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-Google '401k calculator' and take your pick of the top 10 results.
-Then plug in:
$15,000 annual salary (full time minimum wage with 2 weeks unpaid vacation = 2000hrs x $7.25)
5% contribution (works out to about 15 dollars a week)
75% employer match
Starting age = 16
Starting value = $0
Retirement age = 65
Annual rate of return = 5%
Expected annual salary increase = 1%
The amount in this hypothetical account at age 65 will be over $300,000. Play with the numbers a little - it is enlightening.
Compound interest is a powerful thing, but of course you need some discipline too. So in response to your post - Saving $15 per week is not unreasonable, and I think a minimum wage employee should definitely be able to contribute to a 401K.
Excellent post. It will go unnoticed as it defies all "truth" we have been told about min wage workers.
If by 40 they dont get that they need to save for retirement they deserve their fate.
I'm in my 40s. With only a HS education I spent my 20s in low wage dead end jobs. I always lived frugal, no debt, but there was not a lot of money anyways. I always had a small savings acct.
In my 30s I got divorced (not my choice). Then I decided to put myself through college and have a decent STEM degree (no student loans). I now have a decent job but only make 30k. I have saved 20k by now since I graduated in 2009!
My mom is healthy in her 80s. Her mother lived well until 99! No way will I ever be able to afford to live that long. Someday I may have to decide when to say when so I am not a burden on the rest of ya.
How is this country supposed to deal with these peoples mismanagement of their lives? This is going to have dramatic effects on a ton of things
I plan on buying their houses for pennies on the dollar when they hit hard times after retirement and renting it back to them for a profit. These are the idiots who have big fancy boats on the rivers and drive Cadillacs.
It's still up to the employee to learn how to manage their own money. If advisors and educational material is made available no employer can be held to blame.
My employer offers a 401k but no match. The company the 401k is through offers plenty of advice and education, but I'm skeptical of how biased it might be. How to I find totally unbiased advice on how to invest a 401k? How do I know who to trust?
The stock market seems like an ok place to put your extra and fun money, but a risky place to put money you might need someday.
That right there tells me the articles is heavily slanted sensationalism not worth reading.
There's never been any such thing as upward mobility in retirement. That should be obvious by the fact that people eliminate a huge source of income....the second they retire.
Avoiding propaganda...
Mircea
Au contraire, mon frere!
There is indeed upward mobility in retirement...
(This newspaper letter-to-the-editor employs union spin, but the relevant part (found through Google) notes a government finding of upward mobility in retirement.)
In PERS' summary of their June 2010 Replacement Ratio Study, they state:
"Average salary replacement ratio:
For all retirees from 1990-2009, the average annual retirement benefit equaled 55% of final salary at the time of retirement.
For 2009 retirees, the average annual retirement benefit equaled 53% of final salary. For all retirees from 1990-2009, there were 7.9% who received annual benefits more than 100% of final salary. The average years of service for this group was 31 years. For 2009 retirees, there were 6.2% who received annual benefits more than 100% of final salary. The average years of service for this group was 32 years ."
I have never had an employer match available. And I can't make that 5% contribution because I have a student loan payment more than 2x whhat that 5% contribution would require.
I realize there are many people that really can't save $15/week, but I also believe there are many people that can but choose not to. 1 trip to Starbucks and 1 trip to McDonalds (or any other fastfood place) would add up to be about $15.
I redid the numbers with 0 employer contribution and it still works out to $175,000 at age 65.
Then if you drop the contribution to about $8.60 (3%) per week you end up with $105,000 at age 65.
I think a lot of people in this country just don't try hard enough - I mean this is the USA where even the poor people are obese. Here are some other ways to scrape together $8.60 to $15.00 per week: Dropping to a basic or prepaid cell phone plan, buying all store brand groceries, using coupons, don't go out to eat - ever, don't buy name-brand anything, don't see movies at the theater (this one might even save your life) - check them out at the public library, go to the dollar theater, don't buy a PS3/Xbox/Wii/3DS/etc or the games ... there are many others.
(freemkt: I'm speaking generally - not directly about your specific situation, which I know nothing about. I hope you don't take anything I'm saying personally)
My employer offers a 401k but no match. The company the 401k is through offers plenty of advice and education, but I'm skeptical of how biased it might be. How to I find totally unbiased advice on how to invest a 401k? How do I know who to trust?
The stock market seems like an ok place to put your extra and fun money, but a risky place to put money you might need someday.
401Ks have a special fund. It's the equivalent of an insured money market fund.
My 401K is with Fidelity and their fund is called the Stable Fund. Basically a money market with underlying insurance to protect your principal. Invests in Treasuries and such.
Your best bet is to google 401K and read as much as possible on it.
Excellent post. It will go unnoticed as it defies all "truth" we have been told about min wage workers.
Nope, I noticed it, and replied accordingly.
I have never had an employer match available. And I can't make that 5% contribution because I have a student loan payment more than 2x what that 5% contribution would require.
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