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Hello all....I am seeking some advice on retirement savings. I am a 26 year old male who earns $65K and has a 401k retirement account in connection with my employer. It is a pre-tax deduction from my biweekly paycheck. The contributions go to my 401k which is administered by Fidelity.
The question is...how much should I be contributing? I expect to retire at 67 years old, in the year 2051. Right now I'm contributing 3% of my gross income to the 401k, but next month I want to bump it up to 6%. And later on this year, possibly up to 12%, if I can afford to. I hear that it's best to make large contributions at a young age, due to the growth factor and time value of money over time. Does my strategy sound wise? Or not? Would 12% be too much to contribute? Is that overkill? My company also matches 100% for the first 3% of contributions, and I also have this K-Vantage thing, in which the company contributes 2.5% on my behalf, without taking from my income at all.
Is it even necessary to be concerned with retirement? Or should I just not bother, since I'm so young?
When I retire, I only want to live an average lifestyle. I don't need vacation homes, boats, etc. Just a middle class lifestyle.
First, congratulations on planning for your retirement at such a young age. You are way ahead of the game... way to go!!
I'm 47 and make $90,000 a year. I take $1800 a month out of my check for my 403b. I'm terrible at math, but if you're taking out a grand a month at your salary, you should be sitting pretty. Even though you're only 27, you will be shocked at how fast life goes by. You'll be 40 and then 50 before you know it (really). So you're doing fabulous already. Keep it up and you'll have a sweet retirement.
If your company matches up to 3%, always at least contribute 3%. Obviously, 6 is better and to that end, so would be 12%.
Remember that you can't really touch any of this money though. If you plan on buying a house anytime soon or want to have some easily accessible income, you may want to consider additionally contributing to an IRA account (if you plan on being in a higher tax bracket as you get older, you may want to go the Roth route vs traditional). They have different rules for contributing and withdrawls - but it is worth looking into as an ADDITION to your 401k.
1. contribute enough to maximize employer match... in both plans.
2. contribute up to max in a Roth IRA.
3. Make sure you keep your cash reserve up.
4. Look at a brokerage account.
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From age 17, (100 yrs ago) I always put at least 10% of my gross towards retirement. (from my 'real' job...). I always lived off my Part-time jobs until I got a family and a farm... (neither is good for retirement planning)
1st contribution went to MAX amount company would match. (7% in my case) 2nd contribution was to ROTH IRA (as soon as it became available).
In the current economy / tax situation I would be maxing both my 401k and ROTH, and I would be converting my 401K to a 401k ROTH.
NON-TAXABLE income will most likely be your dear friend in the future.
ROTH IRA's are very nice, in that you can withdraw your contributions after 5 yrs penalty free (but not your earnings) Try to never do that . I set my kids up into ROTHs when they were age 12 and had earned income. ROTHs DID NOT count against them when they did college financial aid applications.
BTW:... Even tho I saved diligently all my life (I left home at age 16), more than 50% of my net worth came from investments OUTSIDE of savings OR Employment. Commercial Real Estate in my case, but for many folks it is collectibles, new business ventures, angel investing, hobby income, musical performances, side businesses... Try to find something that you are interested in and MAKE it earn it's own way. DIVERSIFICATION is OH SO Important.
Besides... working for someone CAN be a Pain... (tho often a necessary pain).
Consider each job to be training for the next, or training (cash) for your 'Freedom-project'. I have heard more than one person claim, "I was too busy working all my life to make any money, it was only after I retired that I made the majority of my wealth." (Hint... consider Work / job as a tool NOT as your life endeavor. You are just renting your body / brain to someone who can leverage your service to make a profit on your efforts. (which is fine, and necessary for success of THEIR business.)
Work your way to maxing it out.
Also do some retirement investing on your own outside of the 401K.
The more baskets you have to fill the better you will be come retirement time.
And never, ever, ever borrow from the 401K or take a hardship withdrawal.
Once the money goes in..it does not come out until you are retired.
Work your way to maxing it out.
Also do some retirement investing on your own outside of the 401K.
The more baskets you have to fill the better you will be come retirement time.
And never, ever, ever borrow from the 401K or take a hardship withdrawal.
Once the money goes in..it does not come out until you are retired.
Well, I also have NU stock, which performs well. In fact, it's worth more than my 401k. I also have cash in the bank worth about as much as my 401k and stock combined!
Hello all....I am seeking some advice on retirement savings. I am a 26 year old male who earns $65K and has a 401k retirement account in connection with my employer. It is a pre-tax deduction from my biweekly paycheck. The contributions go to my 401k which is administered by Fidelity.
The question is...how much should I be contributing? I expect to retire at 67 years old, in the year 2051. Right now I'm contributing 3% of my gross income to the 401k, but next month I want to bump it up to 6%. And later on this year, possibly up to 12%, if I can afford to. I hear that it's best to make large contributions at a young age, due to the growth factor and time value of money over time. Does my strategy sound wise? Or not? Would 12% be too much to contribute? Is that overkill? My company also matches 100% for the first 3% of contributions, and I also have this K-Vantage thing, in which the company contributes 2.5% on my behalf, without taking from my income at all.
Is it even necessary to be concerned with retirement? Or should I just not bother, since I'm so young?
When I retire, I only want to live an average lifestyle. I don't need vacation homes, boats, etc. Just a middle class lifestyle.
Any advice would be appreciated.
Thanks!
Few thoughts:
I was physically limited in my mid 20's. Still able to make money, but you never know what will happen.
Better to be better off.
Your thinking of 'compound interest'
Standard I hear is that if you invest 15% of every paycheck you'll be al lright.
Personally I want to retire sooner.
More is better. You can always slack off later. (It can be harder to put more up later)
If your not concerned with retirement... you will be concerned IN retirement!
I prefer to 'take a little off the top' now... and know that later I'll not have to be concerned!
Middle class (Which I assume you mean) is threatened by current economics.
Pay yourself first. Your retirement may not seem important now, but rest assured if you live long enough, it will become very important. I always liked the sound of 10% as a deduct for 401k and I made it to age 73 and am fairly comfortable.
Congratulations on a good start, I agree that at a minimum you should contribute the 3% your employer is matching. You can not go wrong there!
I have been worried about some talk in Washington about pooling these monies to be managed for us by the government like they did in Argentina. Government makes the argument that they are "protecting it" from the theives of the financial services industry.
The usual suspects in our government think this is such a great idea. After all 401Ks were set up as a backstop for people to secure there own retirement as many employers dropped or reduced the traditional pension benefit. Thse monies could help cover the pilfering of Social Security and support the payout of defined pension benefits of private companies that have gone bankrupt.
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(neither is good for retirement planning
)
. I set my kids up into ROTHs when they were age 12 and had earned income. ROTHs DID NOT count against them when they did college financial aid applications.
