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Hello,
I started working for a new employer this month. One of the benefits is a 15% company match on a 401k. I am 52 and would like to contribute the maximum $ 24,000.00 a year but it would really make it tough to pay other monthly bills with the huge contribution. In your opinion what amount would you contribute if you were in my situation? I appreciate your advice.
How much are your monthly bills? When you look at net salary - monthly expenses, how much do you want left over every month -- either for an emergency fund or just to have some liquid cash around?
Both of those things will determine how much to put into your 401k. It may not be $2000/month, but can you swing $1800/month or $1500/month? If you post your expenses (totals - not a line item budget) here, one of us can likely do the math for you. You obviously want to put in 15% or as close to that as possible to take advantage of the very generour match.
Also, you're 52 -- what do your retirement savings look like already. Do you feel like you're in a good position or do you feel like you're playing catch up?
Hello,
I started working for a new employer this month. One of the benefits is a 15% company match on a 401k. I am 52 and would like to contribute the maximum $ 24,000.00 a year but it would really make it tough to pay other monthly bills with the huge contribution. In your opinion what amount would you contribute if you were in my situation? I appreciate your advice.
Last year I "woke up" and realized I also needed to do this. I owed money on TWO cars, and found out my wife had a "secret" credit card she could NEVER hope to ever pay off. So, I got busy. I went through the house and garage, and started selling stuff on Ebay and Craigslist. I paid OFF over $25,000 worth of debt in about 5 months to get free and clear. I then MAXED out my 401k (I'm over 50 also) AND started a Vanguard Roth IRA with another $6,500.
Once you "wake up" as you now have, you can make a plan such as this also. When you pay off a debt, you "free up" that money for your 401k. Your pay deductions towards your 401k are PRE TAX, so you might also be surprised at how much is left after it's taken out of your check. Find ways to make some extra money, and GET BUSY!
Good luck, it's a GREAT FEELING once you get it done!
Hello,
I started working for a new employer this month. One of the benefits is a 15% company match on a 401k. I am 52 and would like to contribute the maximum $ 24,000.00 a year but it would really make it tough to pay other monthly bills with the huge contribution. In your opinion what amount would you contribute if you were in my situation? I appreciate your advice.
You don't have to contribute the full 24k if you just can't swing it. Contribute some lesser amount.
Hello,
I started working for a new employer this month. One of the benefits is a 15% company match on a 401k. I am 52 and would like to contribute the maximum $ 24,000.00 a year but it would really make it tough to pay other monthly bills with the huge contribution. In your opinion what amount would you contribute if you were in my situation? I appreciate your advice.
The problem is, we really don't know your bills, so we can't really give you good advice.
We also don't know how many of your bills are true needs vs. wants.
There is usually a lot of stuff people can do, but it's typically out of their comfort zone, so they don't do it.
IE--Maybe they could sell the house and move to a smaller, cheaper one. Maybe they could rent out a room in the house they live in. Maybe they could sell a new car and buy a cheaper, used one. Maybe they could find a side job or start a small side business to earn extra money. Maybe they could ditch cable tv. Maybe they could cut back on eating out. Or they could shop smarter for groceries.
So it's a question of how far you are willing to move outside your comfort zone.
Hello,
I started working for a new employer this month. One of the benefits is a 15% company match on a 401k. I am 52 and would like to contribute the maximum $ 24,000.00 a year but it would really make it tough to pay other monthly bills with the huge contribution. In your opinion what amount would you contribute if you were in my situation? I appreciate your advice.
Max it every single year. Figure out a way to do it. It is that important.
At least it is to me. I have trimmed my spending and have not made purchases all so I can max my 401k every year until retirement.
Figure out what percentage it will take to max it and try it for a few months to see how it goes.
Also, run a quick estimate on your year end taxes to give you an idea how much federal and state income tax maxing your 401k will save you. It might provide some extra motivation
I generally put the max $53,000 in my 401k/year because of my tax bracket.
What really matters is what you think your tax bracket will be once you retire. If it will be less than it is now, then try to max out your 401k. If you think it will be higher, it might be in your best interest not to max out your 401k.
If you have an option of a roth 401k, you can play with the numbers even more.
At the very least, it's a good idea to get the maximum match from your employer.
The question is do you need to put in the max? What do your retirement funds look like right now? If they are sufficient for your needs, I'd put in the 15% and call it good. If you don't have enough put away, I'd figure out how to max out the 24K.
I generally put the max $53,000 in my 401k/year because of my tax bracket.
What really matters is what you think your tax bracket will be once you retire. If it will be less than it is now, then try to max out your 401k. If you think it will be higher, it might be in your best interest not to max out your 401k.
If you have an option of a roth 401k, you can play with the numbers even more.
At the very least, it's a good idea to get the maximum match from your employer.
You aren't putting 53k aside pretax annually are you?
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