Just started my 401k, thoughts?

[JL 0513]

"Only 3%" is 3% more than the majority of Americans, unfortunately.

Only 10% of Americans are saving enough for retirement. Most are actually going backwards accumulating debt faster than they are saving.

The average retirement assets of all households is just $3000. More shocking, people age 55-64 only average $12000.

I'm doing 1% right now because I'm at 1st year driver rate. Which means I barely make enough to pay bills. I still have a second job on the weekends. I plan to get serious about saving in 3 years when top rate is attained.

 

[brownmonster]

"Only 3%" is 3% more than the majority of Americans, unfortunately.

Only 10% of Americans are saving enough for retirement. Most are actually going backwards accumulating debt faster than they are saving.

The average retirement assets of all households is just $3000. More shocking, people age 55-64 only average $12000.

I'm doing 1% right now because I'm at 1st year driver rate. Which means I barely make enough to pay bills. I still have a second job on the weekends. I plan to get serious about saving in 3 years when top rate is attained.

Your statement is why people don't have enough. I will start saving later when I have more money. Guess what, you will never have enough.

 

[JL 0513]

Your statement is why people don't have enough. I will start saving later when I have more money. Guess what, you will never have enough.

I totally get it. That's why I at least enrolled in the 401k even though I have almost no flexibility right now. I can't even get the amount of groceries I need each week. I pack bologna sandwiches or PB&J for lunch. In 2.5 years, my pay doubles and my expenses will remain fairly similar. At least I have a bright outlook on saving soon. Most people can't even say that.

People always say you can save on any budget but the theory is much easier said than done. You have to decide what to cut. When you're broke, it's hard to make yourself even more broke by saving.

 

[gorilla75jdw]

why bother with 401k , I invested in Apple 11 years ago and only need Obama to keep the Teamsters strong

 

[Catatonic]

why bother with 401k , I invested in Apple 11 years ago and only need Obama to keep the Teamsters strong

You probably need to diversify.
Maybe dollar cost average into other stocks or indexes.
No single stock should comprise more than 5% of your investment portfolio.

 

[instantK]

whats the 401k option week?

 

[UpstateNYUPSer(Ret)]

Some regions have a vacation week that you can take as individual days or cash in.

 

[IVE GOTTA PACKAGE 4U]

whats the 401k option week?

If you have unused personal days at the end of the year........you can elect to put some or all of it in your 401k plan.

 

[anonymous6]

everyone has expenses that they can do without. my daughter and son in law make about 3 grand a week between them and live paycheck to paycheck. they have "necessary" expenses like starbucks and takeout food everyday plus all the latest gadgets, parties, brand new cars, etc.

sometimes they ask us for money to buy groceries and pay some bills and I just laugh at them. I tell them to send the kids over if they need to eat. sometimes they do. they resent my financial advice but I don't care. I take care of the grandkids very well. the daughter is another matter. I wrote her out of the will until she grows up.

 

[Catatonic]

everyone has expenses that they can do without. my daughter and son in law make about 3 grand a week between them and live paycheck to paycheck. they have "necessary" expenses like starbucks and takeout food everyday plus all the latest gadgets, parties, brand new cars, etc.

sometimes they ask us for money to buy groceries and pay some bills and I just laugh at them. I tell them to send the kids over if they need to eat. sometimes they do. they resent my financial advice but I don't care. I take care of the grandkids very well. the daughter is another matter. I wrote her out of the will until she grows up.

​Tooough love!

 

[upschuck]

everyone has expenses that they can do without. my daughter and son in law make about 3 grand a week between them and live paycheck to paycheck. they have "necessary" expenses like starbucks and takeout food everyday plus all the latest gadgets, parties, brand new cars, etc.

sometimes they ask us for money to buy groceries and pay some bills and I just laugh at them. I tell them to send the kids over if they need to eat. sometimes they do. they resent my financial advice but I don't care. I take care of the grandkids very well. the daughter is another matter. I wrote her out of the will until she grows up.

Some folks have to keep up with the Jones'. Those people will never have enough money, kinda sad really.

 

[Babagounj]

why bother with 401k , I invested in Apple 11 years ago and only need Obama to keep the Teamsters strong

Hoax is correct .
All your investments in one company is highly dangerous .
Think about what happened to Enron , Lucent and
Billionaires Who Went Broke .
Billionaires Who Went Broke | MadConomist.com

 

[bleedinbrown58]

If you have unused personal days at the end of the year........you can elect to put some or all of it in your 401k plan.

Really? I didn't know that......how does one go about doing that??

 

[Brownslave688]

Hoax is correct .
All your investments in one company is highly dangerous .
Think about what happened to Enron , Lucent and
Billionaires Who Went Broke .
Billionaires Who Went Broke | MadConomist.com

But but it's apple that will never happen. Lol. I have a small (to me) amount of money that I play single stocks with. Made a fair amount off apple now I have bought and sold Facebook 2-3 times this year. It's my play money and I try to double it every 2-3 years but by no means is it my retirement plan. Putting all my eggs in one basket is not a risk I'm willing to take.

 

[brett636]

Congratulations on starting your 401k. Unlike your pension this is an asset that can be passed onto your heirs, and is something you control versus relying on a retirement controlled by a committee that may or may not have your best interests at heart. A Couple of things though, your investments are certainly aggressive and should be given your age. Don't let big market swings get to you causing you to move money out of one investment in order to place it in a "safer" investment. When a downturn occurs, and you lose some value moving that money only locks in that loss, and keeping it in place means you stand to regain the lost value and then some. Just keep in mind this isn't money you will need for a very longtime, so losses that occur aren't the end of the world. In fact these funds are divided up among hundreds, if not thousands of companies so its not like if one company goes bankrupt you lose your retirement nest egg. If it drops in value its a systemic issue that needs to work itself out rather than a single company or industry issue. The 3% contribution sounds like a safe bet allowing you to adjust to a smaller paycheck while giving you something to look forward too come retirement, but I would suggest you increase that by atleast 1% at every raise interval. This will allow you increase your contributions without seriously impacting your take home pay. Also may I suggest you look into the Roth 401k rather than the pre-tax. You and I are on the same boat as we are nearly the same age, and chances are when we retire income tax rates will be significantly higher than they are today. You may be paying taxes on that money going into your 401k, but it grows tax free and is withdrawn tax free which can mean a bigger return later on versus waiting to pay the tax later on both the contributions and the growth.

Again, congratulations on taking control of your own retirement and remember that atleast half of your teamster brothers and sisters are not making the most of their generous income today to save for tomorrow putting you well ahead of them. Encourage them to do the same, and don't stop contributing to that 401k until that last day you walk out of your building a retiree!

 

[3838373]

The debate rages on the internet about which to choose, but for now almost everyone is staying with the traditional 401k style plan instead of the Roth401k. The reason is that very few people make more money in retirement than they do while working and saving. Even if you only save 10% of your income, you're living off of 90% and thus only need 90% of your pre-retirement income once you retire, which moves you into a lower tax bracket in retirement, and thus favors a traditional 401k over a Roth401k. TFor most people on this site, the Roth401k isn't going to be very helpful in achieving an early retirement, because it just requires you to pay more taxes. The primary benefit of the Roth IRA, on the other hand, is estate planning benefits and the ability to withdraw contributions before retirement age, making it a safe hedge for most of this audience.
Summary: Roth IRA: good. Max it to $5k/year Roth 401k: bad. Probably better to stick your $17k in a traditional 401k.

 

[brett636]

The debate rages on the internet about which to choose, but for now almost everyone is staying with the traditional 401k style plan instead of the Roth401k. The reason is that very few people make more money in retirement than they do while working and saving. Even if you only save 10% of your income, you're living off of 90% and thus only need 90% of your pre-retirement income once you retire, which moves you into a lower tax bracket in retirement, and thus favors a traditional 401k over a Roth401k. TFor most people on this site, the Roth401k isn't going to be very helpful in achieving an early retirement, because it just requires you to pay more taxes. The primary benefit of the Roth IRA, on the other hand, is estate planning benefits and the ability to withdraw contributions before retirement age, making it a safe hedge for most of this audience.
Summary: Roth IRA: good. Max it to $5k/year Roth 401k: bad. Probably better to stick your $17k in a traditional 401k.

The flaw in your logic comes in when you say a ROTH IRA is good while a ROTH 401k is not. Both are treated the same when it comes to taxes, and dipping into your retirement account prior to actual retirement is a bad idea because it significantly reduces your future savings by denying you today's contributions along with tomorrow's compounded growth. Not to mention you are ignoring the income tax rates and what they will most likely be in the future. I can't say exactly what they will be, but I am willing to bet they will be higher than today's income tax rates. A retiree 30 years from now may be paying the same tax rate as they do today on a lower income because the government just can't survive without the higher rates. Its a bit of a gamble, but a safe one in my book. I am exclusively contributing to my ROTH 401k, and I disagree that this is a bad plan of action for my retirement.

 

[3838373]

If you are not maxing out then go with traditional 401k contribute to ROTH IRA.

http://thefinancebuff.com/case-against-roth-401k.html

 

[anonymous6]

Really? I didn't know that......how does one go about doing that??

take your personal days for your mental health. that's a better investment.

 

[Jackburton]

I hope you guys remember that your pension will count towards your annual income, combined with a Roth401k your taxed amount stays the same. If you take the same pension and add into it the traditional 401k, this could put you into another tax bracket. Another thing to consider is Roth accounts are far better to be used as inheritance money than traditional 401k. The following gives some examples as to why, considering forced distributions.

401k Beneficiary – Inherited 401k - When and How You Can Take Money Out

Non Spouse 401k Beneficiary – If You Inherited a 401k Plan From Someone Other Than Your Spouse

If you are the beneficiary of someone’s 401k plan and they were not your spouse, there are three possible choices:


If The Person You Inherited From Was Over Age 70 ½


1. If the person you inherited the account from was over age 70 ½ and thus had already started taking required minimum distributions at the time of death, the rule is that you must, at a minimum, continue to take out at least these required minimum distributions, and if you desire you can take out more than this amount, but not less. You can take these distributions out over the longer of either the decedents life expectancy or your own, according to the IRS required minimum distribution life expectancy tables. You should have the option to do this by leaving the money in the plan or by rolling it over to an account titled as an inherited IRA.


If They Were Not Yet Age 70 ½


If the person you inherited the 401k plan from was not yet age 70 ½, the 401k plan will allow one or both of the options below:


2. The 401k plan may require you to take all of the money out of the plan no later than Dec 31 of the fifth year following the year of the person’s death. You could take a little out each year, or wait until the last year to take it all. You will pay regular income taxes on the amount withdrawn, so you may want to take more out in years where you expect to be in a lower tax rate.


3. The plan may allow you to take the money out in annual amounts over your life expectancy according to the required minimum distribution life expectancy tables. You may be able to do this by leaving the money in the plan or by rolling it over to an account titled as an inherited IRA. This option is often referred to as a "stretch IRA" because if you are much younger than the person you inherited from you can stretch the distributions out over a long period of time.