How much (if any) do you contribute to 401k?

jenna8984 · June 2014

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.

JCbride2015 · June 2014

I did 10% when I worked before law school (I was a teacher, so it was a 403(b)). I'm a recent grad and haven't yet started my new job, so I don't know how much my new place will match yet. I think that's a big deal-- you are giving up free money if you invest less than your employer will match. Once you're over the employer match, other types of accounts may give you a better return so that is very personal.

KatWAG · June 2014

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)

sarahufl · June 2014

I have been fortunate to work places with very generous matches. Right now, I contribute 6% and my employer contributes 5%. At my old job, it was 5%, but the employer matched the 5% at 200% and was fully vested at all times (I know, ridic).

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.

blabla89 · June 2014

Honestly, I haven't even set one up. I'm 25 and I just finished school and started working three years ago, and I felt it was more important for me to build up a good amount of emergency savings first. And now I have a wedding to pay for. I plan to start contributing in January, up to whatever amount my company will match.

beethery · June 2014

I have a Roth IRA and I put 12% in every week.

Maggie0829 · June 2014

I contribute 3% and my company matches it. I have been getting on H to set one up since he has never had a 401K and he has been working full-time for 10 years. Yeah, not so good.

I would like to contribute more but financially at this time I just can't.

Cookie Pusher · June 2014

I put in 8% post-tax, and my company matches it. Our annual bonuses also go into our retirement plans. In addition, I have a company funded pension and other private investments towards retirement.

jenna8984 · June 2014

beethery said:

I have a Roth IRA and I put 12% in every week.

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.

VulgarGirl · June 2014

FI does 5% because that's what her company matches. I don't get a 401K. We both have IRAs and few other investments for retirement though as well. I'd say we each put away probably 15% exclusively for retirement.

buttercup1958 · June 2014

I don't have one yet, I'm still in school. I've been building up my savings account and I guess I'll try to match the amount my future bosses give. I do have a job but only during the school year that actually pays. I think I would want a 401 before opening an IRA. There are pros and cons for each so I guess I'll see what I end up doing in the future.

beethery · June 2014

jenna8984 said:

beethery said:

I have a Roth IRA and I put 12% in every week.

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 got it when I was in college. My mom is a big fan of this consumer reporting guy in ATL and he recommends Roths over everything... which caused her to not shut the fuck up about getting a Roth for like 7 months every time she saw my paycheck come in the mail, and I finally said JESUS CHRIST MOM I WILL GET ONE IF IT SHUTS YOU UP. That was literally the only reason.

theartistformerlyknownas · June 2014

Right now, 6%. I think my company matches 3%. It's the most I can do while paying off debt/saving for the wedding, but I increase it each time I get a promotion before I have a chance to get accustomed to having more money.

(ETA - I'm 30, and have been enrolled since I started my career at 21.)

AprilH81 · June 2014

10% is what I contribute to my 401k (pre-tax) and my employer matches 100% of the first 3% and 50% of the next 2%. I'm getting ready to open up a ROTH IRA in the next few months. 10% used to be the "standard" amount that the pros recommended people save for retirement and now it seems to be bumped up to 15%. I'm not sure when that happened. SOMETHING is better than nothing when it comes to retirement savings. The sooner you start the more it will increase in value.

Couggal12 · June 2014

I contribute 5% Roth and my company matches it.

ETA: My company matches up to 5% so that's why I contribute that much.

jenna8984 · June 2014

@aprilh81 & @couggal12 Why the interest in Roth? I was always told that you're likely in the 30% tax bracket during your working career but likely in the 10% tax bracket upon retirement (since your only income is distributions). So why pay on it now at estimate 30% instead of later at 10%?

l9i · June 2014

I contribute 11% with partial roth and partial pre-tax. My employer matches to a certain percent. When I first set it up it was suggested somewhere between 7-10 percent for my age (under 30).

littlemushroom · June 2014

I contribute 6% to my Roth 401(k) and my company matches half of what I put in up to 3%. Once I get married, I will likely increase my contributions to at least 10%.

I chose Roth over pretax for a couple reasons: (1) my tax bracket is most likely lower now than it will be in the future closer to retirement (with likely promotions, raises, plus getting married, not to mention that tax % may change by law in the future given that the country is so broke) so I end up paying less in taxes now than I would be in the future when I retire, and (2) I like knowing exactly how much money I have in my 401(k) that I will have available when I retire, as opposed to having to pay taxes on that money when I cash it out.

AprilH81 · June 2014

jenna8984 said:

@aprilh81 & @couggal12 Why the interest in Roth? I was always told that you're likely in the 30% tax bracket during your working career but likely in the 10% tax bracket upon retirement (since your only income is distributions). So why pay on it now at estimate 30% instead of later at 10%?

The ROTH IRA is funded with post-tax funds and when you take the money out it is ALL tax free (both the contributions and earnings).

Here is an article that explains the benefits better than I can. http://www.kiplinger.com/article/retirement/T046-C006-S001-why-you-need-a-roth-ira.html

thisismynickname2 · June 2014

I have contributed 2-3% with company match at 2% for awhile, and just bumped my (pre-tax) contribution to 5%. I've been doing that since age 22, and also at that age I was contributing whatever I could ($100-$200 a month) to a Roth IRA.

Simultaneously I was saving (perhaps $500 a month) for emergency/rainy day, and used savings for a down payment, and now savings are also helping to pay for this wedding.

I've cooled off on the Roth since I got engaged and upped the 401k contribution because FI and I combined will be in the worst tax bracket.

FI and I will be visiting a financial planner for the first time later this summer to really help us get our ducks in a row.

As an aside, nothing bothers me more than people who have a 401k with a company match and don't use it. One guy in particular thinks our Big Evil Corporation doesn't pay him enough, so he "can't afford" to invest in the 401k. Face, meet palm.

Maggie0829 · June 2014

NikkiJay3333 said:

I contribute 6% to my Roth 401(k) and my company matches half of what I put in up to 3%. Once I get married, I will likely increase my contributions to at least 10%.

I chose Roth over pretax for a couple reasons: (1) my tax bracket is most likely lower now than it will be in the future closer to retirement (with likely promotions, raises, plus getting married, not to mention that tax % may change by law in the future given that the country is so broke) so I end up paying less in taxes now than I would be in the future when I retire, and (2) I like knowing exactly how much money I have in my 401(k) that I will have available when I retire, as opposed to having to pay taxes on that money when I cash it out.

Pretty much why I chose a Roth over a pretax.

jenna8984 · June 2014

AprilH81 said:

jenna8984 said:

@aprilh81 & @couggal12 Why the interest in Roth? I was always told that you're likely in the 30% tax bracket during your working career but likely in the 10% tax bracket upon retirement (since your only income is distributions). So why pay on it now at estimate 30% instead of later at 10%?

The ROTH IRA is funded with post-tax funds and when you take the money out it is ALL tax free (both the contributions and earnings).

Here is an article that explains the benefits better than I can. http://www.kiplinger.com/article/retirement/T046-C006-S001-why-you-need-a-roth-ira.html

I guess I still don't understand the draw because they (most articles) are focused on the fact that you don't pay taxes on it later, but they are neglecting to see that you are paying 20-30% taxes on it today. So you are paying 30% on it when you can just wait and pay 15% on it later....what am I missing lol

sarawifenow · June 2014

AprilH81 said:

jenna8984 said:

@aprilh81 & @couggal12 Why the interest in Roth? I was always told that you're likely in the 30% tax bracket during your working career but likely in the 10% tax bracket upon retirement (since your only income is distributions). So why pay on it now at estimate 30% instead of later at 10%?

The ROTH IRA is funded with post-tax funds and when you take the money out it is ALL tax free (both the contributions and earnings).

Here is an article that explains the benefits better than I can. http://www.kiplinger.com/article/retirement/T046-C006-S001-why-you-need-a-roth-ira.html

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.

jenna8984 · June 2014

Maggie0829 said:

NikkiJay3333 said:

I contribute 6% to my Roth 401(k) and my company matches half of what I put in up to 3%. Once I get married, I will likely increase my contributions to at least 10%.

I chose Roth over pretax for a couple reasons: (1) my tax bracket is most likely lower now than it will be in the future closer to retirement (with likely promotions, raises, plus getting married, not to mention that tax % may change by law in the future given that the country is so broke) so I end up paying less in taxes now than I would be in the future when I retire, and (2) I like knowing exactly how much money I have in my 401(k) that I will have available when I retire, as opposed to having to pay taxes on that money when I cash it out.

Pretty much why I chose a Roth over a pretax.

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.

Jells2dot0 · June 2014

I contribute 12%- 9% before tax and 3% after tax. The company matches the first 8%, but I contribute slightly more to lower my taxable income. I've been in the top tax bracket for awhile now, so I take whatever break I can get! Also, whenever I get raise, I add additional contributions, so I've been living off of the same pay for the past 4 or 5 years.

flyingfoxes · June 2014

I was doing 10%, and my company does 12% (crazy amount, but they do a 6% match, then another 6% at the end of the year). I think right now I'm putting away 9%. It's funny that in the 4 years I've worked here, I've accumulated just as much in my 401k here than I did in all of my 13 years of putting money away before I came here (I left my old 401k funds in a mutual fund at my old company and started fresh here).

jenna8984 · June 2014

@jells2dot0 Wow you're employer is very generous! That's awesome!

photokitty · June 2014

I don't have a 401K. I put 12% in my Roth and a tiny amount in my deferred comp. I know I should be upping the amount and maxing my Roth...need to work on that.

SBmini · June 2014

Husband does 10%, I currently do 7%. I need to bump it up a bit. I know I do, but the other money goes into liquid savings, which isn't bad. My company does a 'bonus' contribution at the end of year based on business. BUT I'm not fully vested in this 'bonus' until I've been here for six years. It is one of the biggest crock of shit benefits ever. No one stays at an advertising agency for six years and they know that. So they get to collect back their money when you leave.

Senecaf · June 2014

I contribute 10% to my 401K. Company matches 3%. I have it set up to increase a percent every year on my employment anniversary. I started it at 7%.

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.

Jells2dot0 · June 2014

jenna8984 said:

@jells2dot0 Wow you're employer is very generous! That's awesome!

Yes, they are. They also have a great short term disability program, which I'm currently utilizing. I'll be receiving my full pay the entire time I'm out for my cancer treatments.

How much (if any) do you contribute to 401k?

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