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What are your thoughts on comtributing to a 401k if you are really focused on paying down debt? I have about 3 years before out of debt. Im 37, with about 20k in my IRA and my company does not have a match.
What are your thoughts on comtributing to a 401k if you are really focused on paying down debt? I have about 3 years before out of debt. Im 37, with about 20k in my IRA and my company does not have a match.
Would help to know your interest rate. Some will say go with whichever gets you the best return.
For instance when I paid off my home in 09 my interest was around 6%. Nothing was paying that. SO I paid it off.
With todays rates? I think I would've kept the mortgage, and invested in an index fund.
Like Suze Orman advice to NEVER put any more in 401k than amount needed to get company match because these are the lowest performing funds possible for 401k, only exception is company stock..
OK, I get really annoyed with absolutist type statements like these. In many cases, they're simply WRONG. People with 401ks/403bs/457s from large companies/governments/non-profits often have very good funds at rock bottom fees. This includes both actively managed and index funds. It turns out, due to sheer number, a pretty high percentage of people with these plans work for large companies, so a good percentage of people are getting good offerings in their plans. Small company plans tend to be a rip off, but there are exceptions there as well.
I have a large menu of solid offerings in my 457 plan. I can probably name at least 5 other folks I know of who have good to excellent plans as well, some smaller/medium sized companies, some large.
Like Suze Orman advice to NEVER put any more in 401k than amount needed to get company match because these are the lowest performing funds possible for 401k, only exception is company stock.
At age 29, I had $45k earning really modest pay. Developed health problems and let go from my job without unemployment pay or medical leave so all the money is gone, long gone. Needed the retirement money to survive earlier than expected...Lots of the local women have suffered similar problems with health or local sex harassment/hostile workplace scams and screwed out of retirement moneys early. Really have nothing to show for staying here.
Now I'm 41, and $2k in IRA, emergency fund, debt paid down but still no work after getting screwed by employer earlier this year. Having trouble finding counsel to advise and having to leave with restraining order some I'm left alone to file a discrimination complaint and try to get my small business started again...Only reason I'm okay financially was paid for broken back injury from 2 years ago about time I found out this employer was unethical and I was likely in for a hard time for a while. Did not need this but ...**** just makes you stronger.
Let's see, my company doesn't do any matching so I should contribute $0? Every situation is different, just like yours. Don't go and follow a generic advice. I am pretty happy with my TIAA-CREF.
no it's not the fed induced interest rate is 0%, that doesn't mean that banks are giving people mortgage's at 0%. Right now it's closer to 4%. If banks were doing that everyone would be running out to get a mortgage as it would an excellent investment.
Let's see, my company doesn't do any matching so I should contribute $0? Every situation is different, just like yours. Don't go and follow a generic advice. I am pretty happy with my TIAA-CREF.
Do you consider this is a bad PRR?
Fully agree. I have TIAA-CREF as well, my returns are similar. I probably have a tad more aggressive portfolio than you, since my high return years are a bit higher, but low return years and 2011 are lower. I'm almost 39, so I have lots of time, will probably stay the course.
What are your thoughts on comtributing to a 401k if you are really focused on paying down debt? I have about 3 years before out of debt. Im 37, with about 20k in my IRA and my company does not have a match.
Depends on the size of debt and its interest. On average returns on my retirement accounts exceed the interest I'm paying on my (very few) debts. Granted I only have mortgage at 4% and a car loan at 2.8%.
What you are missing by not contributing early into retirement are all the years of the compounding interest. I will soon be at a point where in the average year my nest egg earns more than 18K allowed by IRS. I like the thought that if I have to stop contributions all together for whatever reason, the money will still be growing at a sizeable rate.
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