OT - How much should your 401k be

[Weave]

Could you guys even imagine the disaster that would be a privatized Social Security system?

If we could keep the vultures out of it, it could work. But our politicians are more than happy to let them in for a price.

 

I fear the same thing will happen when we go to a single payer health care system. As it is we are stuck with $600 epipens until someone uncovered it. And you know damned well the $400 version is a wink-nod until the heat goes elsewhere.

[Kevbeau]

  Biggest thing to wealth accumulation is to start TODAY with as much, or as little, as you can afford.  It does take time, but it works.

 

 

This, this, this. Fortunately my dad was in HR and the company he worked for was one of the pioneers of implementing the 401K, so I've been contributing since my early 20's. Couple decades later....all I can do is preach the power of compounding interest (although to the point a few posters made...why they don't cover this in HS is criminal. The same math works in reverse and can wreck people's lives.) Additionally with the tax ramifications, it's borderline asinine not to contribute. 

 

I do know new hires in my company have to opt out as they are automatically enrolled at 7% to receive the match when they start. 

[Claude_Verret]

Another piece of advice from investing author William Bernstein.  It really can be as simple as he states here

 

 

“Would you believe me if I told you that there’s an investment strategy that a seven-year-old could understand, will take you fifteen minutes of work per year, outperform 90 percent of finance professionals in the long run, and make you a millionaire over time?   Well, it is true, and here it is: Start by saving 15 percent of your salary at age 25 into a 401(k) plan, an IRA, or a taxable account (or all three). Put equal amounts of that 15 percent into just three different mutual funds:   A U.S. total stock market index fund An international total stock market index fund A U.S. total bond market index fund.   Over time, the three funds will grow at different rates, so once per year you’ll adjust their amounts so that they’re again equal. (That’s the fifteen minutes per year, assuming you’ve enrolled in an automatic savings plan.)   That’s it; if you can follow this simple recipe throughout your working career, you will almost certainly beat out most professional investors. More importantly, you’ll likely accumulate enough savings to retire comfortably.” 
― William J. Bernstein, If You Can: How Millennials Can Get Rich Slowly

 

 

[Radar]

My wife and I live in Western New York and both retired and retirement income is little over 50,000/annual. I would say we are comfortable and able to take vacation each summer for couple weeks. We eat out on average once a week. Have to add still paying a mortgage for about five more years. Biggest threat to our security is definitely health. We do have investments that we now have to take out the required minimum withdrawal on. I think a lot of retirement planning is answering what kind of life style one expects or desires in retirement.

[Hank]

Anyone else a Dave Ramsey fan? He has a couple good books out there regarding saving/investing.

[Claude_Verret]

Anyone else a Dave Ramsey fan? He has a couple good books out there regarding saving/investing.

 

 

I think in general he gives good advice that people should follow for personal finance, but for investing I've found that he often recommends high fee/load actively managed funds that are bad news.  Index funds are your best bet.

[Tondas]

Another piece of advice from investing author William Bernstein.  It really can be as simple as he states here

 

Great quote and it is that simple.  Actually, I made mine simpler.  Just 2 index funds from Vanguard: Total US stock and Intermediate Term Bond.  10 years ago, I was in an international stock fund but it seemed to react to the US stock market too closely, thereby limiting diversification.  I decided to bet my future on the good ol' US and got out of the international fund.  Made a good decision as the US market beat the international market by 6 percentage points in the last 10 years.  God Bless the US!

 

Many 401(k)s offer Lifecycle funds that automatically changes the allocation of Stocks to Bonds as you get closer to retirement.  Invest as much as you can afford each pay period, and as Ron Popiel says, "Set it and forget it."

 

Sorry for the lecture, but I was fortunate enough to have someone show me how to become financially independent when I retire.  I'm trying to pay it forward for those who may not have had that  person.

[Taro T]

Anyone else a Dave Ramsey fan? He has a couple good books out there regarding saving/investing.

Yep.

 

Don't agree 100% w/ his recommendations, for example his saying people should get rid of all credit cards. If they can't or won't pay off the balances then he's right. But if you have a card w/ some form of reward & pay it off every month, you get free money. Pay everything you can on your card & make sure you pay it on time.

[Claude_Verret]

Great quote and it is that simple. Actually, I made mine simpler. Just 2 index funds from Vanguard: Total US stock and Intermediate Term Bond. 10 years ago, I was in an international stock fund but it seemed to react to the US stock market too closely, thereby limiting diversification. I decided to bet my future on the good ol' US and got out of the international fund. Made a good decision as the US market beat the international market by 6 percentage points in the last 10 years. God Bless the US!

 

Many 401(k)s offer Lifecycle funds that automatically changes the allocation of Stocks to Bonds as you get closer to retirement. Invest as much as you can afford each pay period, and as Ron Popiel says, "Set it and forget it."

 

Sorry for the lecture, but I was fortunate enough to have someone show me how to become financially independent when I retire. I'm trying to pay it forward for those who may not have had that person.

Bogleheads unite!

 

I'm in vanguard Total US, total international and intermediate bond. Rebalance yearly. I've rode it through the highs and lows of the past decade plus...staying the course.

[BagBoy]

Yep.

 

Don't agree 100% w/ his recommendations, for example his saying people should get rid of all credit cards. If they can't or won't pay off the balances then he's right. But if you have a card w/ some form of reward & pay it off every month, you get free money. Pay everything you can on your card & make sure you pay it on time.

 

Oh heck, yeah.  I have 3 different credit cards and they all pay me back.  If you can pay your credit card bills off in full each month, they are actually giving you money you wouldn't get otherwise.

Edited October 8, 2016 by BagBoy

[Claude_Verret]

Nearly half of adults 18-30 have $0 in retirement or pension savings.

[TrueBlueGED]

Nearly half of adults 18-30 have $0 in retirement or pension savings.

Well, I may not be where I want to be, but I'm glad I'm not in that unfortunate statistic.

[Hoss]

Well, I may not be where I want to be, but I'm glad I'm not in that unfortunate statistic.

I am. Technically. I have a savings account at my bank that I've put money into but haven't touched. I'm going to sit down with somebody in the new year and allocate that money to something that'll actually do things.

[ubkev]

I am. Technically. I have a savings account at my bank that I've put money into but haven't touched. I'm going to sit down with somebody in the new year and allocate that money to something that'll actually do things.

Why don't you do this tomorrow? Feel free to tell me to mind my business.

[Captain Caveman]

The general rule is that in order to make sure you don't run out of $ you want to spend about 4% of what you have in savings each year (with the idea that most year if that money is invested on average you should come out at or above 4% in earnings.)  Following this, whatever you start with will probably be left over when you die, depending on your investments.

[Captain Caveman]

I know the driving force behind the rise and fall of pensions in this country has been well discussed but the point you're making has been exactly what I've been thinking. As a guy who's always had a pension, I paid particularly close attention to the "why" involved each time I saw a company pension program die. Every time the argument that 401k will do everything a pension did for you was used. Scam? Absolutely. The fact that Ink was compelled to inquire about a comfortable amount to have saved should be the flashing light for the truth about 401k savings. In the days of pensions no one would have worried about retirement because the pension payed you for life. I teach a course to apprentices about home budgeting/money management and I use the three legged model from the 60s/70s. Retirement=pension+SS+savings(annuitys/401k/investments). Replacing pensions with 401k saved huge amounts of money for the corporations even when the philosophy started with 100% match. 50% match up to 6% sounds like theft to me. The corporations save on pension contributions and operating costs and still managed to "bargain" their responsibility for your retirement even lower seems archaic. What's next? Will the Pinkertons return with their baseball bats to start smashing our kneecaps?

 

With people living longer and rising cost of health care the old model was not sustainable.  That said, I'm all for companies paying more into 401K and other retirement plans.  I'm very fortunate that I've been able to save just about the max allowed for about 10 years now and my company also has matched 100% of first 3, then 6, and now 9%.  I am hoping to retire by 50 (if not before), my wife loves her job and will probably work into her 60s.

[Tondas]

With people living longer and rising cost of health care the old model was not sustainable.  That said, I'm all for companies paying more into 401K and other retirement plans.  I'm very fortunate that I've been able to save just about the max allowed for about 10 years now and my company also has matched 100% of first 3, then 6, and now 9%.  I am hoping to retire by 50 (if not before), my wife loves her job and will probably work into her 60s.

 

Well done and congrats on retiring at 50 and also, just in case, having a wife who will work into her 60's ;) .

Edited October 14, 2016 by Tondas

[Hoss]

Why don't you do this tomorrow? Feel free to tell me to mind my ###### business.

Because I've got a bunch of things I'm taking care of financially for the next few months. I spent carelessly (without touching a penny of the money I have set for savings) this year for the betterment of myself (boy has it worked), so I'm capping a few things off and then getting stuff around starting day one next year.