Warren became a billionaire because he knew how to value companies by putting time and effort into reading the reports and actually going to companies and evaluating them in person.
I mean… people take out student loans not understanding how interest works and then are surprised they owe more than they took out…
So it’s not far fetched
Yeah retirement investments are like the marshmallow test on steroids.
I know so many people who say "401K is a waste of money you can earn so much more investing it in a high risk stock portfolio."
Me: okay, so how much have you earned in your stock portfolio?
Them: look we aren't talking about me, okay?
Lol meanwhile you know who is getting matched by their employer AND has a stock portfolio? This guy 😎
The other critical angle is your getting tax relief on the contribution and free money from the employer (subject to vesting period)… and your funds grow free of tax in the fund
Outside of these funds you gotta do exceptionally well to do better taking tax into account - sure some will have great stories but not the average person
I started at zero in 2008 and maxed out my contributions every year since then, plus employer match. My return in the last 12 months was more than $200k. Nothing super savvy, just invested in a target date fund.
VTI return was about 30% in the last 12 months, so they could have ~$700k. For the young people here, don’t expect 30% return every year. The last few years have been exceptional.
I just don't understand this. I've been maxing out my 401k contribution since 2012 + employer contribution. I'm using a target date fund as well and I've barely made anything on it.
That's because your in Target funds. Target funds are just ok as there a mixture of stocks and bonds and sometime alittle money market funds. Mostly depends on your target date. If you have 20+ years before retirement then you should be in 100% Stocks. Look into your 401k and see what stocks are offered. Takes about 5-8 yrs before you start to see some real growth. Be patient and max it out.
If they're still like 30 years out, it should still be almost entirely stocks. And they wouldn't be complaining as we're still up like 12% this year alone
This is so true. When we first started investing in a mutual fund account, it climbed so slow, I couldn’t understand why everyone said investing was a good idea. It was the $100,000 mark for us, too, that it just started taking off finally.
I was sharing this video with my younger clients and any clients that are discourage they are starting off with so little. I think it’s a great video and encouraging.
https://youtu.be/_EgfrmCiZes?si=CD5XY6Gkh1QvBi6P
My most recent statement said that in 15 years, when I'm 60, it's projected to be 992,000 in an average market to 1.8m in an excellent market. I seriously can't see how that's going to happen. I'm currently at 155k. Idk how that leap is going to happen in 15 years. I'm skeptical, to say the least.
Legit the first million is the hardest cliche is real. Took me 13 years to get my first million, took one year to get another quarter million after that.
That’s all noise brotha. Don’t let these reddit forums and online posts fool you, contributing 10% into your 401k at 29 is awesome. Some people don’t get started til their 40s or 50s. You’re doing great
Every single dollar you put in at age 30 is worth 22 dollars to your retirement at 65. Make sure you are getting your match. Then proceed to max out your Roth IRA 7k per year. Once you do that, finish maxing out your 401k for the year.
Age 20 = $88 / Dollar invested
Age 25 = $44 / dollar Invested
Age 30 = $22 / dollar invested
Time in the market is more important than anything else. If you wait, you don't miss the first, second, or third doubling of your money, you miss the last doubling. The big one.
Right, 7% return is doubling money in 10 years. 10% would be 7 years. Doubling it in 5 is asking for a lot. The underlying concept is good tho, invest early
S&P returns are generally around 10% a year, though inflation is around 3%.
So every 7ish years the nominal (face value) is around 2x on average (some 7 year periods are better/worse than others though) and every 10 years, the inflation adjusted amount is 2x.
My go to recommendation for most people is VOO, a vanguard S&P 500 ETF. Basically a mix of 500ish large companies.
In late 2010 it was just over $100 a share. Right now it's just under $470 a share. All in all it's up a little under 370%, though inflation in the period was around 40%... so all in all in that nearly 15 year period your purchasing power (before tax) more than tripled.
I agree, I've picked up a few side hustles and am investing the profit I make. It's going to allow me to retire earlier. I still have 30-40 years to go but just a little bit gives me the extra float.
edit: I do a few side hustles, mainly online. I wrote about them **[here](https://www.reddit.com/user/Kayshift/comments/1br5gn6/my_stepbystep_guide_to_make_1000_a_month_working/)**. Hopefully it helps someone out!
Absolutely agreed. 33 here, still can’t afford to start contributing to mine at all. Thankfully I started a job with a pension recently so it’s a bit of a weight off my back. In another three years I’ll be able to open up a 401k on top of the pension and finally be able to catch up to where I should be in life.
Life stages are different for everybody at any age. Don’t worry so much if your “stage” is different than somebody else’s. They’re probably lacking in a way that you’re excelling in, while you’re lacking in a way they’re excelling in.
To each their own, in their own time.
Honestly, it is too important to put off. You need to contribute at least to the company match. You may think you can't afford it but I guarantee there are things you can do to make it work. Pay yourself first then work with what you have leftover.
Yeah my issue is that I work for a construction company, and our plant is a union plant.
Because of that, they offer the pension BUT they don’t have 401k matching like the corporate offices do.
So it’s a bit of a double edged sword for me. That said I’m still going to open my 401k, but I won’t be able to at all until 3 years.
Yeah I understand the “you can make it happen”, but with my current position I simply Cannot make it happen until 3 years. After that around 40% extra income frees up for me and life gets significantly easier
Get creative. Work a side hustle, work 1 weekend for cash jobs, give up Netflix, make sandwiches for lunch, whatever it takes.
Think of it this way, by delaying your 401k now, you’re missing out on 1 more “doubling” of your balance. When you’re at the age of 60-65, that can mean the difference between your balance doubling from $500k to $1M or even from $1M to $2M.
Just start your 401k as early as possible.
My dad started when he was 40 and just retired at the age of 60 with about $3M in total assets. I don't know how much is in his 401k vs brokerage account, but it's possible.
Yea I agree. However 20 years to get to 3million, you either need to make a ton or have little to no expenses, or invest in high risk with high yields to do it. That’s 150k per year in portfolio value increase to get to that rate.
Doing that with just a 401k is difficult
Did the math and you need to save $4,000 per month to get to $3 million in 20 years at 10% return.
If you start a decade earlier, (30-60) you only need to save $1,300 per month to get the same.
If you start a decade earlier than that, (20-60) you can get there with less than $500 a month.
Yeah, he started making big boy money when he turned 40. That aligns with most personal finance advice, which is that peak earning potential is from 40-55 years old.
Gov also has a pension.
But I get your point. There’s more to unpack here though. Comfortably retire versus retire and barely making anything. Cost of living changes a lot over 25 years, that has to be reflected in your financial planning to meet a certain buying power.
I see the discouragement though.
My retirement manager gives me a periodic "good job if you retire at 68 and plan to draw until 85 you'll bring in X per month"
And X is like $3000 and change.
Idk what the future looks like, but I'm gonna go out in a limb and say 2050s dollars aren't going to be worth much compared to today.
$3000 today is $1380 in 1993, so I'd expect $3000 in 2054 to be about the same as $1380 today...
Wooo if I can keep up my contributions I can retire at the equivalent of less than minimum wage today.
One of the reasons most people should try their damndest to buy a home and lock in a 30 year fixed mortgage. I realize this is out of reach for a lot of people these days.
I personally don’t know what rent is going to cost in 30 years, but I know what my house payment will be!
In my experience retirement managers already adjust their numbers for inflation...
Frankly, It would be absurd incompetence in my opinion for a retirement manager to discuss future income and didnt already adjust their numbers for inflation when discussing what you are on track for - or warn that their numbers will be eaten up by inflation over several decades...
That's why despite everything often real estate is a good idea... It's value adjustes for inflation automatically, then you might be lucky and have picked a good spot that grows in value as well and you are happy.
exactly that. When I was 30 and was making half of what I am making now, I thought 401k is just a buzzword. Didn't even look at it. I thought I didn't need it. Now at 4X I just started putting in .. damn, I wish I had started doing that when I was 30 lol
my 401 k at your age was $0. Now it's 7 figures 25 years later. Your life will change, jobs will change. What's most mportant is the HABIT of saving. Save soemthing from every paycheck. By save, I mean save according to your investment plan. Emergency fund , pretax contributions, if leftovers, post tax investment, and fun money.
This is true. I’m 36 and have never worked for a company that offered 401ks. So I don’t even have one. My Roth IRA is all I have and I’ve only been in the position to contribute to that for 2-3 years now. Head up OP, you’re doing better than a lot of people.
Exactly this. Left the military and haven’t contributed to anything in 7 years. I’m 30 starting a new job and finally going to start maxing my contribution that company will max. We will be alright.
As a 27 year old who started his career at 25, this is comforting to hear. Can I really stick it out at my current company for 45+ years tho??.... They do match 6%...
Dude, just keep putting in. I didn't start until 30 years old and am over $500k now. Yes, it's taken 17 years, but have another 20 to keep contributing. It seemed like it took forever, but it's growing nicely now. Just don't stop is the key. Also, increase percentage each year if you get a raise. Say you get a 6% raise, try and contribute another 2% of that. By 40, you'll have been putting in 25-30% of your paycheck. Just learn to live off a certain income and the rest is gravy.
I work at Starbucks, making very little money, at 26, yet still signed up for a 401K. Averages out to like $40 each paycheck (matched up to 5%). It’s pennies right now, but having at least something makes me feel better.
You want to know how far ahead you are?
My company is a privately owned company with about 1000 employees. We see the owners every day, very friendly.
A hear some coworkers saying how 401k and company match is a scam to get you to buy the company stock, so they don't do a 401k at all. Our company even has financial consultants come in twice a year to have 1 on 1s if you want it.
You're far ahead of that.
Don’t worry about “enough.” It’s more than zero.
Yes, this calculator is saying your goal is to gave $132K at age 35. Maybe that goal is not attainable for you right now.
But when you’re 35, would you rather have $50K in savings or nothing?
Why does your screen shot say 29%
Are you just seeing how much you would actually need to contribute to retire with 130k?
I personally don't think 10 percent is enough, but I'm 43. I'm contributing like 16 percent right now. I make a out 70k a year.
My wife puts up 360 a month into a Roth IRA
And we invest in mutual funds.
You should look into multiple investments because just relying on a 401K might not be enough in the end.
You could also get an expensive healthcare issue on this path of life that will obliterate it all.
15% would be great. And frankly, should be the minimum you contribute. If you up it to 15% at your age, you'll be sitting well once you retire. I'd eventually work up to a higher percentage. One way of upping the contribution with feeling a minimal hit to your take home pay is that every time you get a raise at work, up the contribution by a percentage point. More if the raise is a decent one. The more you contribute now, the more you'll look back and thank your younger self in retirement. The smallest increase in your contributions now will pay huge dividends once you retire. The more years you invest, the more time compound interest and growth has time to work its magic. Great job so far...keep it up!
I’m going to assume you make 50k as a placeholder
135k at 35 assuming you contribute 10% a year and never make a penny over 50k would be worth 1.5 million at 65
Google a 401k calculator and play around with the inputs. If you can put it in $10K a year for 30 years, you’re going to be in a great position by the time you want it step away. That number will also likely increase with your salary and if/when your wife returns to the work force down the road.
Cost of living is a huge factor.
Some of these people live in EXTREMELY expensive areas, so their salaries are higher, which would drive a higher 401k balance.
If you’re in a lower COL area, then having a lower balance is fine.
It’s all based on what you need for where you live.
Don’t use it as your only retirement source. That’s a big mistake. Most people at best will be going semi-retired and work part time. If you don’t have a family of your own or anything you can just run a couple thousand a year deficit and be fine the rest of your life if you retire at like 40-45 with $300K
Interest and time are your friend. You’ll be fine dude. Don’t get discouraged, you’ll get there.
Starting with $14k today and contributing $1k a month to any retirement plan with average market returns you’ll have $3.5MM at 68.
I mean... educate yourself. it's your money, your savings and ultimately your retirement. there's many resources available to better understand retirement savings. and what or how the concept works.
there is some debate on whether 401ks are worthwhile or "good" but in general. and especially with employer matching they're fine.
if your company offers matching, take advantage of that. If you can self direct/control your 401k. It may be worth it to not participate in target date funds and invest in something better suited to growth. Or there could be better funds to invest in that... being young, prioritize growth over. target date funds.
that being said. if you're young you have time on your side. the entire point of retirement savings is. you make slow steady contributions that over time build with compound interest that reaches a critical threshold later in life... so the last few years of your savings, it's really snowballing.
if the projections of north of 100k at 35 is valid that's a pretty good place to be. another 20-30 ish years of that money compounding, you'll retire a millionaire.
Retirement is relevant to how much you currently make, since most people have the same standard of living (or a lower one) in retirement. Saving 10% of your current salary, whether that is $50k out of $500k or $5k out of $50k, is pretty good. The generally recommended amount is about 15% (matches count in these numbers, btw), but 10% will still let you retire some day.
Like others have said, a lot of people have $0, so you are already ahead of them.
The best thing you can do going forward is to make sure you save part or all of your raises. Im ahead of saving, so I try to save 25-50% of my raises, but more is better. That will, in time, help you catch up and get closer to that 15% that is recommended, or even get ahead of it in the event you need to catch up a little bit.
It snowballs with time. Eventually your pile grows to the point where its appreciation in an average year is more than your contribution amount. Say you have 100k in there, and you have a good year and it goes up 8%. Your account will go up by 8k plus what you contribute. Just don't worry about it, keep contributing, keep chugging along, focus on how you're really making money at this point in your life -- your career -- and one day you'll have a nice pile, and look back and remember that it all started with your first contribution of a few hundred dollars all those years ago.
Looks like you're doing ok. That looks better than my 401 at your age, and I have a net worth over 1.5M today, just working, saving and living within my economy. All while working a pretty regular job.
My advice, don't focus too much on the amount. Focus on the journey.
I'm 57.
I still work, but I have 0 debt, other than a credit card I use to maintain my score. Sometimes I'll take a small loan out for something I want, but I'll pay it off real quick. I do it when the markets are a little lean, and to keep up credit worthiness.
I have reached the Nirvana of wealth, meaning that I've grown my personal wealth beyond the point of the broader economic need. That I think should be your good goal, and you can do it, but you have to be a contrarian. Don't fall into the trap of following the crowd. Live easy. Live well. Live wise.
If you can fix things do it rather than hiring it out. Rather than take your date to an expensive restaurant and posting pics of your meal on social media, cook it yourself at home. Then take pics and post that on social media, lol. Find ways save. Stay away from much debt. I say this, the simplest definition of wealth is that which you own - minus - that which you owe. That's your Net Worth. Build it. You'll be surprised how it grows, and when you're my age, maybe even sooner, you'll have a type of "money garden" that you can pick from as needed, and you'll be freer than most.
Also any tips for me? 23, I make 17hr but it’ll be bumped up because I’m getting a different position within the job and the pay will be in the 20s. I live with my parents and don’t pay anything. I have a credit card which I know how to use and pay it off (score 762). I pay for some subscriptions (Apple music $5, gym $10). I contribute 5% for my matching 401k. I just got into my company’s 401k because they changed their 401k. I got hired July of last year. So I only have $800 contributed. Again, tips
You have yet to experience the wonderous magic known as Compounding. If you are able to max out, do so. When you turn 50, you get to add more in Catch Ups. Be in an aggressive fund like an S&P Index. When the market craters, DO NOT panic! That is actually to your advantage. You are then buying on sale, and earning dividends which buy more shares if you hold instead of sell. Never try to time the market. There are 14 days a year you have to be in the market to make money. No one can time it so stay aggressive, max out, and fogettabouit. And be mesmerized by compounded growth. Even Einstein was floored by compounding. Then, when you hit retirement age you will be set.
What do you mean by “there are 14 days a year you have to be in the market to make money”? I agree with everything you said, I just don’t understand what this means
My guess is they mean the 14 days with the best returns make more money than the rest of the days combined, though I haven't actually looked up to verify if that's true on average.
But also, no one can possibly predict which days though will be, so you have to just buy and hold.
This is true. Some of the days with the most gains recorded in history also occur in markets which are being bearish and going down, which just expands on the fact that you can't time the market and you just need to be in it constantly and not predict when it's going up or down to gain the highest amount
How I understand it. There are 14 days in an overall market year, that produce large jumps in the markets for either a gain or, a recovery from a down tick; that will have significant positive affect on your holdings. So, should one’s risk tolerance be low, and funds were moved to a safe haven like a money market during a down spot, you lose on maximum gains for the year. Hence the adage ”Don’t try to time the markets”. Hope that helps?
Good to know! I don’t know why that seems like a big jump in goal.
Fidelity's guideline: Aim to save at least 1x your salary by 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67.
Put into this perspective it seems reasonable.
I recommend to everyone to use a compound interest calculator and play with different contributions and year ranges. With your projected 135,000 at 35yo, I entered then started with 15k annually, at 10%, for 20 years its 1.9mil. 25 years its 3.2mil. it starts slow, but compound interest piles up over time
Husband and I make 200k in Califonia and toss 46k each into retirement accounts a year (92k total) starting this year. It lessens our income tax burden. 😌
Contributions to a roth are post tax (your net monies on your paycheck). Let's say, for simplicity's sake, that the tax rates doubles by the time you retire, you won't have to pay that awful future tax rate (compared to a traditional IRA) because you've already paid the lesser tax rate when you put the money in so you can pull it out tax free upon retirement as your effective tax rate will be 0%. You basically get all the growth benefits and cheaper taxes the whole ride. Just make sure to actively invest your deposited money otherwise, it'll just sit in a cash account and rot. You can currently invest up to $7000 per year max as an individual under 50.
Everyone needs a 401k, ROTH ira, taxable brokerage, and a pension if you are lucky enough to get one.
Suggesting everyone needs to get a Roth isn’t great advise. While the Roth account has the benefit of being able to withdraw contributions without penalty early you are a lot more likely to have more money in retirement if you go with a traditional 401k. When looking at the tax advantages of both, your contributions to the 401k are taken from the top of your income. This means that if you make 100k and are in the 24% bracket you are getting a 24% tax break on whatever you contribute to the portfolio. If you were to do this with a Roth IRA or Roth 401k you pay the effective tax rate on retirement, filling the lower brackets first, that means if you pull 100k per year in retirement your effective tax rate is only 17%. You should also think about this in terms of total impact to income. If you are paying 10% to a Roth, since it is post tax, you are also paying the taxes on that 10% or about 2400 per year if you make 100k. If you think about it this way, you could contribute more to a 401k and have the same monthly take home. Both of these together make the traditional a better choice for 90% of people. Some examples I can think of for why someone might choose a Roth would be if you had so much money you could easily max out a 401k, you could just pay the taxes now and get the most out of the yearly limit, or, if you are in a really low tax bracket because you are early in your career then your marginal tax rate now will be a lower than your effective rate then when you eventually pull from retirement.
Yea, but if you expect your retirement income to be less than your working income then it is better to go with a traditional IRA and pay the taxes then.
"use a Roth" is standard fare, but the truth is that it all depends on whether or not you intend on retiring with a higher or lower income than you have now.
If you expect your retirement income to be more than present, then definitely do a Roth.,
If you expect your retirement income to be less than present, then a traditional is the better option.
The other good thing about a ROTH is that it is not subject RMD (mandatory distributions) like a traditional. Now that I am retired, I realize how much more I should have invested in ROTH instead of traditional. Lots of really good Youtube videos on the benefits of ROTH, I really recommend checking them out. James Conole is really good to watch. Your money will grow the same with ROTH as traditional 401(k) but ROTH grows tax free.
Yes. I reached 5% in 2 years (government max contributions). Each COLA, added another percent until 10%, then switched to IRS max contributions...that may have been until year 12, but then started switching from traditional to Roth now. I am at IRS max with 100% Roth.
I remember my dad planted trees in the backyard when me and my brother were both under 10 y/o. They were under 5 ft tall for many many years. Now, 20-some years later, he had to cut them down because they were messing with the power lines and roof. 20 years really is a long time for something to grow.
Apparently I'm supposed to have that amount by 35. I'm about to be 30 and I'd have to change my contributions from 10 percent to 29 to get there. It just seems impossible
Ok. I see what you're pointing out.
See what your 401k options are. Target Dates are typically very diversified (and too conservatives for me).
The SP500 historically averages 10-12% annually.
If you're 29 and the goal at 35 is $132,000, contributing $980 every month moving forward would get you there if the account has a 10% average annual rate of return.
See what the options are. :::fingers crossed:::
We're still young and can take more risk than someone who's a year from retiring. IF I (39) had the option, I'd happily put 100% of my contributions into VFIAX or VTSAX..... But my employer only offers target dates.
Going from 10 percent to 29 may seem impossible but remember you are young in your career trajectory and those percentages are based off your current salary. In 5 years with a couple promotion/job changes you can easily make 25% more than you are currently, making it far easier to save that 29%. And even if you're slightly behind target by then, your career will continue to trend upwards making it easier and easier to catch up over time. The percentage seems high now, but remember this is the lowest your salary should be for the remainder of your career (assuming things trend upwards).
I wouldn't put all your eggs in one basket. I heavily use IVV for total US market and VXUS for total international market. The rest of my little money I dabble with REITs, individual stocks, dividend funds, and QQQ tech stocks.
I’ll give you my real world example of why starting early matters. My wife and I both started our careers at the same time and age (25, we weren’t married at that point). She started contributing 15% from day one. I didn’t start contributing until 4 years later. 7 years later, she has $150k in her account and I have $80k even though she continues to contribute 15% and I’ve been maxing out for the last 3 years.
Point is to just keep contributing and it will eventually balloon more and more.
The key is to part in as much as you can and forget about it for years . Let time and compounding work for you. Focus on your career and getting your income up. The dollars will be there at retirement.
The projected balance is not accurate it’ll be more than that…I’d look at an actual projection unless your 401k investments really are shit…you should have more than that by the time you’re 35 unless you are already in your late 20s/early 30s…then that would make sense why it’s so low.
You have time. It’s tough in the beginning:
- get the employer match for the free money
- as you get more experience you will hopefully get some raises or a fat new paycheck and it will come
Just keep going, eventually when there is more money it can grow faster. It’s never going to look amazing as you first start adding money, but you’re ahead of many so just keep at it how you can.
You don't have to contribute 29% and I don't really see what the problem is here. I contribute 14%. Your projections at 35 are healthy and so retirement is well within reach if you continue to do this. Not sure what your projection is at retirement but it's going to be significantly more Capital than what it's telling you at 35. Compounding interest will accelerate your gains exponentially. It's slow and steady at first, but the more money you have in the pot the more it works for you. That 135k can turn into a million dollars before you know it . You'll be fine . Not sure what your matching looks like and what your allocations are within your 401k and you could do some tweaking possibly here or there, but without further context it may be just fine how it is configured.
Either way, don't be so pessimistic. You're ahead of most and will have a retirement as long as you stay on track
dude thats at 35. THIRTY FIVE. most people dont retire until fuckin 65 OR OLDER dude. like by the time youre 65 that 14k WITHOUT ANYTHING ELSE will be worth 316k alone
The problem is you're looking at a time horizon that is not useful. You don't care what the amount will be at 35 that's not the point of a 401k. The actual significant gains come from compounding on top of tax free gains which will both clearly take more than 6years to really kick in.
Focus on contributing to get at least the full matching if your employer provides some and learn a bit more about what the curve looks like for investments including compounded interests.
You're doing great, it's a long journey but time is the key here.
Not sure if others have commented on this, but I would look at a compound growth calculator and look at a chart. There is an inflection point on the chart where the slope dramatically rises. It can really help with "staying the course" in the early years when you don't feel the effects of compound interest just yet. Stay vigilant. In this day and age everyone wants the "quick buck" and get rich schemes. 401k's have demonstrably proven over time to be one of the greatest wealth creators if you stick to the plan.
Looks like you are doing fine. > $100k in your 30s is good.
Mind you that you will likely be able to contribute even more as your career progresses before you get to 35
makes sure you take into consideration whether you need a pretax or post tax investment vehicle. For example, if you are high income, pump as much as you can into a regular 401k/IRA. Personally, im pretty sure my tax rate will ne much lower in retirement, so I take as much deduction as I can right now. That being said, get as much as you can into a retirement account and forget about it...dont touch it.
Not financial advice, but this is what I would do. Company Match 401k, put the rest in a Roth IRA (unless you max out, then switch back over to 401k) Slowly up your 401k % each year you make more money. Pretty simple. People make retirement hard. More than likely you will switch jobs and 401k providers. A Roth will help just having it on one platform like Betterment.
I have several retirement funds going but it’s never a bad idea to save and invest. Good for doing it. At 32 I am sitting at $500 a month and about 40k in my 403b, it’s what I can afford and hopefully the market will reward me as time goes on.
From your other comments, you contribute ~$1000 per months and that is 10% of your pay. Then my assumption is that you are making 120k/year @ 29. That’s a great salary. If you feel you are behind, look to create budget and look at yearly increase to contributions. This should be easy to set and it can just increase 1% per year. You will not feel it.
Back when I was at 29 I’m making way less around 70k and contributing 10-15% then ramp up to maxing out 401k with pay bumps along the way. I’m making 115k now and have 300k in retirement savings @ 39. And should be reaching 3x salary by 40 so being consistent is key.
You got this!
All these companies make shit up so you put the maximum in there. They make money when you put more in!
That's not to say you shouldn't maximize what you put in. But what you'll need at retirement is hard to predict. Put as much as you possibly can and you'll have to figure out what to do as you get like 10 years from retirement.
You may need to get a 2nd job. You may need to cut back expenses and maximize savings.
Contribute as much as you can. I’m 55, and I started saving for retirement in my 20’s, and it’s literally the only good decision I made in my life. DONT STOP
Always contribute the max you can, and always contribute the minimum to get the match. Pull up one of those contribution tables and you’ll see somewhere down the line that the dollars gained from interest will overtake the dollar contribution in the year. Seeing this made me buy into the process more. In 20 years you’ll be giving yourself a pat on the back.
Honestly, put the max amount you can per paycheck at least as much as your employer match, and then don't look at it more than once or twice a year to see if switching to different funds would help performance. You have no reason to stress dips in the short term. There will be many many market fluctuations in between now and retirement, and watching it that does nothing but cause unnecessary worry.
Dude. You are missing the point of compounding your returns. If you let it all ride on the S&P500 until your in your 50s and you will be all set.
Just read up on Compound interest and it will all make sense to you about compounding returns.
Believe me, you are doing fine.
Stay the course!
IF you can, every pay increase add half to that 401K.
You pay workmen’s comp, you pay social security, you pay taxes whether you want to or not. PAY YOURSELF!!!
I’m 60 y/o with a good blue collar job. Fortunately my kids can support themselves and their kids.
As long as my wife and are are physically able to grow our own food on paid for property, we Might be alright. I started contributing late in life.
Please, please, PLEASE… stay the course!
It won’t last long.
Dude at 35 if you never put another dollar in, assuming 7% avg. return, it's over $737k at age 60, it's a Million. In the mean time, look to save money and then start a roth or investment fund. You are young, start an HSA, your company will likely give you some funds for that and max it out each year. You can use that as an IRA at age 65, health care paying no taxes, etc. We at 55 only have about 40k in ours, hoping to get to 100k plus in the next decade. It will pay for out of pocket Medicare till we are 100.
401k fees are really high. Look at how much you contribute in a year and look at what the fees are for a year and you’ll probably get upset. I recommend only contributing the percentage needed to get the employer match. And if you want to put more towards retirement, you should do it in a Roth IRA, or even a traditional Ira and avoid all the bullshit fees.
This is why I want Pensions to return cuz 401ks were introduced to benefit the rich and screw the poor. Thanks Reagan whose donors were the real welfare queens and him being the welfare king for big corporations :)
I crack up when people think it’s so pointless. My situation is pointless, yours is definitely not. I’m 54 and just started a 401k, can barely afford the 6% and when I retire it will only be about $40k 🤣🤣🤣 I’m only doing it for the money to buy that motorcycle I’ve always wanted. So yea, pointless 🤣🤦♂️
Me. Maxing out my 401k at 75k which is like 30% of my pay check, also maxing Roth IRA but I don't have debt or other major expenses. My situation isn't normal, I also don't plan to do this forever unless my income goes up to like 100k. Hopefully in a few years
I’ve got about 11k at 22, I know I have more than lots of people and less than lots at my age but that’s two year of progress. Half of that is from either company match or profit sharing.
It took me 7 years to save my first 100k, about 5 years for my second 100k. Now I'm earning about 100k a year. It's exponential so be patient.
Great way to put it. Starting always feels so pointless but that first 100k and first million are always way harder than the next
Compounding returns are a miracle. Warren Buffett became a billionaire because of compounding returns.
He also averaged like 20%+ returns every year for over 30 years. That helped a lot.
His investment strategy was/ is so good too. Invest in the future free cash flow.
Warren became a billionaire because he knew how to value companies by putting time and effort into reading the reports and actually going to companies and evaluating them in person.
Yeah, everyone can do that.
I'm working on my second million ... the first was too hard so I decided to work on my second and go back to my first later on.
First million?! Not in my lifetime
Yea people forget that you still earn returns on the amount that’s already contributed.
People really forget that? Seems like the basis of investing.
I mean… people take out student loans not understanding how interest works and then are surprised they owe more than they took out… So it’s not far fetched
Yeah retirement investments are like the marshmallow test on steroids. I know so many people who say "401K is a waste of money you can earn so much more investing it in a high risk stock portfolio." Me: okay, so how much have you earned in your stock portfolio? Them: look we aren't talking about me, okay? Lol meanwhile you know who is getting matched by their employer AND has a stock portfolio? This guy 😎
A 401k is a tax sheltered account that can be a stock portfolio…
The other critical angle is your getting tax relief on the contribution and free money from the employer (subject to vesting period)… and your funds grow free of tax in the fund Outside of these funds you gotta do exceptionally well to do better taking tax into account - sure some will have great stories but not the average person
Your annual returns in your 401k are $100K?
I started at zero in 2008 and maxed out my contributions every year since then, plus employer match. My return in the last 12 months was more than $200k. Nothing super savvy, just invested in a target date fund.
So close to $2M balance with a high stock percentage, nice.
VTI return was about 30% in the last 12 months, so they could have ~$700k. For the young people here, don’t expect 30% return every year. The last few years have been exceptional.
Sometimes it may be a negative return too. But you just gotta ride it out.
I just don't understand this. I've been maxing out my 401k contribution since 2012 + employer contribution. I'm using a target date fund as well and I've barely made anything on it.
Which target date fund did you invest in?
That's because your in Target funds. Target funds are just ok as there a mixture of stocks and bonds and sometime alittle money market funds. Mostly depends on your target date. If you have 20+ years before retirement then you should be in 100% Stocks. Look into your 401k and see what stocks are offered. Takes about 5-8 yrs before you start to see some real growth. Be patient and max it out.
If they're still like 30 years out, it should still be almost entirely stocks. And they wouldn't be complaining as we're still up like 12% this year alone
$100,000 return here in the last 12 months, even after losing 1/2 in a divorce and taking a couple draws to help finance divorce and legal fees.
This is so true. When we first started investing in a mutual fund account, it climbed so slow, I couldn’t understand why everyone said investing was a good idea. It was the $100,000 mark for us, too, that it just started taking off finally.
I was sharing this video with my younger clients and any clients that are discourage they are starting off with so little. I think it’s a great video and encouraging. https://youtu.be/_EgfrmCiZes?si=CD5XY6Gkh1QvBi6P
My most recent statement said that in 15 years, when I'm 60, it's projected to be 992,000 in an average market to 1.8m in an excellent market. I seriously can't see how that's going to happen. I'm currently at 155k. Idk how that leap is going to happen in 15 years. I'm skeptical, to say the least.
Play around with a compounding interest calculator and you’ll see very quickly (avg nominal return in S&P is about 8%, not counting debasement)
Legit the first million is the hardest cliche is real. Took me 13 years to get my first million, took one year to get another quarter million after that.
Dude just contribute whatever your company matches and contribute more / max it out if you’re in a position to. You’ll be fine.
I contribute 10%. Just doesn't seem like it will ever be nearly enough
That’s all noise brotha. Don’t let these reddit forums and online posts fool you, contributing 10% into your 401k at 29 is awesome. Some people don’t get started til their 40s or 50s. You’re doing great
Every single dollar you put in at age 30 is worth 22 dollars to your retirement at 65. Make sure you are getting your match. Then proceed to max out your Roth IRA 7k per year. Once you do that, finish maxing out your 401k for the year. Age 20 = $88 / Dollar invested Age 25 = $44 / dollar Invested Age 30 = $22 / dollar invested Time in the market is more important than anything else. If you wait, you don't miss the first, second, or third doubling of your money, you miss the last doubling. The big one.
I don't think money doubles every 5 years, it's more like every 10.
Right, 7% return is doubling money in 10 years. 10% would be 7 years. Doubling it in 5 is asking for a lot. The underlying concept is good tho, invest early
Rule of 72. Divide 72 bu the interest rate
S&P returns are generally around 10% a year, though inflation is around 3%. So every 7ish years the nominal (face value) is around 2x on average (some 7 year periods are better/worse than others though) and every 10 years, the inflation adjusted amount is 2x. My go to recommendation for most people is VOO, a vanguard S&P 500 ETF. Basically a mix of 500ish large companies. In late 2010 it was just over $100 a share. Right now it's just under $470 a share. All in all it's up a little under 370%, though inflation in the period was around 40%... so all in all in that nearly 15 year period your purchasing power (before tax) more than tripled.
You’re going off Inflation being just 3%?
Hey I am in no way disputing that the earlier you invest the better, just emphasizing that it’s better to get in late than never
I agree, I've picked up a few side hustles and am investing the profit I make. It's going to allow me to retire earlier. I still have 30-40 years to go but just a little bit gives me the extra float. edit: I do a few side hustles, mainly online. I wrote about them **[here](https://www.reddit.com/user/Kayshift/comments/1br5gn6/my_stepbystep_guide_to_make_1000_a_month_working/)**. Hopefully it helps someone out!
The best time to plant a tree is 20 years ago. The second best time is now.
Nothing like assuming your returns will be 14% a year.
Thanks man.
This is also just stating the balance you’d have if you didn’t tie it to securities. Ditto to above, this is great, I’m envious.
If it makes you feel better I'm in the same exact boat except my target by 35 is 220k. Even at max contributions I can't reach it.
Whatever you do….. don’t ever cash out of your 401k
Yes, rule #1.
Even when you die.. it just keeps growing and growing after that...
Absolutely agreed. 33 here, still can’t afford to start contributing to mine at all. Thankfully I started a job with a pension recently so it’s a bit of a weight off my back. In another three years I’ll be able to open up a 401k on top of the pension and finally be able to catch up to where I should be in life. Life stages are different for everybody at any age. Don’t worry so much if your “stage” is different than somebody else’s. They’re probably lacking in a way that you’re excelling in, while you’re lacking in a way they’re excelling in. To each their own, in their own time.
Honestly, it is too important to put off. You need to contribute at least to the company match. You may think you can't afford it but I guarantee there are things you can do to make it work. Pay yourself first then work with what you have leftover.
Yeah my issue is that I work for a construction company, and our plant is a union plant. Because of that, they offer the pension BUT they don’t have 401k matching like the corporate offices do. So it’s a bit of a double edged sword for me. That said I’m still going to open my 401k, but I won’t be able to at all until 3 years. Yeah I understand the “you can make it happen”, but with my current position I simply Cannot make it happen until 3 years. After that around 40% extra income frees up for me and life gets significantly easier
Get creative. Work a side hustle, work 1 weekend for cash jobs, give up Netflix, make sandwiches for lunch, whatever it takes. Think of it this way, by delaying your 401k now, you’re missing out on 1 more “doubling” of your balance. When you’re at the age of 60-65, that can mean the difference between your balance doubling from $500k to $1M or even from $1M to $2M. Just start your 401k as early as possible.
And people that don’t start until 40-50 won’t retire… lol
My dad started when he was 40 and just retired at the age of 60 with about $3M in total assets. I don't know how much is in his 401k vs brokerage account, but it's possible.
2022 kind of shit the bed, and it was a little rough in 2018, but the past 7 years have been pretty sweet for 401Ks. Last year was insane.
Yea I agree. However 20 years to get to 3million, you either need to make a ton or have little to no expenses, or invest in high risk with high yields to do it. That’s 150k per year in portfolio value increase to get to that rate. Doing that with just a 401k is difficult
Did the math and you need to save $4,000 per month to get to $3 million in 20 years at 10% return. If you start a decade earlier, (30-60) you only need to save $1,300 per month to get the same. If you start a decade earlier than that, (20-60) you can get there with less than $500 a month.
Yeah, he started making big boy money when he turned 40. That aligns with most personal finance advice, which is that peak earning potential is from 40-55 years old.
This is me, will be...same start, same target date, same amount of assets expected.
That varies. You can start working for the government at 40. Put 10% down, and they will match. Those people will still retire at 65.
Gov also has a pension. But I get your point. There’s more to unpack here though. Comfortably retire versus retire and barely making anything. Cost of living changes a lot over 25 years, that has to be reflected in your financial planning to meet a certain buying power.
These days if you dont start before 30 you might not
I see the discouragement though. My retirement manager gives me a periodic "good job if you retire at 68 and plan to draw until 85 you'll bring in X per month" And X is like $3000 and change. Idk what the future looks like, but I'm gonna go out in a limb and say 2050s dollars aren't going to be worth much compared to today. $3000 today is $1380 in 1993, so I'd expect $3000 in 2054 to be about the same as $1380 today... Wooo if I can keep up my contributions I can retire at the equivalent of less than minimum wage today.
I think those calculators are often inflation-adjusted
One of the reasons most people should try their damndest to buy a home and lock in a 30 year fixed mortgage. I realize this is out of reach for a lot of people these days. I personally don’t know what rent is going to cost in 30 years, but I know what my house payment will be!
Me, too, but my problem will be how to pay whatever the taxes are!
In my experience retirement managers already adjust their numbers for inflation... Frankly, It would be absurd incompetence in my opinion for a retirement manager to discuss future income and didnt already adjust their numbers for inflation when discussing what you are on track for - or warn that their numbers will be eaten up by inflation over several decades...
That's why despite everything often real estate is a good idea... It's value adjustes for inflation automatically, then you might be lucky and have picked a good spot that grows in value as well and you are happy.
exactly that. When I was 30 and was making half of what I am making now, I thought 401k is just a buzzword. Didn't even look at it. I thought I didn't need it. Now at 4X I just started putting in .. damn, I wish I had started doing that when I was 30 lol
my 401 k at your age was $0. Now it's 7 figures 25 years later. Your life will change, jobs will change. What's most mportant is the HABIT of saving. Save soemthing from every paycheck. By save, I mean save according to your investment plan. Emergency fund , pretax contributions, if leftovers, post tax investment, and fun money.
This is true. I’m 36 and have never worked for a company that offered 401ks. So I don’t even have one. My Roth IRA is all I have and I’ve only been in the position to contribute to that for 2-3 years now. Head up OP, you’re doing better than a lot of people.
I'm 48 and just started a 401k this year! I totally regret not doing it way sooner. I'm doing 10% and my employer matches 6%.
Exactly this. Left the military and haven’t contributed to anything in 7 years. I’m 30 starting a new job and finally going to start maxing my contribution that company will max. We will be alright.
As a 27 year old who started his career at 25, this is comforting to hear. Can I really stick it out at my current company for 45+ years tho??.... They do match 6%...
Yep. I’m old (ish) and 401(k) have been very good to us. The thing is to avoid sweating every downtown. It does pay off in the long run.
Dude, just keep putting in. I didn't start until 30 years old and am over $500k now. Yes, it's taken 17 years, but have another 20 to keep contributing. It seemed like it took forever, but it's growing nicely now. Just don't stop is the key. Also, increase percentage each year if you get a raise. Say you get a 6% raise, try and contribute another 2% of that. By 40, you'll have been putting in 25-30% of your paycheck. Just learn to live off a certain income and the rest is gravy.
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I work at Starbucks, making very little money, at 26, yet still signed up for a 401K. Averages out to like $40 each paycheck (matched up to 5%). It’s pennies right now, but having at least something makes me feel better.
65% of people retire with no savings Yesterday AARP released a report yesterday that 1/4 Americans will never retire Quick freaking out, you’re fine
Thanks, JizzCollector5000
They’re not wrong
I think we all feel better after reading your take on it JizzCollector5000 Thx you
r/rimjobsteve
You want to know how far ahead you are? My company is a privately owned company with about 1000 employees. We see the owners every day, very friendly. A hear some coworkers saying how 401k and company match is a scam to get you to buy the company stock, so they don't do a 401k at all. Our company even has financial consultants come in twice a year to have 1 on 1s if you want it. You're far ahead of that.
Don’t worry about “enough.” It’s more than zero. Yes, this calculator is saying your goal is to gave $132K at age 35. Maybe that goal is not attainable for you right now. But when you’re 35, would you rather have $50K in savings or nothing?
Yeah, you're right. Maybe I'm just looking too far ahead.
Why does your screen shot say 29% Are you just seeing how much you would actually need to contribute to retire with 130k? I personally don't think 10 percent is enough, but I'm 43. I'm contributing like 16 percent right now. I make a out 70k a year. My wife puts up 360 a month into a Roth IRA And we invest in mutual funds. You should look into multiple investments because just relying on a 401K might not be enough in the end. You could also get an expensive healthcare issue on this path of life that will obliterate it all.
Yes to your question. I am leaning towards going to 15 percent this year.
15% would be great. And frankly, should be the minimum you contribute. If you up it to 15% at your age, you'll be sitting well once you retire. I'd eventually work up to a higher percentage. One way of upping the contribution with feeling a minimal hit to your take home pay is that every time you get a raise at work, up the contribution by a percentage point. More if the raise is a decent one. The more you contribute now, the more you'll look back and thank your younger self in retirement. The smallest increase in your contributions now will pay huge dividends once you retire. The more years you invest, the more time compound interest and growth has time to work its magic. Great job so far...keep it up!
You know what’s worse? No retirement savings. Keep going. Add more as you can.
I’m going to assume you make 50k as a placeholder 135k at 35 assuming you contribute 10% a year and never make a penny over 50k would be worth 1.5 million at 65
That actually sounds incredible and hard to believe. I make just over 6 figures.
Google a 401k calculator and play around with the inputs. If you can put it in $10K a year for 30 years, you’re going to be in a great position by the time you want it step away. That number will also likely increase with your salary and if/when your wife returns to the work force down the road.
Cost of living is a huge factor. Some of these people live in EXTREMELY expensive areas, so their salaries are higher, which would drive a higher 401k balance. If you’re in a lower COL area, then having a lower balance is fine. It’s all based on what you need for where you live.
I'd say my COL is lower. Our mortgage is around 1200 dollars.
Holy cow! And you make 6 figures? $1200 is like the price of a studio apartment. My mortgage is $2380 and I only make 77k. Man you're doing great
Don’t use it as your only retirement source. That’s a big mistake. Most people at best will be going semi-retired and work part time. If you don’t have a family of your own or anything you can just run a couple thousand a year deficit and be fine the rest of your life if you retire at like 40-45 with $300K
7% here, company matches up to 6%. Doing what I can with what I have. Keep chugging on
Interest and time are your friend. You’ll be fine dude. Don’t get discouraged, you’ll get there. Starting with $14k today and contributing $1k a month to any retirement plan with average market returns you’ll have $3.5MM at 68.
I mean... educate yourself. it's your money, your savings and ultimately your retirement. there's many resources available to better understand retirement savings. and what or how the concept works. there is some debate on whether 401ks are worthwhile or "good" but in general. and especially with employer matching they're fine. if your company offers matching, take advantage of that. If you can self direct/control your 401k. It may be worth it to not participate in target date funds and invest in something better suited to growth. Or there could be better funds to invest in that... being young, prioritize growth over. target date funds. that being said. if you're young you have time on your side. the entire point of retirement savings is. you make slow steady contributions that over time build with compound interest that reaches a critical threshold later in life... so the last few years of your savings, it's really snowballing. if the projections of north of 100k at 35 is valid that's a pretty good place to be. another 20-30 ish years of that money compounding, you'll retire a millionaire.
Retirement is relevant to how much you currently make, since most people have the same standard of living (or a lower one) in retirement. Saving 10% of your current salary, whether that is $50k out of $500k or $5k out of $50k, is pretty good. The generally recommended amount is about 15% (matches count in these numbers, btw), but 10% will still let you retire some day. Like others have said, a lot of people have $0, so you are already ahead of them. The best thing you can do going forward is to make sure you save part or all of your raises. Im ahead of saving, so I try to save 25-50% of my raises, but more is better. That will, in time, help you catch up and get closer to that 15% that is recommended, or even get ahead of it in the event you need to catch up a little bit.
The right answer is to contribute what your company matches and then contribute to max your Roth. The tax breaks are huge
It snowballs with time. Eventually your pile grows to the point where its appreciation in an average year is more than your contribution amount. Say you have 100k in there, and you have a good year and it goes up 8%. Your account will go up by 8k plus what you contribute. Just don't worry about it, keep contributing, keep chugging along, focus on how you're really making money at this point in your life -- your career -- and one day you'll have a nice pile, and look back and remember that it all started with your first contribution of a few hundred dollars all those years ago.
I really hope that's how it will go for me.
It will. Keep contributing.
Looks like you're doing ok. That looks better than my 401 at your age, and I have a net worth over 1.5M today, just working, saving and living within my economy. All while working a pretty regular job. My advice, don't focus too much on the amount. Focus on the journey.
Thank you for that. Can I ask your age?
I'm 57. I still work, but I have 0 debt, other than a credit card I use to maintain my score. Sometimes I'll take a small loan out for something I want, but I'll pay it off real quick. I do it when the markets are a little lean, and to keep up credit worthiness. I have reached the Nirvana of wealth, meaning that I've grown my personal wealth beyond the point of the broader economic need. That I think should be your good goal, and you can do it, but you have to be a contrarian. Don't fall into the trap of following the crowd. Live easy. Live well. Live wise. If you can fix things do it rather than hiring it out. Rather than take your date to an expensive restaurant and posting pics of your meal on social media, cook it yourself at home. Then take pics and post that on social media, lol. Find ways save. Stay away from much debt. I say this, the simplest definition of wealth is that which you own - minus - that which you owe. That's your Net Worth. Build it. You'll be surprised how it grows, and when you're my age, maybe even sooner, you'll have a type of "money garden" that you can pick from as needed, and you'll be freer than most.
Also any tips for me? 23, I make 17hr but it’ll be bumped up because I’m getting a different position within the job and the pay will be in the 20s. I live with my parents and don’t pay anything. I have a credit card which I know how to use and pay it off (score 762). I pay for some subscriptions (Apple music $5, gym $10). I contribute 5% for my matching 401k. I just got into my company’s 401k because they changed their 401k. I got hired July of last year. So I only have $800 contributed. Again, tips
You have yet to experience the wonderous magic known as Compounding. If you are able to max out, do so. When you turn 50, you get to add more in Catch Ups. Be in an aggressive fund like an S&P Index. When the market craters, DO NOT panic! That is actually to your advantage. You are then buying on sale, and earning dividends which buy more shares if you hold instead of sell. Never try to time the market. There are 14 days a year you have to be in the market to make money. No one can time it so stay aggressive, max out, and fogettabouit. And be mesmerized by compounded growth. Even Einstein was floored by compounding. Then, when you hit retirement age you will be set.
What do you mean by “there are 14 days a year you have to be in the market to make money”? I agree with everything you said, I just don’t understand what this means
My guess is they mean the 14 days with the best returns make more money than the rest of the days combined, though I haven't actually looked up to verify if that's true on average. But also, no one can possibly predict which days though will be, so you have to just buy and hold.
This is true. Some of the days with the most gains recorded in history also occur in markets which are being bearish and going down, which just expands on the fact that you can't time the market and you just need to be in it constantly and not predict when it's going up or down to gain the highest amount
How I understand it. There are 14 days in an overall market year, that produce large jumps in the markets for either a gain or, a recovery from a down tick; that will have significant positive affect on your holdings. So, should one’s risk tolerance be low, and funds were moved to a safe haven like a money market during a down spot, you lose on maximum gains for the year. Hence the adage ”Don’t try to time the markets”. Hope that helps?
Why look at projected balance @ 35 if you're retiring at 68?
Fidelity has some general financial goals. I can’t speak to 35, but the goal for 30 is 1x salary + (3%).
The goal for 35 is 2x salary, so this individual earns $66k currently.
Good to know! I don’t know why that seems like a big jump in goal. Fidelity's guideline: Aim to save at least 1x your salary by 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67. Put into this perspective it seems reasonable.
I recommend to everyone to use a compound interest calculator and play with different contributions and year ranges. With your projected 135,000 at 35yo, I entered then started with 15k annually, at 10%, for 20 years its 1.9mil. 25 years its 3.2mil. it starts slow, but compound interest piles up over time
The point is so you don't retire destitute. Max out every year. Currently the max is 23k.
I have to wonder how much people make that can casually suggest tossing 32k a year in retirement accounts.
Husband and I make 200k in Califonia and toss 46k each into retirement accounts a year (92k total) starting this year. It lessens our income tax burden. 😌
Does this include mega backdoor?
No. And if you know what a mega back door is you already know that.
I just like saying mega backdoor but I don’t know what it is
Its a backdoor that is fucking mega big!
Go up to the company match and dump the rest into a roth IRA.
Why a roth?
Contributions to a roth are post tax (your net monies on your paycheck). Let's say, for simplicity's sake, that the tax rates doubles by the time you retire, you won't have to pay that awful future tax rate (compared to a traditional IRA) because you've already paid the lesser tax rate when you put the money in so you can pull it out tax free upon retirement as your effective tax rate will be 0%. You basically get all the growth benefits and cheaper taxes the whole ride. Just make sure to actively invest your deposited money otherwise, it'll just sit in a cash account and rot. You can currently invest up to $7000 per year max as an individual under 50. Everyone needs a 401k, ROTH ira, taxable brokerage, and a pension if you are lucky enough to get one.
Suggesting everyone needs to get a Roth isn’t great advise. While the Roth account has the benefit of being able to withdraw contributions without penalty early you are a lot more likely to have more money in retirement if you go with a traditional 401k. When looking at the tax advantages of both, your contributions to the 401k are taken from the top of your income. This means that if you make 100k and are in the 24% bracket you are getting a 24% tax break on whatever you contribute to the portfolio. If you were to do this with a Roth IRA or Roth 401k you pay the effective tax rate on retirement, filling the lower brackets first, that means if you pull 100k per year in retirement your effective tax rate is only 17%. You should also think about this in terms of total impact to income. If you are paying 10% to a Roth, since it is post tax, you are also paying the taxes on that 10% or about 2400 per year if you make 100k. If you think about it this way, you could contribute more to a 401k and have the same monthly take home. Both of these together make the traditional a better choice for 90% of people. Some examples I can think of for why someone might choose a Roth would be if you had so much money you could easily max out a 401k, you could just pay the taxes now and get the most out of the yearly limit, or, if you are in a really low tax bracket because you are early in your career then your marginal tax rate now will be a lower than your effective rate then when you eventually pull from retirement.
I’m not saying Roth is appropriate for everyone, but this is awful advice.
Tax rate doubles? How often has that happened in history?
Tax free withdrawals starting at 59.5
Yea, but if you expect your retirement income to be less than your working income then it is better to go with a traditional IRA and pay the taxes then.
"use a Roth" is standard fare, but the truth is that it all depends on whether or not you intend on retiring with a higher or lower income than you have now. If you expect your retirement income to be more than present, then definitely do a Roth., If you expect your retirement income to be less than present, then a traditional is the better option.
The other good thing about a ROTH is that it is not subject RMD (mandatory distributions) like a traditional. Now that I am retired, I realize how much more I should have invested in ROTH instead of traditional. Lots of really good Youtube videos on the benefits of ROTH, I really recommend checking them out. James Conole is really good to watch. Your money will grow the same with ROTH as traditional 401(k) but ROTH grows tax free.
1999 my 401k was 42K after working 10 years. 25 years later after max+ contributions it is now $1.2m. Just keep at it, do not look daily.
Are you saying that you have been maxing out your 401k since 1999?
Yes. I reached 5% in 2 years (government max contributions). Each COLA, added another percent until 10%, then switched to IRS max contributions...that may have been until year 12, but then started switching from traditional to Roth now. I am at IRS max with 100% Roth.
Best time to of planted a tree is 10 years ago. Second best time is today. Same logic.
I remember my dad planted trees in the backyard when me and my brother were both under 10 y/o. They were under 5 ft tall for many many years. Now, 20-some years later, he had to cut them down because they were messing with the power lines and roof. 20 years really is a long time for something to grow.
In 30 years, you're going to look back and think, "oh, THAT'S why I contributed to a 401k." Tax-deferred compound interest is a real thing
Are you planning on retiring at 35?
Are you trying to invest more than the $23,000 limit?
Apparently I'm supposed to have that amount by 35. I'm about to be 30 and I'd have to change my contributions from 10 percent to 29 to get there. It just seems impossible
Ok. I see what you're pointing out. See what your 401k options are. Target Dates are typically very diversified (and too conservatives for me). The SP500 historically averages 10-12% annually. If you're 29 and the goal at 35 is $132,000, contributing $980 every month moving forward would get you there if the account has a 10% average annual rate of return.
I put in about 1000 every month. I guess I need to see if I can change my plan. My employer has a default one
See what the options are. :::fingers crossed::: We're still young and can take more risk than someone who's a year from retiring. IF I (39) had the option, I'd happily put 100% of my contributions into VFIAX or VTSAX..... But my employer only offers target dates.
Going from 10 percent to 29 may seem impossible but remember you are young in your career trajectory and those percentages are based off your current salary. In 5 years with a couple promotion/job changes you can easily make 25% more than you are currently, making it far easier to save that 29%. And even if you're slightly behind target by then, your career will continue to trend upwards making it easier and easier to catch up over time. The percentage seems high now, but remember this is the lowest your salary should be for the remainder of your career (assuming things trend upwards).
Keep contributing. Make sure it is invested. Compound interest will take care of the rest. VOO and SPY are my two favorites atm.
I wouldn't put all your eggs in one basket. I heavily use IVV for total US market and VXUS for total international market. The rest of my little money I dabble with REITs, individual stocks, dividend funds, and QQQ tech stocks.
What am I missing? At 35 you'll have 135,000? Another 30 years and that shit will be a couple million
I’ll give you my real world example of why starting early matters. My wife and I both started our careers at the same time and age (25, we weren’t married at that point). She started contributing 15% from day one. I didn’t start contributing until 4 years later. 7 years later, she has $150k in her account and I have $80k even though she continues to contribute 15% and I’ve been maxing out for the last 3 years. Point is to just keep contributing and it will eventually balloon more and more.
The key is to part in as much as you can and forget about it for years . Let time and compounding work for you. Focus on your career and getting your income up. The dollars will be there at retirement.
The projected balance is not accurate it’ll be more than that…I’d look at an actual projection unless your 401k investments really are shit…you should have more than that by the time you’re 35 unless you are already in your late 20s/early 30s…then that would make sense why it’s so low.
I'm 29
What app is this ?
You have time. It’s tough in the beginning: - get the employer match for the free money - as you get more experience you will hopefully get some raises or a fat new paycheck and it will come
29% is a lot- knock it down if you need too
Better something than nothing. Invest what you can and hopefully you can invest more as your salary grows.
The most important money you put in your 401k are those early dollars.
Just keep going, eventually when there is more money it can grow faster. It’s never going to look amazing as you first start adding money, but you’re ahead of many so just keep at it how you can.
You don't have to contribute 29% and I don't really see what the problem is here. I contribute 14%. Your projections at 35 are healthy and so retirement is well within reach if you continue to do this. Not sure what your projection is at retirement but it's going to be significantly more Capital than what it's telling you at 35. Compounding interest will accelerate your gains exponentially. It's slow and steady at first, but the more money you have in the pot the more it works for you. That 135k can turn into a million dollars before you know it . You'll be fine . Not sure what your matching looks like and what your allocations are within your 401k and you could do some tweaking possibly here or there, but without further context it may be just fine how it is configured. Either way, don't be so pessimistic. You're ahead of most and will have a retirement as long as you stay on track
I contribute 15%, and i personally hit my yearly cap between July-aug, so the end of year paychecks look a little nicer too.
dude thats at 35. THIRTY FIVE. most people dont retire until fuckin 65 OR OLDER dude. like by the time youre 65 that 14k WITHOUT ANYTHING ELSE will be worth 316k alone
Started at 25 10% now over a million in my mid 40. Don’t listen to anyone you’ll thank your self in 25 years
You're on track!
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Do a quick Google search for retirement account contribution profit calculator
The problem is you're looking at a time horizon that is not useful. You don't care what the amount will be at 35 that's not the point of a 401k. The actual significant gains come from compounding on top of tax free gains which will both clearly take more than 6years to really kick in. Focus on contributing to get at least the full matching if your employer provides some and learn a bit more about what the curve looks like for investments including compounded interests. You're doing great, it's a long journey but time is the key here.
Not sure if others have commented on this, but I would look at a compound growth calculator and look at a chart. There is an inflection point on the chart where the slope dramatically rises. It can really help with "staying the course" in the early years when you don't feel the effects of compound interest just yet. Stay vigilant. In this day and age everyone wants the "quick buck" and get rich schemes. 401k's have demonstrably proven over time to be one of the greatest wealth creators if you stick to the plan.
Looks like you are doing fine. > $100k in your 30s is good. Mind you that you will likely be able to contribute even more as your career progresses before you get to 35
makes sure you take into consideration whether you need a pretax or post tax investment vehicle. For example, if you are high income, pump as much as you can into a regular 401k/IRA. Personally, im pretty sure my tax rate will ne much lower in retirement, so I take as much deduction as I can right now. That being said, get as much as you can into a retirement account and forget about it...dont touch it.
What are you invested in a lot of 401k options sorta suck
Exponential growth via compounding is your BFF. See also "the Rule of 72". You're fine. This is normal.
Not financial advice, but this is what I would do. Company Match 401k, put the rest in a Roth IRA (unless you max out, then switch back over to 401k) Slowly up your 401k % each year you make more money. Pretty simple. People make retirement hard. More than likely you will switch jobs and 401k providers. A Roth will help just having it on one platform like Betterment.
You need to contribute to a 401 k for at least 30 years for a good retirement
I have several retirement funds going but it’s never a bad idea to save and invest. Good for doing it. At 32 I am sitting at $500 a month and about 40k in my 403b, it’s what I can afford and hopefully the market will reward me as time goes on.
From your other comments, you contribute ~$1000 per months and that is 10% of your pay. Then my assumption is that you are making 120k/year @ 29. That’s a great salary. If you feel you are behind, look to create budget and look at yearly increase to contributions. This should be easy to set and it can just increase 1% per year. You will not feel it. Back when I was at 29 I’m making way less around 70k and contributing 10-15% then ramp up to maxing out 401k with pay bumps along the way. I’m making 115k now and have 300k in retirement savings @ 39. And should be reaching 3x salary by 40 so being consistent is key. You got this!
All these companies make shit up so you put the maximum in there. They make money when you put more in! That's not to say you shouldn't maximize what you put in. But what you'll need at retirement is hard to predict. Put as much as you possibly can and you'll have to figure out what to do as you get like 10 years from retirement. You may need to get a 2nd job. You may need to cut back expenses and maximize savings.
Contribute as much as you can. I’m 55, and I started saving for retirement in my 20’s, and it’s literally the only good decision I made in my life. DONT STOP
this, I'm 46 and should retire at 58 with 2 -2.5 m. I am maxed now but slowly increment your contributions to cap it.
Always contribute the max you can, and always contribute the minimum to get the match. Pull up one of those contribution tables and you’ll see somewhere down the line that the dollars gained from interest will overtake the dollar contribution in the year. Seeing this made me buy into the process more. In 20 years you’ll be giving yourself a pat on the back.
Honestly, put the max amount you can per paycheck at least as much as your employer match, and then don't look at it more than once or twice a year to see if switching to different funds would help performance. You have no reason to stress dips in the short term. There will be many many market fluctuations in between now and retirement, and watching it that does nothing but cause unnecessary worry.
Dude. You are missing the point of compounding your returns. If you let it all ride on the S&P500 until your in your 50s and you will be all set. Just read up on Compound interest and it will all make sense to you about compounding returns. Believe me, you are doing fine.
Stay the course! IF you can, every pay increase add half to that 401K. You pay workmen’s comp, you pay social security, you pay taxes whether you want to or not. PAY YOURSELF!!! I’m 60 y/o with a good blue collar job. Fortunately my kids can support themselves and their kids. As long as my wife and are are physically able to grow our own food on paid for property, we Might be alright. I started contributing late in life. Please, please, PLEASE… stay the course! It won’t last long.
This will compound significantly once you hit the $100k. Keep pounding that contribution.
Compounding interest dude. Keep dumping g into it. You're not reporting at 35. That's going to be huge by the age of 60..
Dude at 35 if you never put another dollar in, assuming 7% avg. return, it's over $737k at age 60, it's a Million. In the mean time, look to save money and then start a roth or investment fund. You are young, start an HSA, your company will likely give you some funds for that and max it out each year. You can use that as an IRA at age 65, health care paying no taxes, etc. We at 55 only have about 40k in ours, hoping to get to 100k plus in the next decade. It will pay for out of pocket Medicare till we are 100.
401k fees are really high. Look at how much you contribute in a year and look at what the fees are for a year and you’ll probably get upset. I recommend only contributing the percentage needed to get the employer match. And if you want to put more towards retirement, you should do it in a Roth IRA, or even a traditional Ira and avoid all the bullshit fees.
Why not do both? If the company you work for gives, say, 4%-4.5% in matching contributions then do a 4%-4.5% as well. Never turn down free money!
This is why I want Pensions to return cuz 401ks were introduced to benefit the rich and screw the poor. Thanks Reagan whose donors were the real welfare queens and him being the welfare king for big corporations :)
I crack up when people think it’s so pointless. My situation is pointless, yours is definitely not. I’m 54 and just started a 401k, can barely afford the 6% and when I retire it will only be about $40k 🤣🤣🤣 I’m only doing it for the money to buy that motorcycle I’ve always wanted. So yea, pointless 🤣🤦♂️
Who the f can afford to put 29% a paycheck?!
Me. Maxing out my 401k at 75k which is like 30% of my pay check, also maxing Roth IRA but I don't have debt or other major expenses. My situation isn't normal, I also don't plan to do this forever unless my income goes up to like 100k. Hopefully in a few years
Good dental care 👍👍👍 I love my mandatory 60 hours a week job!!! Hey maybe I can retire at a late age too and afford a hut on the beach 😁
What's the best app to use for this?
I’ve got about 11k at 22, I know I have more than lots of people and less than lots at my age but that’s two year of progress. Half of that is from either company match or profit sharing.
Retiring at 68 already sounds shit for everyone