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Started By
Message
401K/Retirement Plan for a 25-year old
Posted on 6/20/13 at 7:11 pm
Posted on 6/20/13 at 7:11 pm
Where the hell do I start? I started a new job a few months ago and I'm about to be eligible for retirement benefits. I've read over the package they gave me for a few weeks and I'm absolutely lost still.
Cliff Notes:
1) Previously I worked at a (very) small local business that did not, but I saved a fair amount.
2) They match 100% of my salary up to 6% that I contribute.
3) There is a profit-sharing plan as well but I don't qualify until next year.
4) The whole package is through JP Morgan.
5) There are a ton of different "package options" that I haven't quite figured out.
I plan on putting in 6% my first year and seeing how it goes. If I'm coming in with a solid amount of cushion in my budget every month, I plan to increase my contribution.
What specifics should I be looking at within these packages though? There is one package that is called "SmartRetirement 2040 Select" that says it is for people looking to retire around 2040. Is it a bad idea to put some money into options like that? I can select multiple packages and divide them up...what should those percentages be like?
I'M LOST AS HELL
Cliff Notes:
1) Previously I worked at a (very) small local business that did not, but I saved a fair amount.
2) They match 100% of my salary up to 6% that I contribute.
3) There is a profit-sharing plan as well but I don't qualify until next year.
4) The whole package is through JP Morgan.
5) There are a ton of different "package options" that I haven't quite figured out.
I plan on putting in 6% my first year and seeing how it goes. If I'm coming in with a solid amount of cushion in my budget every month, I plan to increase my contribution.
What specifics should I be looking at within these packages though? There is one package that is called "SmartRetirement 2040 Select" that says it is for people looking to retire around 2040. Is it a bad idea to put some money into options like that? I can select multiple packages and divide them up...what should those percentages be like?
I'M LOST AS HELL
4
Posted on 6/20/13 at 7:27 pm to Srbtiger06
Its great that you are worrying about this at age 25 because who knows what your generation will be needing to retire after all the shite that is being dumped on yall these days. IMO get your savings built up first. I'm talking money that can support you for up to 6 months just in case you loose your job or get injured and cant work. Once your safety net is in place, put all you can into your retirement account. I also suggest that you open and online trading account and use some money (not all) on trading yourself. I started doing this years ago and it will open your eyes on how things work in the market. Remember, nobody will look after your money like you will. Good luck!!
Posted on 6/20/13 at 8:00 pm to Srbtiger06
Savings
match 401k
max roth
max 401k
taxable accounts
is what I've read. i'm a little younger than you.
That plan is probably similar to the Vanguard Target date funds (i'd bet). Basically a buy and forget about it total fund.
From what I've been told, at our age, it's not so much WHAT you are buying, as long as you are buying as much as possible.
match 401k
max roth
max 401k
taxable accounts
is what I've read. i'm a little younger than you.
That plan is probably similar to the Vanguard Target date funds (i'd bet). Basically a buy and forget about it total fund.
From what I've been told, at our age, it's not so much WHAT you are buying, as long as you are buying as much as possible.
Posted on 6/20/13 at 8:33 pm to jimbeam
quote:
max roth
What kind of rates are most IRAs offering these days? I checked with one institution earlier and they seemed very low.
Posted on 6/20/13 at 8:34 pm to weagle99
Que?
You can do different things in a roth.
You can do different things in a roth.
Posted on 6/20/13 at 8:36 pm to jimbeam
quote:
You can do different things in a roth.
Okay. Still learning here.
Posted on 6/20/13 at 8:46 pm to weagle99
Roth is only a vehicle. You invest like you would any other way (or you can anyway). It just takes advantage of tax free withdrawals on earnings.
Also, Bogleheads is a great place to learn
Also, Bogleheads is a great place to learn
Posted on 6/20/13 at 8:53 pm to Srbtiger06
I am 26 and met with a Wells Fargo agent yesterday to discuss exaclty what plan was best. As a teacher, I had been making monthly contributions to a limited 457b plan, but we decided to go into a Roth IRA plan.
Like one poster mentioned, good job on making this a focus already. My agent said I am the youngest client he has and that the majority of people wait until mid-30s to start. Even though I personally don't make six-figures a year, we can get a big advantage just by using time as our ally!!
Like one poster mentioned, good job on making this a focus already. My agent said I am the youngest client he has and that the majority of people wait until mid-30s to start. Even though I personally don't make six-figures a year, we can get a big advantage just by using time as our ally!!
Posted on 6/20/13 at 8:55 pm to jimbeam
quote:
It just takes advantage of tax free withdrawals on earnings.
With a roth, do I pay tax on dividends that are reinvested?
Posted on 6/20/13 at 8:56 pm to rpg37
Look up the Rule of 72 if you haven't.
Just consider that with the all time average rates of return, your money will double in 7 years. starting early is huge.
Just consider that with the all time average rates of return, your money will double in 7 years. starting early is huge.
Posted on 6/20/13 at 8:57 pm to wegotdatwood
I do not believe so.
Posted on 6/20/13 at 9:28 pm to jimbeam
No taxes on dividends/ gains inside the Roth.
Posted on 6/20/13 at 9:34 pm to jimbeam
quote:
starting early is huge.
Truer words were never spoken. Put in as much as you can. Not only will your taxes be lower(depending on what you do), but starting early is huge - if you don't know about compound interest, look it up. If you can do more than 6%, do more, obviously whatever you're comfortable with. But if you've got a 6% match, that's fantastic. And reinvest dividends, imo. That's free money you're getting right now.
But starting early is the best thing you can do. I work for a Coke and didn't start my 401k until about 2 years after I started(25) and my dad would give me shite weekly about not starting it earlier. I always kind of blew him off, but now that I'm 33, I know exactly why he was all over me about it.
This post was edited on 6/20/13 at 9:38 pm
Posted on 6/21/13 at 6:32 am to Srbtiger06
quote:
SmartRetirement 2040 Select"
This is a good plan but DO NOT put all your money in this fund because every year the contributions will change away from the stock market and into bond type funds. Max about 15-25% IMO
Put it in the market and let it roll. You have time to lose and gain it back before retirement
Posted on 6/21/13 at 8:46 am to kage
quote:
If you can do more than 6%, do more, obviously whatever you're comfortable with. But if you've got a 6% match, that's fantastic. And reinvest dividends, imo. That's free money you're getting right now.
I plan on doing more than 6% once I get my feet under me. I want to throw more into savings first though. I'm also about to be moving and my expenses will be rising a little so I want to make sure I will have enough to cover my basics.
quote:
I always kind of blew him off, but now that I'm 33, I know exactly why he was all over me about it.
My boss and I discussed this and he was showing me the difference in starting now vs. next year or the next. The numbers were RIDICULOUS.
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