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Old 04-16-2012, 06:58 PM
 
Location: Penfield, NY
287 posts, read 261,274 times
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I have $0 in a 401k, but have a pretty respectable amount in a Keogh. I'm 28.
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Old 04-16-2012, 07:05 PM
 
Location: Chapel Hill, NC (formerly Vienna, VA)
5,783 posts, read 5,790,588 times
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Quote:
Originally Posted by Info Guy View Post
I wonder if the $17K limit for 401K and the $5K for Roth IRA will ever be raised?
The 401(k) limit gets raised every year or so. I know for 2011 it was $16.5K. For 2012 it is $17K. I remember when the limit was only $10K or $11K back in the 90's. The IRA limit used to be $2K when it was first introduced. Then it was $3K then $4K. And now it's been $5K for many years. Hopefully, it will get raised again soon.

Here's the link to the Roth IRA limits: http://en.wikipedia.org/wiki/Roth_IRA
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Old 04-16-2012, 07:13 PM
 
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Quote:
Originally Posted by michgc View Post
The 401(k) limit gets raised every year or so. I know for 2011 it was $16.5K. For 2012 it is $17K. I remember when the limit was only $10K or $11K back in the 90's. The IRA limit used to be $2K when it was first introduced. Then it was $3K then $4K. And now it's been $5K for many years. Hopefully, it will get raised again soon.

Here's the link to the Roth IRA limits: Roth IRA - Wikipedia, the free encyclopedia
It raises on 401K due to inflation right?

I wonder how much people would contribue if either of them had NO limits.
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Old 04-17-2012, 02:08 AM
 
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Obviously it would depend on the amount of disposable income you have. Given that the median individual income in the US is just under $29k, and the median household income is about $50k, a lot of people find it difficult/impossible to contribute the max, epsecially in their 20s and 30s before their peak earning years--people at this time are also buying homes and raising families etc.

That's why I think the catch-up should be raised from $5500 a year to perhaps $10-15k. Also, rather than at 50 years old, people should be allowed to begin the catch-up at 45 or perhaps even earlier.

Quote:
Originally Posted by Info Guy View Post
It raises on 401K due to inflation right?

I wonder how much people would contribue if either of them had NO limits.
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Old 04-17-2012, 03:02 AM
 
28,597 posts, read 24,528,524 times
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most people just arent savers so it really doesnt matter how high the limit is raised. it would only end up benefiting the higher income earners who already are saving.

dont get me wrong i would love to see the limits raised but the fact is even those with the income to save rarely save it.

good portfolio construction is having the right assets in the right kind of vehicles so retirement accounts arent the place for many asset classes anyway.

even those who do save structure their investments all wrong anyway.

equities should be in a taxable account where they can benefit from greatly reduced tax rates, write off losses,pass to heirs at a stepped up basis tax free.

there is a huge difference in the bottom line by only keeping income and interest generating stuff in a 401k or traditional ira since thats taxed at regular rates anyway. big difference between a max of 15% and possibly 25,26 or 28% from tax deferred vehicles.

roths can handle either....


there are enough ways to plow money into constructing a portfolio right now and very very very few do it right.
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Old 04-17-2012, 02:33 PM
 
4,217 posts, read 3,100,799 times
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Quote:
Originally Posted by stoutboy View Post
Obviously it would depend on the amount of disposable income you have. Given that the median individual income in the US is just under $29k, and the median household income is about $50k, a lot of people find it difficult/impossible to contribute the max, epsecially in their 20s and 30s before their peak earning years--people at this time are also buying homes and raising families etc.

That's why I think the catch-up should be raised from $5500 a year to perhaps $10-15k. Also, rather than at 50 years old, people should be allowed to begin the catch-up at 45 or perhaps even earlier.
It maybe difficult if you are living alone but not with family and/or roomates. If you bought that home and you cannot fund your retirement then you bought too much home and/or could not afford it.
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Old 04-17-2012, 02:47 PM
 
1,785 posts, read 1,127,787 times
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I'm not saying they shouldn't be saving for retirement, I'm saying it is difficult/impossible for people making lower incomes to set aside the 401k max of $17k.


Quote:
Originally Posted by Info Guy View Post
It maybe difficult if you are living alone but not with family and/or roomates. If you bought that home and you cannot fund your retirement then you bought too much home and/or could not afford it.
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Old 04-17-2012, 04:17 PM
 
28,597 posts, read 24,528,524 times
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the max is really tough to put in when first starting out in a career.

when i was a lad going to college i worked for an investment company answering phones and filing.

someone sold me a 75 dollar a month investment plan, this is in 1970.

i had no clue what i bought. all i knew was every month a bill came and every month i paid it.

i couldnt even tell you what it was i bought.

actually it turned out to be a junk bond fund. almost all the money i was making part time was going in to this.

well it had high fees and wasnt the greatest performer but years later i was amazed i saved so much.

that later became my working capital once i really was ready to invest and learn.

one other point is wealth is rarely created by our pay checks, wealth is created by capital gains on what little we can manage to save. . eventually we reached a point where we make more in our investments in some years than both our pay checks together and we are at the tail end of our careers at this stage..
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Old 04-17-2012, 04:20 PM
 
4,217 posts, read 3,100,799 times
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Quote:
Originally Posted by stoutboy View Post
I'm not saying they shouldn't be saving for retirement, I'm saying it is difficult/impossible for people making lower incomes to set aside the 401k max of $17k.
No pain, no gain. That is why the 99% are whining on the streets.

To be succesful in business, it takes sacrafice.
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Old 04-17-2012, 04:24 PM
 
5,507 posts, read 5,361,458 times
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Quote:
Originally Posted by Info Guy View Post
No pain, no gain. That is why the 99% are whining on the streets.

To be succesful in business, it takes sacrafice.
So you save 17k? Where do you live? How much you make? Single? Family?
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