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Old 11-02-2018, 08:59 AM
 
8,870 posts, read 5,147,902 times
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OP, here is a blog post by the infamous Mr. Money Mustache about savings rates and years to retirement:

The Shockingly Simple Math Behind Early Retirement

Love him or hate him, his math is correct.
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Old 11-02-2018, 09:16 AM
 
Location: Gulf Coast
284 posts, read 596,675 times
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Quote:
Originally Posted by Petunia 100 View Post
OP, here is a blog post by the infamous Mr. Money Mustache about savings rates and years to retirement:

The Shockingly Simple Math Behind Early Retirement

Love him or hate him, his math is correct.
We're all screwed then. His calculator doesn't count SSI, which I know you shouldn't rely on, but that's about an additional $40k annually with inflation in 28 years (until I'm 65). I believe it's about $17k annually in today's dollars. Not a ton, but if your annual expenses in retirement are $50k, SSI takes care of about 1/3 of that. Always save the max, but this takes into account the worst case scenario.
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Old 11-02-2018, 09:30 AM
 
Location: Denver, CO
1,700 posts, read 4,068,335 times
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I would contribute at the minimum up to match, and then max Roth and HSA (you are young and presumably healthy, so go with high deductible plan), then back to 401k, in that order. As your income grows you start increasing contributions until you max them out.
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Old 11-02-2018, 09:52 AM
 
8,870 posts, read 5,147,902 times
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Quote:
Originally Posted by JRA2000TL View Post
We're all screwed then. His calculator doesn't count SSI, which I know you shouldn't rely on, but that's about an additional $40k annually with inflation in 28 years (until I'm 65). I believe it's about $17k annually in today's dollars. Not a ton, but if your annual expenses in retirement are $50k, SSI takes care of about 1/3 of that. Always save the max, but this takes into account the worst case scenario.
An awful lot of people are going to be retiring into poverty, yes. That's nothing new.
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Old 11-02-2018, 10:03 AM
 
11,999 posts, read 17,515,194 times
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As others said- as much as possible.

I remember back in my 20s, a colleague started right out and did 20%. Her brother, an accountant, advised it. She girded herself and lived very, very modestly for a year and then reduced that down, probably to 10% or so. Tough to do, but a nice foundation of savings.

Another time, I was listening to Bob Brinker. One caller described how he put insane amounts, or at least as much as legally possible, in to his 401(K). He worked a second job so he could do so.

Just some stories.
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Old 11-02-2018, 10:29 AM
 
Location: Connecticut
26,390 posts, read 42,353,142 times
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At your age, you should be saving as much as you feel comfortable saving. The absolute minimum is the amount to meet your employer's match. Years ago we had two secretaries who were saving nothing toward their retirements. I showed them why this was foolhardy since they were missing out on free money that our employer would be giving them with the match. Both grudgingly signed up for it, one maxing out her contributions, the other doing the minimum to get the employer match. Years later they both thanked me for getting them to start making contributions. The one who maxed out the contributions was able to "retire" very early and now works a job she likes rather than a secretarial position she did not care for. She can tap that retirement money if/when she wants as a backup to her current job. The other one married and started a family but still has that retirement account which has grown nicely over the years. One day it will help her and her husband to retire completely. Jay
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Old 11-02-2018, 11:14 AM
 
1,565 posts, read 405,831 times
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Don't worry about the math. Just contribute the max, and see if you can live on the rest. If you can't, then reduce the contribution. Many people can contribute the max, but believe they can't.
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Old 11-02-2018, 11:26 AM
 
Location: Madison, Alabama
3,616 posts, read 1,727,626 times
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Quote:
Originally Posted by Petunia 100 View Post
Not quite. If OP contributes 4%, the company will kick in a 3.2% match + the 3% everyone gets whether they contribute or not.

OP, 15% is fine if you want to retire at 65. If you want to have options sooner than that, you need to aim higher.
You're right ... I misstated. They'll kick in 80% of the first 5%, so he'd have to contribute at least 5% to get the full 4% match.
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Old 11-02-2018, 11:33 AM
 
Location: Madison, Alabama
3,616 posts, read 1,727,626 times
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Quote:
Originally Posted by karen_in_nh_2012 View Post
No, they will contribute 4% if the employee puts in 5%. (4%, the MAXIMUM company match, is the 80% match on the OP's 5% contribution.) This is what Petunia was pointing out; I just tried to make it even more explicit.



OP, contribute AT LEAST 5%, so you'll get the full company match.

Above that, contribute whatever you can afford. Since you're starting so young, you have lots of time for compounding. If I'd had that deal at 23, I could have retired early ... although I love my job so I wouldn't WANT to!
Yes, after Petunia pointed out the error, I found it. At least I understood the faux paus.

As just about everybody says, contribute as much as you possibly can. My son is doing just that ... he's working in a technical job and putting a LOT in his retirement fund so he can retire very early and teach University courses, which is what he really wants to do but schools don't really pay a living wage.
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Old 11-02-2018, 12:03 PM
 
3,423 posts, read 875,113 times
Reputation: 3930
Quote:
Originally Posted by chuk23chuk View Post
I'm fresh outta college and I would like to maximize the match that I get from my employer. I like to think I am fairly good at math but the way this is written is driving me F**$(@ crazy. I"ll copy paste it here. Basically I just want to know how much I should contribute from my paycheck every paycheck (2 times a month) to get the most benefit out of this.


Please show me the numbers so I can hopefully understand this.

Right now I've got it at 15% which I'm positive is more than enough. But say I want to back it off I want to know what the magic number is. Assume I make $54,0000 a year.

Here we go:


**** will match 80% of the first five percent (5%) that you contribute, i.e., up to a maximum of 4% match
contribution from the company. Participation in the 401k plan is voluntary, however, the company will
automatically enroll you at a five percent (5%) pre-tax participation level if you do not enroll or decline
participation within 30 days of your date of hire.
The second company contribution, made on your behalf by the company, contributes three percent (3%)
of your earnings to Fidelity funds that you have selected from the funds offered. This contribution is
made for all employees beginning with the first payday after hire.
If you contribute 1%, they'll give 0.8%, plus an extra 3% of your base pay just because
If you contribute 2%, they'll give 1.6%, plus an extra 3% of your base pay just because
If you contribute 3%, they'll give 2.4%, plus an extra 3% of your base pay just because
If you contribute 4%, they'll give 3.2%, plus an extra 3% of your base pay just because
If you contribute 5%, they'll give 4.0%, plus an extra 3% of your base pay just because
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