Associate
Joined: Feb 3, 2011 11:25:27 GMT -5
Posts: 21,560
|
Post by giramomma on May 13, 2011 9:44:01 GMT -5
Not very. I just did my calculations, and maxing out my 403b would cost us 27.5% of our gross household income. I have no idea what I'd have after taxes, but assuredly, the percentage would be much worse.
For lower income folk, I think it's possible, but maybe not practical. I still have to save for cars, home maintenance things, etc.
In my personal situation, my spouse brought in a sizable chunk of assets, that left alone, should provide for at least half of our retirement needs. I've begun to run retirement numbers, and we'll be just fine with 1.5 million saved up. I plan to continue to work part time in retirement, and we'll have pensions, IRAs, 403bs, and taxable accounts to draw upon.
We also won't need a ton of income to live off of. Before we had kids, we lived fairly well on smaller income (actually, it was half of our income right now). Meaning, we could eat out, go to movies, take vacations, and still save.
|
|
Tiny
Senior Associate
Joined: Dec 29, 2010 21:22:34 GMT -5
Posts: 13,393
|
Post by Tiny on May 13, 2011 10:01:21 GMT -5
It was important to me to get to contributing 16500 to my 401(k) and getting 5K into a Roth. I'm single and I've got the income to let me do this. I also didn't get serious about saving more for retirement until I was 40 and it took some time to go from 8% to the % that gets me to 16500 and a bit of cutting back (or finding money i was frittering) to get 5K into a Roth.
It was important to me because I realized I wasn't saving enough for retirement (and what I will save might not be 'enough'). It's ok if it's not 'enough' - I'm doing things (enjoying life) now and the bigger 'nest egg' I'll have will definitely give me more future flexibility (even if it's 'not enough'). If I can avoid being caught between a rock and a hard place (no or few choices) when I'm old I'll have been successful.
|
|
Deleted
Joined: Jun 21, 2024 15:12:57 GMT -5
Posts: 0
|
Post by Deleted on May 13, 2011 10:22:27 GMT -5
I think you are a few years younger than me, cawiau (I'm 32) - are you sure you need to be maxing your 401k contribution? You and your wife have long careers ahead of you. That may be the right figure to target for savings and investments - but you may want to have some of it be more liquid for your pre-retirement savings goals. (But that's a Phil question - it is distinctly possible that I am just trying to make myself feel better about not contributing more) We are both 26. And my logic behind it was to get used living on less since it is harder to cut back later on (as we are painfully aware now since we have to downsize). Since we are both contributing 25% now, as our income grows we can just totally ignore the 401k and just roll with it until we max it and need to reduce the percentage. Kinda just get it out of the way once and for all and forget about it kinda thing. 25% represent about 22K/year for both of us , so per our calculations if we were to do nothing else for retirement, just with the 401K we would be set.
|
|
bcdfgh
Junior Member
Joined: Mar 2, 2012 12:17:53 GMT -5
Posts: 132
|
Post by bcdfgh on May 13, 2011 10:40:22 GMT -5
The year I was out of work I probably didn't max out 401k but other than that I max out both 401k and Roth every year. If I don't contribute in full to both retirement savings I would have to invest the money in a taxable account.
|
|
Baby Fawkes
Familiar Member
Joined: Mar 6, 2011 15:39:53 GMT -5
Posts: 812
|
Post by Baby Fawkes on May 13, 2011 10:43:49 GMT -5
I consider it important to me, but not necessarily for the savings part. I am in a fortunate position where I can max out my 401(K), max out my HSA limit (single) and also have 15% of my gross go into taxable long term savings automatically from my paycheck.
My concern is entirely lifestyle creep right now. I'm still young and genuinely feel that I still have enough money left over at the end of the year to cover all my necessities + a bunch of wants, but I realise that it would be far to easy for me to purchase a a better car or more tools for the shop etc. if I didn't save first.
For me it's purely a choice of paying myself before I get the money so I live a modestly comfortable life and can retire earlier if I choose to. Besides, there's no guarantee that my current income level will always be the case so I don't want to fall into the trap of taking it for granted if I can help it.
|
|
phil5185
Junior Associate
Joined: Dec 26, 2010 15:45:49 GMT -5
Posts: 6,410
|
Post by phil5185 on May 13, 2011 10:49:47 GMT -5
Well, it is important to me and I intent to fully fund (16.5k) in 2012. Right now, this year, I put $0. I know mathematically it's bad, but this is more than math for me. Hmmm - $16,500 invested in 2011 would typically be $378,000 when you are age 65. So diverting $12,000 to service your revolving consumer debt this yr is going to cost you dearly. (BTW, you get about a $4000 tax break, so it doesn't really cost $16,500 out-of-pocket, only about $12,500.)
|
|
gooddecisions
Senior Member
Joined: Dec 22, 2010 13:42:28 GMT -5
Posts: 2,418
|
Post by gooddecisions on May 13, 2011 12:48:08 GMT -5
As Phil says, the tax break makes it totally worth it to me to contribute the full $16,500 at the cost of only $12,375. So, with the employer match, $20,500 goes into my 401(k) at the bargain price of $12,375. It's important to me to not have to bank on if I can find a job later in life in a world of age discrimination (not to mention any health issues) and if I will lose my income involuntarily at any year of my career.
If I can tighten my belt to do so, I will always contribute the max federal limit regardless of what percentage of my income that it ends up being. I also agree with Cawiau's suggestion that this also helps avoid life style creap. As my income grows, that will decrease the percentage but the percentage is ultimately irrelavant to me.
|
|
The J
Senior Member
Joined: Dec 18, 2010 11:01:13 GMT -5
Posts: 4,821
|
Post by The J on May 13, 2011 14:03:37 GMT -5
Currently, I contribute 20% to retirement. 3% of that goes to my pension, 17% to my 457. Maxing my 457 would be around 19% of income, so I'm close to that. Could I max it right now? Sure. But I haven't -- I'll wait until it maxes itself out in January with my next step increase.
|
|
thyme4change
Community Leader
Joined: Dec 26, 2010 13:54:08 GMT -5
Posts: 40,486
|
Post by thyme4change on May 13, 2011 14:17:32 GMT -5
I have to max ours out. We started late, and now have a high income. If we don't save a hefty percentage, then my life in retirement will be a drastic reduction in lifestyle (double - no savings then, and extra spending now.) I use 401k to reduce my taxes as much as allowed to make the hit a little less pronounced. We are not eligble for ROTH. I also put money into my brokerage account every month.
|
|
|
Post by illinicheme on May 13, 2011 14:19:40 GMT -5
Maxing my 401(k) is very important to me. I'm fortunate that maxing it is not a big sacrifice on my salary.
|
|
Sum Dum Gai
Senior Associate
Joined: Aug 15, 2011 15:39:24 GMT -5
Posts: 19,892
|
Post by Sum Dum Gai on May 13, 2011 14:21:16 GMT -5
It's not that important to me at all. My goal is to put in 15% of my gross. Well, I count the match as part of my gross, so 15% of whatever you'd call that. As long as I'm doing that, I don't really care whether or not I'm maxing it. I started with 15% at 25, which is later than it should have been, but according to the calculators I'm well on my way to a secure retirement whether I get SS or not and that's good enough for me.
|
|
Tiny
Senior Associate
Joined: Dec 29, 2010 21:22:34 GMT -5
Posts: 13,393
|
Post by Tiny on May 13, 2011 14:32:19 GMT -5
Dark, be sure to re-visit how much you need for retirement every 3 or 4 years. You may want to up your contributions as the years go by. Way back when, when I was offered a 401(k) I was told that saving 3% of my salary (along with the company match of 3%) would do the trick for retirement savings. I was bold and contributed 5%. 10 years later when i switched jobs I changed my contribution amount to 8% (with no match). I should have paid more attention during the first 20 years. Not that I'm knocking what I did - I'm gosh darn glad I DID contribute! Just saying if I had increased the % every couple of years I wouldn't have really noticed AND I'd have a heck of alot more money now. Plan to re-evaluate your savings every couple of years (or yearly).
|
|
Sum Dum Gai
Senior Associate
Joined: Aug 15, 2011 15:39:24 GMT -5
Posts: 19,892
|
Post by Sum Dum Gai on May 13, 2011 14:38:23 GMT -5
I want to slowly up it so that I'm putting in 15% and consider the match gravy. I only get a 4% match, and I'm putting in 12% now, so I just have to add 1% a year for a few years.
|
|
bobosensei
Well-Known Member
Joined: Dec 21, 2010 11:32:49 GMT -5
Posts: 1,561
|
Post by bobosensei on May 13, 2011 14:44:27 GMT -5
We try to max 401ks on top of roth IRAs. But when I say DH's maxes his it is actually a few hundred short per year because he can only do a whole percentage of his income. I could probably manipuate the numbers and up the percentage the last month to get him as close to 16.5k as possible for the year but so far we've been too lazy for that. I consider it "good enough"
Now my current job is full time, but temporary. So I can put in 50%pretax and 10% post tax to 401k, but because I am not working every single month I won't reach the max. Last year I got 9 months of work, but had to wait a few months before I could start 401k contributions. This year I will get 7 or 8 months.
Neither DH or I get a match on 401k. I did at a previous job and while I didn't max out my contributions I did contribute more than necessary to get the full match.
|
|
RoadToRiches
Familiar Member
Formerly "indebt"
Joined: Jan 4, 2011 11:08:00 GMT -5
Posts: 965
|
Post by RoadToRiches on May 13, 2011 14:45:23 GMT -5
Well, it is important to me and I intent to fully fund (16.5k) in 2012. Right now, this year, I put $0. I know mathematically it's bad, but this is more than math for me. Hmmm - $16,500 invested in 2011 would typically be $378,000 when you are age 65. So diverting $12,000 to service your revolving consumer debt this yr is going to cost you dearly. (BTW, you get about a $4000 tax break, so it doesn't really cost $16,500 out-of-pocket, only about $12,500.) I understand that, hence me saying that I know mathematically it's bad, but getting rid of my debt asap is surprisingly more important to me right now than putting max into my 401k for this year. I am willing to pay that price in 30 years when I get there. As of now, my priority is to credit card debt. Nothing else matters. As strange as it sounds, I am willing to pay 300k in 30 years in order to get rid of 12k of debt today. It would only make sense to you Phil, if you were ever in credit card debt because of your own stupidity and careless spending. Otherwise, people as responsible as you will never understand it.
|
|