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

sophhabobopha · June 2014

beethery said:

Everyone here is having an adult conversation with numbers and percentages and I'm just like

Yup.

lkristenj · June 2014

I hear you on the house thing. My dad just could not believe the houses we were considering. He comes from the country (so did I) and he said that my range was over twice the price of his 4 bedroom, 2.5 bath house with garage apartment (with one bedroom and one bath more) and 28 acres of land. But, you can't get those prices in the city. Our little 1/3 acre 1958 3 bedroom 2 bath house probably cost more than most of my dad's houses combined. Of course, he can't understand paying so much in rent either. Over $1,000 a month for a 1 bedroom apartment? He owns several rent houses and he can only rent out those HOUSES for $500 to $800 a month and they have 2 and 3 bedrooms. It was a shock to him, but he gets that I can make my own choices. I understand. Different areas just demand different prices.

He would never get a 30 year mortgage or pay so much for a house, but that's what we had to do to make it work. Rent was only going up and we were tired of apartment living with 3 dogs.

FI has an individual IRA, but I don't think he has anything in it. Ugh. We are doing awful on the investment/retirement front. That will be our focus for next year for sure.

wandajune6 · June 2014

I don't have a 401K anymore as I'm now an independent contractor. When I did have one, I'd max out any contribution, max out a Roth IRA, and, if I had anything left to work with, either add more to a 401K, HSA, or a combination of money market accounts and CDs.

I look forward to having a 401k again...

littlemushroom · June 2014

@KatWAG The contribution limits are the same for both Roth 401(k) and Traditional (pretax) 401(k). The numbers you listed were for a Roth IRA v a Traditional 401(k).

jenna8984 · June 2014

Well I always get bummed when I watch Suze Orman show and she has these "viewers" call in and go over their finances with her and they are like "we're 33 years old and we have $127k in retirement". I'm always like WTFFFFFF because I've been in the work force for 7 years now and I don't even have 25k.

I feel much better and more average knowing that most of you guys are in a similar boat. I feel like those callers are either pretend or trust fund babies.

Thanks for the good tips about required distributions too, that may affect income levels and tax brackets. I am definitely going to look into Roths now.

VulgarGirl · June 2014

FI and I both had Roth IRAs when we first got together. But now, she makes too much to qualify for the Roth. She bitched so much about it. She loved having a Roth. She's made peace with her traditional IRA now.

I will say when I was 18 and signing up for my first IRA, what appealed to me about the Roth was that if I needed to get my money out for anything, I didn't have to worry about paying taxes on it. I was only 18, saving for retirement sure did sound like a good idea, but eating everyday was pretty nifty too, and I was willing to dip into retirement to do so.

audubonbride2013 · June 2014

jenna8984 said:

@audubonbride2013 Do you happen to know if you will pay taxes on your pension? Does it differ per company/ pension?

My pension's partially taxable. Part of it is not taxable because it is considered recovery of my costs (my contribution to the pension).

This IRS has a guide to determine if your pension is taxable here

Maggie0829 · June 2014

jenna8984 said:

Well I always get bummed when I watch Suze Orman show and she has these "viewers" call in and go over their finances with her and they are like "we're 33 years old and we have $127k in retirement". I'm always like WTFFFFFF because I've been in the work force for 7 years now and I don't even have 25k.
I feel much better and more average knowing that most of you guys are in a similar boat. I feel like those callers are either pretend or trust fund babies.
Thanks for the good tips about required distributions too, that may affect income levels and tax brackets. I am definitely going to look into Roths now.

LOL! I have the same feelings. When she is on the Today show talking about how much people should have saved and such I am always like "Fuck you Suze Orman!"

theartistformerlyknownas · June 2014

Maggie0829 said:

jenna8984 said:

Well I always get bummed when I watch Suze Orman show and she has these "viewers" call in and go over their finances with her and they are like "we're 33 years old and we have $127k in retirement". I'm always like WTFFFFFF because I've been in the work force for 7 years now and I don't even have 25k.
I feel much better and more average knowing that most of you guys are in a similar boat. I feel like those callers are either pretend or trust fund babies.
Thanks for the good tips about required distributions too, that may affect income levels and tax brackets. I am definitely going to look into Roths now.

LOL! I have the same feelings. When she is on the Today show talking about how much people should have saved and such I am always like "Fuck you Suze Orman!"

I feel this way watching House Hunters. Fucking 24 year olds with $80k saved for a down payment FUCK YOU VERY MUCH. Grrrrrr.

(No hate to any of you who are in that boat. That boat sounds lovely. I'm just jealous of your damn boat.)

lkristenj · June 2014

25-year-olds with $15K saved for our down payment here. And we struggled for it. FI more than I. I'm a saver, he's a spender. I couldn't have purchased a house without him, so it's definitely OUR house, but most of the down payment (80%+) was "my" money. I can't imagine having so much more than that... I'm jealous of that boat too. Starting to panic a little bit about retirement now that we're mostly starting over with our savings.

photokitty · June 2014

jenna8984 said:

photokitty said:

jenna8984 said:

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.

That's flawed too...if you don't make more in retirement than you make now you'll be in bad shape. If you need 75K to live now you, do you really want to live off 40K in retirement?

I'm with Maggie & Nikki - that's why I hardly put anything in deferred comp and most of my money in the Roth.

BUT, If I had a 401K that had matching I would totally do it to the max match, regardless of the pre-tax situation.

Well the goal is to have your home and cars paid off by retirement. Like my parents only pay a few grand for their property taxes & insurance and then the basics like food, electricity, vacations. They easily live off a third of what they once made.

My goal is to have my home paid off way before retirement - I have 11 years to go if we stay in this house

And I hope to be retired long enough that I need to consider a new car at some point. I'd rather plan to live it up in retirement...so I figure between that and healthcare I'll need at least 75% of my pre-retirement income.

photokitty · June 2014

I bought my house at 25. I had $30K saved up all by myself bc my parents let me move in with them for a year rent free as long as I banked everything that wasn't a bill or gas (basically).

I really appreciate what they did for me, but also know everyone is not as lucky as I was

I can't even imagine how much my brother has saved up - he still lives with them, 2 years out of college with a real job, just banking it all. He claims he wants to move up, but he has a sweet set up - our parents buy the food, pay the utilities, mom cooks for him, etc. He does do his own laundry :-p

VulgarGirl · June 2014

lolo883 said:

Maggie0829 said:

jenna8984 said:

Well I always get bummed when I watch Suze Orman show and she has these "viewers" call in and go over their finances with her and they are like "we're 33 years old and we have $127k in retirement". I'm always like WTFFFFFF because I've been in the work force for 7 years now and I don't even have 25k.
I feel much better and more average knowing that most of you guys are in a similar boat. I feel like those callers are either pretend or trust fund babies.
Thanks for the good tips about required distributions too, that may affect income levels and tax brackets. I am definitely going to look into Roths now.

LOL! I have the same feelings. When she is on the Today show talking about how much people should have saved and such I am always like "Fuck you Suze Orman!"

I feel this way watching House Hunters. Fucking 24 year olds with $80k saved for a down payment FUCK YOU VERY MUCH. Grrrrrr.

(No hate to any of you who are in that boat. That boat sounds lovely. I'm just jealous of your damn boat.)

We were 26 when we bought our condo and had $25K saved for a down payment. A little over half of that came from an inhertiance I received the year before. I thought we were were impressive. But fucking $80K?!? Like...how does that happen?

chibiyui · June 2014

My student loans wrecked H's savings. He wants them paid off before we buy a house, so yeah.

WinstonsGirl · June 2014

I'm not sure what percentage I pay, but I max out my RRSP contributions each year (our retirement plan in Canada). I don't get employer matching, but that's cos I have a pension, so I'll get that when I retire.

I also put away 10% of my paycheque into savings on top of that each month. Go read the Wealthy Barber and pay your self first ladies!!

freebread03 · June 2014

Maggie0829 said:

That is all well and good for you and your FI, but H and I would not have been happy (nor are their houses that inexpensive where we live) to buy something well below our max budget. Our area is very expensive. Condos around my part go for $175K and up...that is for a 2 bedroom condo. So for us to have found a house for a lot less then our max budget we would have had to buy an old fixer upper resulting in hours and hours of work and money in contractors and other vendors to make our house livable. So for us, in our area, we had to go with our max budget and we had to go with a 30 year loan because we wouldn't have been able to afford a shorter one.

Not everyone lives the same and what works for you will not work for everyone else. H and I don't plan on living in our same home for the rest of our lives. We plan on selling and moving to a different state in a few years. And we will most likely sell and move again in the future. And I am sure that a shorter mortgage will not work for us at that time either. We also don't plan on keeping the same car once we retire. That is a long time to keep a car and hope that nothing drastic happens to it.

Life happens and you need to be open and ready for the possibility that your plans may not work out.

**stuck in box** 175k for a 2 bedroom sounds amazing-that doesn't get you a 1BR in a decent area in my city, so I guess I'm surprised that you say you live in a high COLA area.

I put a little over 10% into retirement-6% into my 401k since my company matches 10% up to my first 6% (and then often puts another 25% of my first 6% in at the end of the year, but its dependent on how profitable we were over that FY). So, that really means they put 6 cents on the dollar in up to my first 6%, which isn't a lot. I also put a lump sum into my Roth at the end of the year. My company also has a very generous pension plan-vested after 3 years, but obviously the longer I stay, the better (hence the low match contribution, which I find annoying).

JCbride2015 · June 2014

freebread03 said:

Maggie0829 said:

That is all well and good for you and your FI, but H and I would not have been happy (nor are their houses that inexpensive where we live) to buy something well below our max budget. Our area is very expensive. Condos around my part go for $175K and up...that is for a 2 bedroom condo. So for us to have found a house for a lot less then our max budget we would have had to buy an old fixer upper resulting in hours and hours of work and money in contractors and other vendors to make our house livable. So for us, in our area, we had to go with our max budget and we had to go with a 30 year loan because we wouldn't have been able to afford a shorter one.

Not everyone lives the same and what works for you will not work for everyone else. H and I don't plan on living in our same home for the rest of our lives. We plan on selling and moving to a different state in a few years. And we will most likely sell and move again in the future. And I am sure that a shorter mortgage will not work for us at that time either. We also don't plan on keeping the same car once we retire. That is a long time to keep a car and hope that nothing drastic happens to it.

Life happens and you need to be open and ready for the possibility that your plans may not work out.

**stuck in box** 175k for a 2 bedroom sounds amazing-that doesn't get you a 1BR in a decent area in my city, so I guess I'm surprised that you say you live in a high COLA area.

I put a little over 10% into retirement-6% into my 401k since my company matches 10% up to my first 6% (and then often puts another 25% of my first 6% in at the end of the year, but its dependent on how profitable we were over that FY). So, that really means they put 6 cents on the dollar in up to my first 6%, which isn't a lot. I also put a lump sum into my Roth at the end of the year. My company also has a very generous pension plan-vested after 3 years, but obviously the longer I stay, the better (hence the low match contribution, which I find annoying).

Oh gosh. We have started looking at real estate to buy within the next year or two, and it will be a serious challenge to find a 2-bedroom condo for under $500k in our neighborhood. And I really want a 15-year mortgage, so we refuse to go higher than that. We're going to need a lot of time and a really good real estate agent to find something in our budget. We don't even live in NYC proper, we live across the Hudson. God forbid any 20-something tries to own a home in the actual city.

blabla89 · June 2014

@wandajune6 what did you do with your 401K when you became a contractor? FI is in the same position and trying to decide what to do.

Maggie0829 · June 2014

lkristenj said:

25-year-olds with $15K saved for our down payment here. And we struggled for it. FI more than I. I'm a saver, he's a spender. I couldn't have purchased a house without him, so it's definitely OUR house, but most of the down payment (80%+) was "my" money. I can't imagine having so much more than that... I'm jealous of that boat too. Starting to panic a little bit about retirement now that we're mostly starting over with our savings.

H and I were in the same position as you are now. I had saved up about $16K and we used $12K for our down payment. The rest of the money was used towards buying some appliances (refrigerator/washer/dryer) and towards our HM. It has definitely sucked trying to recoup what we used.

lkristenj · June 2014

Maggie0829 said:

lkristenj said:

25-year-olds with $15K saved for our down payment here. And we struggled for it. FI more than I. I'm a saver, he's a spender. I couldn't have purchased a house without him, so it's definitely OUR house, but most of the down payment (80%+) was "my" money. I can't imagine having so much more than that... I'm jealous of that boat too. Starting to panic a little bit about retirement now that we're mostly starting over with our savings.

H and I were in the same position as you are now. I had saved up about $16K and we used $12K for our down payment. The rest of the money was used towards buying some appliances (refrigerator/washer/dryer) and towards our HM. It has definitely sucked trying to recoup what we used.

I know it's going to suck so much! But, it's what we want and we think we'll be happy there for many years. Luckily, the sellers are leaving their refrigerator so we won't have to buy one. It's about one-year-old. We will have to get a washer and dryer, but we have family nearby that is happy to trade babysitting time for the use of their laundry room. They have good kids, so I think that's fair. And there's always Laundromats, though I know from experience how much hauling clothes and waiting sucks. I know it's possible to make it back, but it will be hard. I know it will be so important later and it's so much easier if you start early. I hope we can get on track next year. Thank you for the encouragement.

Jells2dot0 · June 2014

DH and I just bought our "final home" last year. It is a new build, in a great neighborhood, and can be easily paid off before we retire. Well, guess what? The company decided to shut down our local office and we're now forced to move. We thought we had everything figured out. DH is on track to retire in 5-7 years as well. So, now we're looking at how we can rebalance things so that we can keep our forever home, own a home in our new location, and still allow DH to retire in the short term. Thankfully, we have enough discretionary income and we're moving to a lower cost of living area. So, he'll be paying for our current home, while we'll get a 15 year mortgage in our new location that I will pay for and be paid off in ten years or less. Then, when he retires, I can just pick up the mortgage for our current home. But then again, who knows what else life will throw at us? With all of this mess and my medical issues, I'm so glad we're savers

JoanE2012 · June 2014

I contribute 14% and DH contributes 12%. We get another 12% from our employers (total). We can only contribute a couple percent more before we max out and look for alternative investments. We are aggressively saving now while we are financially able to do so....we want to be able to travel the world when we retire!

We just bought a house last year and got a 30 year fixed mortgage but are working to payoff at least 10 years early. We didn't want to get a shorter term in case something happened and we wanted the lower payments for awhile.

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

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