My friend asked me what percentage I contribute because apparently people our age (25-30) were talking about it in her lunchroom and scoffed at her for only doing 10%. They all told her it was way too low. I currently do 10% and I thought that was high. Our employer match is 3% so I am taking advantage of that maximum benefit. Just curious how much others contribute as a percentage.
Re: How much (if any) do you contribute to 401k?
I am 29 and do 5% because that is how much my company is willing to match. Honestly, I would put in at least what your company matches so that you can benefit from the "free money"
H puts in a lump sum and the end of the year and he is very fortunate that his company will match whatever he contributions (up to the legal limit)
FI contributes a lot to his, but he makes a lot more than me. Once we get married and combine finances, I will start contributing more, but that is about all I can afford at this time.
I'm the fuck out.
beethery said:
Just curious- why did you chose the Roth and not the pre-tax? My favorite part of contributing is that it lowers my tax bracket.
I'm the fuck out.
ETA: My company matches up to 5% so that's why I contribute that much.
Took the words right out of my mouth on this one. As a financial professional, many of my clients invest in Roth IRAs for this very reason.
Currently I contribute 5% to 401k which is matched by my company and 5% to my Roth.
I think that is flawed. Say you get promotions and you're up to earning 75k a year- you'll be in the 30% tax bracket. But once you retire you will not be earing 75k a year. You will be taking only what you need to live (say 40k) a year in retirement distributions. Hence, you would then be in a 15% tax bracket at that time.
After the wedding FI and I are going to look into a few different financial saving options. We need to start college funds also. Our oldest is starting 2nd grade and we want to be able to have a decent amount saved for both by the time they graduate HS.
ETA-I studied Economics in college and all of the professors harped on us to make retirement savings a priority so I'm kind of concerned I'm not doing more.