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Help with 401k please!

Discussion in 'The Okie Corral' started by sheriff733, Jul 20, 2012.

  1. sheriff733

    sheriff733 NRA LIFE MEMBER

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    Hey all. This is not my best subject by far so please, bare with me.

    This past Feburary, I started a 401k. I started putting in $100 out of every check into it. My employer no longer matches any of my contributions. That was cut ~3 years ago.

    I got my quarterly statement in the mail today and currently have $1200 saved up.

    I get the basic idea of what I'm doing, but I'm wondering if the 401k is worth it since my employer isn't contributing anything. I'm attempting to do the math in my head, but without being able to see the future, the number's I'm coming up with aren't even remotely close to enough to live on. Granted that when I fully retire, I will draw a pension, and my goal of the 401k was only to supplement having to work quite as many years and be able to retire a little earlier.

    However, since who knows what will happen down the road, I'm doing what I can now to ensure that I will have enough of a safety net built up should some unforeseen cut take place where they no longer offer a pension or some such. Slim chance I know, but I don't want to work forever. Or, wake up one day in my mid 40s and say, "Oh S***..." So, I'm trying to build up my 401k to where I could live on just it.

    So, I guess my question is, am I on the right track or are there some other avenues I should explore to get to where I want to be?

    Thanks everyone.
     
  2. BobbyT

    BobbyT

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    It's not huge, but will reduce your tax bill. Max it out or you're being robbed more than necessary.

    17k a year won't make you set for life, but it'll add up.
     

  3. sheriff733

    sheriff733 NRA LIFE MEMBER

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    Excuse my ignorance, but where did you get 17k from? I am really bad at this, but I'm trying!
     
  4. certifiedfunds

    certifiedfunds Tewwowist

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    Max contribution 2012
     
  5. sheriff733

    sheriff733 NRA LIFE MEMBER

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    Ah, I see.

    Thanks
     
    Last edited: Jul 20, 2012
  6. cgwahl

    cgwahl Sheriffs a near

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    I think the general rule of thumb is to max out your IRA and then focus on the 401k preferably at least to what the employer might match. Since your employer isn't matching, maybe to what you feel comfortable with.

    It's not a lot now, but what you are hoping for is compound interest making that amount into a lot more in future years.



    My own opinion, but you should try to put at least 10% of whatever you make towards retirement (some probably say more, others less, this is just what I believe). If you can do more, great. But 10% is a good number to strive for (I think).

    How you come to that is up to you. If I make $100k a year, it'd be $5,000 in the IRA and possibly $5,000 in the 401k. Or if married, $5k in my IRA, $5k in wife's IRA and then maybe up to whatever my employer matched 401k is.
     
    Last edited: Jul 20, 2012
  7. Jonesee

    Jonesee

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    OK, let's ask a few questions first.

    Do you have sufficient cash set aside in case of emergency or loss of job?
    if not, do that before contributing more. If not, you will be forced to withdraw from the 401K and the penalties and taxes will kill you.

    Are you carrying any credit card debt?
    Pay it off first.

    Can you save emergency cash or money for a down payment on a home while continuing to contribute to your 401K?
    If so, do that.

    Do you need a tax break?
    If not, remember, you are contributing for your retirement not for immediate tax benefits.
     
    Last edited: Jul 20, 2012
  8. davsco

    davsco

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    what you are gaining is that the money you are putting into your 401k has no taxes taken out on it. so if you had just been paid the $100, taxes would have been maybe $25, so you would have only seen $75. but instead, you got to put the full $100 into your 401k account, so you essentially got a free $25 loan that you can invest for years and years.

    so even without your employer matching anything, you are getting more money to work for you than if you just got it all paid in your paycheck.
     
  9. certifiedfunds

    certifiedfunds Tewwowist

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    25%? Few people here have a 25% tax liability. I'm guessing the OP doesn't. Not splitting hairs. Point being the tax advantages may not mean that much to him.
     
  10. sheriff733

    sheriff733 NRA LIFE MEMBER

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    .....
     
  11. sheriff733

    sheriff733 NRA LIFE MEMBER

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    Also, I'm in my late 20s right now and can't retire until roughly 53.
     
  12. kalashluvr

    kalashluvr

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    Take your $100 a pay period and calculate what that will be when you retire if it grows at 4%, 6%, and maybe 10% and see if you can live off of 8% of the total when you retire. Give yourself some worst case and better case investment scenarios. Also, if you can pay off a mortgage if you have one by the time you are say, 45 or 50, you would really increase retirement savings. One other thing....hopefully you won't be stuck to your income level for the next 30 years so you will increase that $100 gradually. Also, doubt you will be at that employer for 40 years...increase your pay and benefits over the coming years


    Outdoor Hub mobile, the outdoor information engine
     
  13. sheriff733

    sheriff733 NRA LIFE MEMBER

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    Ok.

    Also, I've got 14 years left on my mortgage. So, I would be able to put much more towards retirement once that was paid off.
     
  14. ray9898

    ray9898

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    That is the goal for most middle class workers if things go as planned. As you near retirement you will hopefully be earning what is a decent wage for your profession along with having lower expenses such as by having your house paid off. Many people save the majority of their retirement in the last few years.
     
    Last edited: Jul 20, 2012
  15. davsco

    davsco

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    re your 401k being invested in wells fargo stock - NO NO NO

    you don't want your 401k tied up in stock of the company you work for. the company goes downhill, you lose your job, and your 401k is in the crapper.

    besides, you need to diversify, don't want your eggs in one basket, whether it's wells or any other bank or company.

    suggest you see if they have a S&P500 index fund or some large cap index fund. you won't get a home run but also won't lose it all.
     
  16. sheriff733

    sheriff733 NRA LIFE MEMBER

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    Ok. I will call and ask monday. I'm going to pull this thread up when I call so I don't forget to ask anything.

    :supergrin:

    ETA: I think it's stock. I don't actually know. I just knew I needed to start saving and thought this may be a good way to do it.
     
    Last edited: Jul 20, 2012
  17. rgb03

    rgb03

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    Look into the freedom plans. The company that manages our 401k plan has the freedom 30, 35, etc. basically you pick the plan that matches up to your retirement years. They intern invest your money between bonds stocks etc. the closer you get to your retirement age the less aggressive they are with your money. At your age you are probably going to want to be a little more aggressive as you have more time to make back any loses.
     
  18. sheriff733

    sheriff733 NRA LIFE MEMBER

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    I am currently with ING.

    Can I move my 401k to a different company without getting hit with some huge fees or penaltys?
     
  19. vote Republican

    vote Republican White and nerdy Moderator

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    This. Also realize that for someone in their 20s, your life expectancy could be another 60-70 years. So you put money in until at least 65, then you need to live off of that for 20-30 years.

    Putting in a little bit at a time, and having it grow for 40 years, should give you a nice bit of change for that occasion.

    Also, a typical corporate IRA should have no load or management fees, so that's even another benefit over dealing with your own investments.
     
  20. certifiedfunds

    certifiedfunds Tewwowist

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    You sound like a guy with good financial discipline already. It sounds like you're young. Saving shouldn't be a problem for you. Lots of good free generic retirement savings advice online from reliable sources.

    Avoid the common pitfalls, try to save much more than 10% previously mentioned. Its going to take a LOT of money to retire comfortably.

    Save aggressively, invest conservatively, avoid the common financial pitfalls. Find opportunities to increase your earnings. Read The Millionaire Next Door. It isn't easy but it isn't rocket science.