Automatic enrollment to 401k (real estate, debt, buy, companies)

[truckingbronco]

Your employer must now auto enroll you for 3%, but you can opt out if you like. 401ks are a great thing, and you will be well served to take advantage of one. You should also be putting away money in a Roth so you will have a nice "tax-free" income stream in retirement as well.

You really don't miss the money since you never see it and a company match is an instant 100% return, you won't find that in any other investment.

But, like I said, if you are very strapped for cash you can always opt out.

[sheenie2000]

There's a company match after one year of service. And it's 33 cents to the dollar.

[truckingbronco]

Originally Posted by sheenie2000

There's a company match after one year of service. And it's 33 cents to the dollar.

That's an instant 33% tax defered return, which can add up to big bucks over the course of your working life.

[sheenie2000]

I didn't see the point of putting my money in since I am not eligible for the company match. Considering it's only 33% return, with the markets losing 25-50% already, I didn't see the point. And we might not even be done with the market crashing yet.

I also never opened a Roth since my husband and I earn too much. But since we have a business, our income fluctuates. I wasn't really sure if it was worth opening up a Roth. If I can only contribute once every other year? I also don't know what the future holds income wise, so I just didn't bother with a Roth.

We opened up a Sep, but that's only to save on income taxes ever so slightly, but then locks up our money for any future expansion of our business. It's kind of frustrating, but I guess that's the point, is to lock the money till you retire.

[truckingbronco]

Originally Posted by sheenie2000

I didn't see the point of putting my money in since I am not eligible for the company match. Considering it's only 33% return, with the markets losing 25-50% already, I didn't see the point. And we might not even be done with the market crashing yet.

I also never opened a Roth since my husband and I earn too much. But since we have a business, our income fluctuates. I wasn't really sure if it was worth opening up a Roth. If I can only contribute once every other year? I also don't know what the future holds income wise, so I just didn't bother with a Roth.

We opened up a Sep, but that's only to save on income taxes ever so slightly, but then locks up our money for any future expansion of our business. It's kind of frustrating, but I guess that's the point, is to lock the money till you retire.

The market may be down, and probably has further to go, but you will still make out over the long run. As far as your personal financial situation, it sounds like you would be best served to sit down with a trusted financial planner and CPA to determine the best use of your funds.

[CouponJack]

Originally Posted by sheenie2000

I didn't see the point of putting my money in since I am not eligible for the company match. Considering it's only 33% return, with the markets losing 25-50% already, I didn't see the point. And we might not even be done with the market crashing yet.
.

You have 30 years + till retirement considering your age.

Do you really believe you would do better over the long term in CD's and bonds if you were to invest in equities right now?

If you do, then I believe you are not cut out for equities.

[f_m]

My job automatically will enroll you unless you say otherwise. Of course they tell you this when you start the job.

If you don't have a pension, then you will need some kind of retirement fund like 401k and/or IRA, since you shouldn't depend on social security. 401k will allow you to save the most for retirement pre-tax. In fact, if you max your amount for 401k and IRA, which is approx ~$20k before age 25 or 26 and add nothing more, then you can reach $1 million if you have a 10% return per year. That is why doing it ASAP is the best thing. However, all of these depend on the funds your money is invested in, safer bond funds have lower return, while riskier stock funds can get good gains. Right now, with the market down, it's a good time to invest in it for the long term.

[f_m]

Originally Posted by sheenie2000

Ok, I could be wrong then, if they are a good idea. For those who are older as I'm only in my 20s, how have your 401ks done? Does it still make out better in the long run in comparison to just putting away the money yourself?

Realize that the money is taken out before taxes are taken. So you get to keep the money and invest it until you start withdrawing at retirement. That means you keep more money. For me, if I max out the account that means about $5k extra/year from company match and tax savings.

[Dave1215]

I highly respect all employers that support automatic enrollment.

[SandyCo]

I invest 9% in my company's 401(k). I would put in more, but I have two kids in college. I'm trying to catch up, because there were many years when I couldn't afford to put any money away. The good news is that my company matches dollar for dollar up to 6%. We usually get bonuses once a year. Because the market is down so much, I've decided to put 25% of my bonus (the maximum) into my 401(k).

Unless you truly believe that the U.S. government is going to fail, a 401(k) is a great way to save. You don't even see the money coming out of your paycheck, and if you start early enough and save enough, you could end up with a very nice cushion for retirement.

As for all of the baby boomers who are now whining because their 401(k)s are down in value, if they were at all close to retirement age, they shouldn't have been heavily invested in the stock market, anyway. They gambled, and they lost.