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I am a little confused, as when I increased my 403b contributions by 5%, my paychecks only decreased by a mere 40 or so dollars (which is far less than 5% of gross biweekly pay).
OP, you say you can't afford to save for retirement, but can you afford NOT to?
Not right now, I wanna wait until next summer and get out of debt.
I signed up for 401K years ago at one of my jobs because I was making more money and didn't miss it at all. But now with them not offering higher salaries there is no way I want my check to be ever lower after taxes than it already is which is why I declined. I would need a huge raise to even consider something like this because there is already too much coming out of the check as it is now.
Now my salary has increased closed to $3000 more a year due to COLA raises since 2014 but I just feel it's not enough at this time. And I thought 401K was something optional that was beneficial so why is my employer being so aggressive in getting people to sign up?
That job years ago where you participated in the 401k. I'm wondering if you withdrew and spent that 401k money.
@OP... 401K can be nice if you have the cash to spare. Don't do it at the cost of forgoing, rent, bills, and racking up credit card debt. OTOH, saving young and early, even if it's a modest amount can still pay off nicely, so that's something to strive for. Especially the employer matching.
Quote:
Originally Posted by jade408
I haven't had an employer match for 401k in 12 years.
You should still contribute something.
I was at a small company (<50 people) where they GAVE US 3% of our salary. Even if we paid nothing, you'd get 3%. I ended up adding another 8% to up that to 11%.
Just want to note that most plans are based on the employer matching a percent of SALARY, not CONTRIBUTIONS as you set it up. They would match 50% of your contributions up to 6% of your salary, equaling a 3% salary match
If so, in the example above, let's assume the $10k contribution is actually 10% of a $100k salary. The company will contribute up to 3% of SALARY, so the match amount is $3,000, not $300. Even with a $40,000 salary, if one contributes 6% or $2,400, the company contributes 50% of that which is $1200, significantly more the the $300 match in your example on a $10k employee contribution.
That's a pretty nice chunk of change that should not be left "on the table".
Thanks for pointing that out, I stand corrected.
Even more of a reason for the employee to contribute to the 401(k)!
No, some people really are this dense. I work in the retirement investment field. Some employees think that a payroll deduction that goes into their own savings account (with a company match!) represents the employer trying to hurt them.
*Employers are required by law* to try to get employees to contribute to any 401(k) or savings plan that the employer happens to offer. (They are not required to offer a plan, but if they do, they have a responsibility to try to get everyone to participate.)
The money is not taxed until you take it out when you are age 59-1/2 or older, then it is taxed.
And I've had co-workers argue with me saying stupid stuff like, "Why in the world would you want to lock up money until you are aged 70?". My favorite stupid comment is, "I will worry about retirement when its time for me to retire".
Because it's been about 12 years since I been involved in 401K. I was making more money back then
So you've missed out on contributing to your 401(k) for 12 years? Oh, man, you seriously need to contribute to it now and perhaps the max allowed. Have you even done any retirement planning? Because you might be in for a real shock when it comes time to retire.
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