410K's How much you guys put in? future value?

JustC

I am realizing that as I near the age of children and over 30, I need to start paying in alot more. I was just wondering,if not too personal, how much you guys put in per pay or how much some of the more learned and established members think I should be putting in to secure my retirement years. I figure I have about 30yrs left.You would think someone who passed his stock brokers license exam with a 95% on the first try wouldn't be asking this.

GreenLantern

The rule of thumb is to put in as much as possible, yet still diversify. It's pre-tax!! I max out for the year, which I think is currently $10,500 and it works out so it's pretty much spread out evenly per paycheck through the whole year.

GreenLantern

Also, I think the laws have just changed. Before you could only put up to 15% of your paycheck into the 401K and for people with low wages, they'd never reach the $10,500 max in a year. I got a notice from my company that we are now able to put in 60% per paycheck. For those who can max out means they can do it quicker in the year than before. It really helps the lower payed people the most and IMO it was long over due.

Rembrandt

I put in 20% of my income, Mrs Rembrandt puts in 17%....of course the way things have been going for rate of return, I'd have been better off buying guns with it....

He Dog

Mine is a 457K and the allowable on contributions went up this year and for the next 3 or 4. This year I am putting in the max.: $11,000. You can never have too much saved up. If it turns out you have more than you need, you can always give some away. Don't over look a Roth IRA, particularly at your age. $3500 per year, you pay the taxes on it, but everything that comes out is tax free. That is where my first $3500 goes.

concealedG36

Boy, you guys must not have ANY debt. How do you put such high percentages into savings? I'm lucky if I can put 5% away.Of course, my wife and I are both still paying off our student loans and our other debt.

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Gun Control Disarms Victims, NOT Criminals

Josey1

I put in %17 of my weekly salary for 20 years and with the company matching it I ended up with enough to start my own business(around $150,000).If your company offers it you are absolutely insane not to take complete advantage of it.Contribute the Maximum,being that you never see the money you don't miss it.You can also borrow against it(on some plans) to buy a principal residence

GreenLantern

He Dog ~ Wouldn't you want to put the first $3500 in the 457K? The general assumption is that after you're retired your income will be much lower and much better to get taxed on the $3500 then as opposed to now?

Rembrandt

We had to go with a higher percentage to avoid being put into higher tax brackets, choice boiled down to either putting it in the 401K or sending it to the libs....

GreenLantern

Just don't get 'Enro-dded' if you're employer matches. You can take a loan against your 401K, but I think if you end up leaving your current employer you have to pay all the money back in a very short time. Maybe it's only if you actually try to take the money out of plan (i.e rollover) as opposed to just leaving the company.concealedG36 ~ you got it right! Spend now, starve later! I don't have many liabilities right now, but that may change as I am going to be shopping for a house soon. Then I'll have to adjust accordingly if necessary.[This message has been edited by GreenLantern (edited 03-21-2002).]

JustC

I must admit I have been delinquent in my contributions. I need to rethink my weapons cache and start planning some serious future savings. I have a roth IRA which I started a year or so ago, I also have the company 401k which I just started as I haven't been here a year quite yet. The only problem is I am "looking" or should I say, keeping an eye out for advancements in pay/potential with other employers. Any thoughts on how I should start right away? put max $$ in here and transfer it elsewhere if need be? Put max in Roth?

He Dog

Green Lantern: Yeah that is the theory, but in fact if you do this long enough and invest well, you stand a good chance of winding up with greater income retired than working. Thus, tax free income when retired looks good. That is assuming your pension is 60%-80% of you ending salary.Concealed: Yep, no debt beyond phone bills, and utilities and property taxes. About the only advantage I can see to being old. Means more investment income and more to spend on things like new kitchens, new bathrooms, and the occasional new rifle.My dad told me when I was 10 years old, "If you can't afford to pay cash, you can't afford it." (excluding houses and cars, both of which he later paid cash for) second best advice I ever got.

simonbs

Okay, what was the first best?

GreenLantern

He Dog ~ You have a valid point. Save too much now, pay more later. Probably doesn't happen to many of us but it's definately something to think about.As for paying with cash, my girlfriend has a short sighted opinion on it. Her parents pay for everything in cash, have a great business, and no credit cards. So she doesn't either and ignores me when I mention the words 'credit history'. Therefore she has no debt (and that's a good thing) but the first time she goes to get a loan for a car, they'll probably want to stick her with 13% interest.

concealedG36

Must be nice He Dog. My dad never gave me that advice, unfortunately. I pay more to my creditors each month than some people earn. It really stinks. Especially because I think if I wasn't in debt like I am I could afford a lot of guns and gun-related stuff!

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Gun Control Disarms Victims, NOT Criminals

offeror

I've often been told to put in a MINIMUM of as much as the employer's matching contribution. It's not that hard; once you get started you won't miss the money. My mother's a retired banker and she agrees with this idea. Match your employer's maximum matching funds. The thing is, that 401K money goes into stock funds, and stocks are still the best longterm way to maximize your money. One piece of advice that helped me: when you can no longer afford to risk losing the value of your 401K savings in a stock market dip, move your 401K balance into a money market account immediately while the market is up. That way your balance won't go down before you can get it out of there and roll it over or re-invest.

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"The 2nd Amendment is about defense, not hunting. Long live the gun shows, and reasonable access to FFLs. Join the NRA -- I'm a Life Member."

He Dog

Green Lantern, actually I do use credit cards, I just pay them off every month. I use the one from Cabela's which gives me a 1% kick back as credit. I figure in two more years they are going to give me a new rifle.Hang in guys, I was not always smart and also got into the revolving credit hole. Took a little while to dig out, but when I did the lesson was learned permanately.My 457 lets me move money among different types of funds. When the market takes a header I move a pile of money into stocks and make a bunch when it goes back up. Getting too old to do that for many more years, and will have to move it all to a solid interest fund.Best advice was "Always try to land on your feet."

gruntled

Something noone warned you about. The 401k & IRA distributions count as income. If you earn over $25,000 with half or your social security or $32,000 if married you will have to pay income tax on your social security. This means in effect you will be paying tax on the distributions twice. Once on the distribution & again because it causes your Social Security to be taxed. My wife & I are now in the process of getting a divorce just because of this. If we stay married we can only get $32,000 a year (Plus 1/2 our SS)including both our pensions & interest income.If we get a divorce & live together we can get $50,000 (Plus 1/2 the SS). On top of that we get a $1500 higher standard deduction & $200 higher senior citizen deduction each when we reach 65.The best way to beat it is to retire at 59 1/2 & take out as much as possible from your plans before you file for Social Security.[This message has been edited by gruntled (edited 03-21-2002).]

JB

401k to the max and fully fund a Roth IRA if you can. Sooner the better. Even if you need to slow down later contributions. Its better to put in at an early age than a late age. The numbers are staggering at putting in money earlier than later.

wundudnee

He Dog has it right!! I wish that there had been a Roth plan when I was younger. It do'es hurt to put after tax money away, but if you are young enough it could possibly triple or more in value with no taxes when you take it out. Even with my 401 plan I'm looking on paying taxes on it till I'm gone.

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"It's great to be great, but it's greater to be human." Will Rogers

JustC

that's what I have been told. I am planning on trying to go "full bore" for a number of years and then back off a little. I would like to at least be comfortable and be able to afford to play with my toys at retirement age.

218Beekeep

Most of mine go`s into a 308-K Program .218

GreenLantern

Sometimes I'll carry a balance on my credit cards but not very often. I just can't see paying someone to lend me money just so I can buy a pair of pants or tank full of gas so anytime I leave a balance it kills me. Really the most I use CC for is making online purchases.

Varmintmist

Ok try the #'sFirst, DIVERSIFYYou company matches 50% of the first 100.00 you put in per payyou put 100.00 in, it is now worth 150.00this is pretax, assume you are in a 15% bracketOh yeah, DIVERSIFYyou get 15% free moneyBUT WAIT THERES MOREyour plan gains at a average of 6% per year150 X .06 = 9.00 , 9+100+50 = 159.00 a 59% return on your moneyOf course if the company stock tanks (like mine just did) it sux, but you just have to think, BUYING OPPORTUNITY and I still have the interest that the company stock made over the last 14 years. and 1 other thing DIVERSIFYWe can do the rule of 72 once I find my old paperwork.[This message has been edited by Varmintmist (edited 03-21-2002).]

JustC

varmintmist, I here ya on the compounding of interest thing! I have expensive tastes, and that is where my problem lies. I can't just buy the good stuff, i gotta BUILD the good stuff. Not to mention my hole in the water. But hey, the times on-board are priceless. I named her "beer thirty", kinda fitting for a beer man huh? I have been putting some serious thought into this issue as of late, and have come to the conclusion that I have to do even more wheelin dealin to keep up my outdoors habits and secure my future as well. Looks like time to review my options as related to employment. Beer business is fun, BUT, I guess I have to either get a nice raise or some other signature on my paychecks.

seb1999

Put as much as you possibly can into your 401(k) or 403(b) or whatever vehicle you have. The miracle of compound interest just cannot be beaten.If you are in a tight situation the minimum you should put in is what your employer will match. After all that is a 100% return.As far as taxes on SS or distributions from your fund if you do not make it you do not have to pay taxes on it.There is nothing wrong with "tax avoidance" but if you cheat on your taxes you are a crook!!!If you do not like the tax structure work within the political structure to change it. Get out and campaign for the party or candidate that best represents your views.

BoltactionMan

Guys, I read your posts on save more now pay more later. That is the whole idea! You sock it away pre-tax while your income level has you in a higher bracket. Then as you take the distributions, you pay the taxes at you new retired, lower tax rate. Even if you hit every card right and retire with more income than you are working for, you were still allowed to accumulate the capital gain on the investment tax deferred.KC

martzkj@msn.com

Hey Greenlantern changing the 401k from 15 to 60% was only a giveme for the wealthy. Low income people can't afford to put in 15% So the only people who benefit is people with excess income.

gruntled

Economics 101: If you put it in at the 15%level & take it out at the 15% level you save zilch. The tax advantage only works if you are in a lower bracket after you retire. If it causes you to have to pay tax on your Social Security you wind up in the hole. If you have a 401k plan with any type of matching funds you MUST do everything possible to at least put in the amount that is matched.Another thing is not to get too giddy about the long range compounding. Inflation is also compounded & you need to consider the buying power when you retire not the numbers.

Varmintmist

heres the rule of 72, its the most in depth (* ) explanation I have ever seenSubject: Analysis - Rule of 72 Last-Revised: 19 Feb 1998 Contributed-By: Chuck Cilek (ccilek at nyx10.nyx.net), Chris Lott (contact me), Richard Alpert The "Rule of 72" is a rule of thumb that can help you compute when your money will double at a given interest rate. It's called the rule of 72 because at 10%, money will double every 7.2 years. To use this simple rule, you just divide the annual interest into 72. For example, if you get 6% on an investment and that rate stays constant, your money will double in 72 / 6 = 12 years. Of course you can also compute an interest rate if you are told that your money will double in so-and-so many years. For example, if your money has to double in two years so that you can buy your significant other that Mazda Miata, you'll need 72 / 2 = 36% rate of return on your stash. Like any rule of thumb, this rule is only good for approximations. Next we give a derivation of the exact number for the case of an interest rate of 10%. We want to know how long it takes a given principal P to double given either the interest rate r (in percent per year) or the number of years n. So, we are solving this equation: P * (1 + r/100) ** n = 2P Note that the symbol '**' is used to denote exponentiation (2 ** 3 = 8). Since we said we'll try the case of r = 10%, we're solving this: P * (1 + 10/100) ** n = 2P We cancel the P's to get: (1 + r/100) ** n = 2 Continuing:(1 + 10/100) ** n = 2 1.1 ** n = 2From calculus we know that the natural logarithm ("ln") has the following property: ln (a ** b) = b * ln ( a ) So we'll use this as follows: n * ln(1.1) = ln(2) n * (0.09531) = 0.693147 Finally leaving us with:n = 7.2725527 Which means that at 10%, your money doubles in about 7.3 years. So the rule of 72 is pretty darned close. You can solve the equation for other values of r to see how rough of an approximation this rule provides. Here's a table that shows the actual number of years required to double your money based on different interest rates, along with the number that the rule of 72 gives you. % Rate Actual Rule 72 1 69.66 72 2 35.00 36 3 23.45 24 4 17.67 18 5 14.21 14.4 6 11.90 12 7 10.24 10.29 8 9.01 9 9 8.04 8 10 7.27 7.2 .. .. .. 15 4.96 4.8 20 3.80 3.6 25 3.11 2.88 30 2.64 2.4 (note: 10pct error) 40 2.06 1.8 50 1.71 1.44 (note: 19pct error) 75 1.24 0.96 100 1.00 0.72 (note: 38pct error)

Big Sky Redneck

OHH MAN THE NUMBERS!!! MAKE THEM GO AWAY!! MY HEAD HURTS!!

JustC

that should take a while to absorb. Luckily she already has the Miata.

GreenLantern

martzkj - unless I'm missing something here, whether or not you're wealthy or poor, you're still limited to only putting in $10,500 a year. So it just becomes a matter of how fast during the year you can reach that right?. I can max out right now with the %15 and I am by no means wealthy :-)

martzkj@msn.com

Greenlantern, I would say that a person making 30-40 grand is about average in my area. I don't know many people who can take 25-33 percent of there money making that and put it in a 401. The fact is low income(25,000 or less) people will never max out. They just can't afford it. The percentage means nothing to them. If you can max out at 15% you have to be making 70 a year. That is pretty dam good money in my area.

GreenLantern

Yes, I see your point now. There's the theoretical amount that you can contribute and then there's the realistic amount you will actually be able to put in given your income level. I agree, in many places the economic job market just isn't there to reach 70K per year to get the 15%. The income potential in the town where I grew up is just like you descibed. Makes me fear that my parents have not put enough away for the later years, but that's a story for another time.