City-Data Forum How much should I contribute to my 401k? (55, years, get married)
 User Name Remember Me Password [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.

11-01-2018, 07:25 PM
 3 posts, read 1,458 times Reputation: 15

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.

11-01-2018, 07:37 PM
The company will contribute 3% of your salary (\$1620) whether you contribute anything at all or not.

Then, on top of that they'll match up to 4% (\$2160) of your salary, if you contribute that much.

So, you'll get \$1620 + \$2160 + \$2160 (matching) for a total of \$5940.

If you contribute 15%, they won't match the resulting 11% difference, which would be \$5940. That would give you a total contribution of \$11880. Pretty good.

In my opinion, you should contribute as much as you can afford.

11-01-2018, 07:40 PM
 Location: Texas of course 563 posts, read 266,261 times Reputation: 2897
I agree, contribute as much as you can afford, you'll be thankful later.

11-01-2018, 07:49 PM
 Location: Central IL 15,222 posts, read 8,518,332 times Reputation: 35613
Agree with both Rocketdawg and OTHG - especially in these earliest years where everything you put away will have the longest time to compound and grow. Even if you can't keep up the highest percentage you contribute now, it will help you greatly.

Pay less attention to the match and your exact calculations - too many people only contribute up to the match as though they are somehow outsmarting their employer but they are only shortchanging themselves - your own money counts too even if not matched! Unless you have a really good purpose for that money over the match that you COULD invest, you're making a mistake stopping at that point - so you're right to go big for as long as you can. Remember, if you get married, have kids, etc. you might have to slow down a bit.

11-01-2018, 08:44 PM
 8,843 posts, read 5,126,299 times Reputation: 10101
Quote:
 Originally Posted by RocketDawg The company will contribute 3% of your salary (\$1620) whether you contribute anything at all or not. Then, on top of that they'll match up to 4% (\$2160) of your salary, if you contribute that much. So, you'll get \$1620 + \$2160 + \$2160 (matching) for a total of \$5940. If you contribute 15%, they won't match the resulting 11% difference, which would be \$5940. That would give you a total contribution of \$11880. Pretty good. In my opinion, you should contribute as much as you can afford.
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.

11-01-2018, 08:50 PM
 Location: The Berk in Denver, CO USA 14,028 posts, read 20,336,588 times Reputation: 22749
OMG!
I would have killed for that kind of deal in 1972.

11-01-2018, 08:56 PM
 3 posts, read 1,458 times Reputation: 15
Quote:
 Originally Posted by RocketDawg The company will contribute 3% of your salary (\$1620) whether you contribute anything at all or not. Then, on top of that they'll match up to 4% (\$2160) of your salary, if you contribute that much. So, you'll get \$1620 + \$2160 + \$2160 (matching) for a total of \$5940. If you contribute 15%, they won't match the resulting 11% difference, which would be \$5940. That would give you a total contribution of \$11880. Pretty good. In my opinion, you should contribute as much as you can afford.

Thank you sweet baby Jesus for breaking this down. Makes so much more sense now.

11-01-2018, 08:59 PM
 3 posts, read 1,458 times Reputation: 15
Quote:
 Originally Posted by Petunia 100 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.

Higher than 15%?! **** sake! I mean that’s based on the assumption I only ever make 54k forever. I’m hoping in some years I’ll be making much more

Editing to say I am 23 y/o

Last edited by chuk23chuk; 11-01-2018 at 09:10 PM..

11-01-2018, 09:24 PM
 605 posts, read 188,659 times Reputation: 638
Contribute as much as needed for the company match. Managing Fees can be high depending upon how many are participating in the plan. How large the company is. We have 100 employees but only 20% are full time.
So only 20 employees participate in 401k

Then open a ROTH IRA at Fidelity with after tax \$\$. You are limited to \$5500 yr and are penalized by IRS if you contribute more. You will not be paying for high fees for someone to manage your account. You'll be doing it yourself. This means researching stocks. Bogleheads website taught me alot.

I will continue utilizing my company match for another 8 years or so BUT my companies match won't even cover the fees at that time. Imagine loosing your employer match and now paying money just to have the account. The investments, even the S&p 500, won't keep up with the fees. They are way too high now. I must to sever employment with them. They always match pre-tax dollars. So it becomes a very expensive savings account. And there are no outs, I've read the material. Not even for a hardship.I'd need to quit my job in order to even roll it over. Good luck!

Last edited by BumbleBeeHunter; 11-01-2018 at 09:39 PM..

11-01-2018, 09:27 PM
 Location: Central New Jersey 2,384 posts, read 910,301 times Reputation: 4219
Put away now as much as you can without depriving yourself. You can always reduce it if you'd like if something unforseeable occurs in your future. Do it now while your young and you'll be very happy when you get older.
Good luck
 Please register to post and access all features of our very popular forum. It is free and quick. Over \$68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned. Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.