I wouldn't use that 401k to pay for student loans. That 5k pension is awesome but what if it gets reduced in 10 years? I would let the 401k grow untouched.
Your son has a good degree and will have a good income.
How big is your 401k?
- Thread starter joesmith
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I wouldn't use that 401k to pay for student loans. That 5k pension is awesome but what if it gets reduced in 10 years? I would let the 401k grow untouched.
Your son has a good degree and will have a good income.
I helped my kids,as much as I could. figured I would do It now,durring my peak earning time.
Not dip into my retirement later.
They both have less than 20k student loan debt.
Now its time to save for me and the MRS.
trickpony1
Well-Known Member
Apparently I am wrong.
I thought for each year you delayed S.S. after retiring you lost a small %.
According to "I've", the amount increases each year.
Till age 70. after that,you gain nothing.
You may have been thinking. if you work,and collect SS.,Befor,full retiremnt age. (Somewhere between 66 and 67)
They will dock,your S.S.
Or a certain part of your S.S.,will be taxed if you make a certain dollar amount.
UpstateNYUPSer(Ret)
Well-Known Member
Bingo! The ideal is to wait until you have to start taking it at 70.
oldngray
nowhere special
You can work and collect SS as long as you don't make too much (14k per year I think).
UpstateNYUPSer(Ret)
Well-Known Member
That's nice. It's not what we are talking about but it's nice anyway.
You can work and not get docked. you just have to be at full retirement age. somewhere between 66+ and 67. depending on what year ,you was born.
Some people do get confused,on the taxable part.
It is very complex.
joesmith
Active Member
Wow this is great thanks for posting, this give me and I’m sure others some inspiration to save, save save. I’d like to tell everyone who responded thank you.
MethodsMan
Well-Known Member
When did you guys start your 401k?
I was 23. My dad who's really smart with money, begged and pleaded. Now he wants me to get it out of prudential and use his money manager. I don't really know the difference.
I was 23. My dad who's really smart with money, begged and pleaded. Now he wants me to get it out of prudential and use his money manager. I don't really know the difference.
UpstateNYUPSer(Ret)
Well-Known Member
You can't move your 401k while you are still working here. You can do a rollover when you retire.
That is correct. but you can have an advisor manage your account.
Thats why I have a roth IRA, on top of my 401k
bleedinbrown58
That’s Craptacular
Yep...I got one of those!
Ms.PacMan
Well-Known Member
I was 30 and my contributions were pretty half-ass in the beginning. I wish I had started earlier. Good job to all you young savers!
Our 401k is great. Stay where you are and keep trying to max it out. IMO you don't need an advisor.
One more thing. People have brought up in the past the tax savings for contributing to the 401k. The savings is significant. My federal effective tax rate averages out to 5.60% and state is 3.40% in the last 20 years (head of household, one dependent).
Your marginal tax rate is the rate that your income falls under in the tax brackets (15%, 25%, 28%, etc.). Your effective tax rate is the tax that you actually pay after deductions, credits, exemptions, etc. If you would like to see the difference that contributing to your 401k makes, you can play around with TaxCaster (Google it)
in 2013, a single filer who made $80K with no dependents, using the standard deduction would have owed $13,435. The same person contributing the maximum of $17,500 to his 401k would have owed $9,060 (because he's only taxed on $62,500). Both these guys have a marginal tax rate of 25% but their effective tax rate (the amt they actually paid) is 17% and 11% or $4,375 the non-saver is giving to Uncle Sam EVERY YEAR!
Ms.PacMan
Well-Known Member
One more thing. If you work until the year you turn 55, you can start withdrawing on your 401k immediately without penalty.
Our plan allows distributions at any time following separation of service http://www3.prudential.com/email/re...eamsterups/media/Summary_plan_Description.pdf pg19
and the IRS considers separation of service in the year you turn 55 an exception to the 10% penalty for withdrawals before age 59 1/2.
Tax on early distributions. If a distribution is made to a participant before he or she reaches age 59½, the participant may be liable for a 10% additional tax on the distribution. This tax applies to the amount received that the employee must include in income.
Exceptions. The 10% tax will not apply if distributions before age 59½ are made in any of the following circumstances:
Our plan allows distributions at any time following separation of service http://www3.prudential.com/email/re...eamsterups/media/Summary_plan_Description.pdf pg19
and the IRS considers separation of service in the year you turn 55 an exception to the 10% penalty for withdrawals before age 59 1/2.
Tax on early distributions. If a distribution is made to a participant before he or she reaches age 59½, the participant may be liable for a 10% additional tax on the distribution. This tax applies to the amount received that the employee must include in income.
Exceptions. The 10% tax will not apply if distributions before age 59½ are made in any of the following circumstances:
- Made to a participant after separation from service if the separation occurred during or after the calendar year in which the participant reached age 55.
Should probably clarify that this tax savings scenario only applies to the traditional 401k, not the roth 401k.
I will throw in the value of "time" when investing. START SAVING IN YOUR 20s AND SAVE ATLEAST 15%.
The key to investing and super saving is to invest and save until it hurts WHEN YOU ARE YOUNG.
If you don't. You will not be retiring early in your 50s on your own terms.
I really don't know any union UPSERs who have left UPS early because they had a huge retirement portfolio. They left for health issues or unfortunately lost their job due to termination.
So live below your means. No big car or boat payments. Save and pay cash for toys. Stay away from credit card debt.
Investing is about time. So start young at 15%. No excuses.
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