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re: Goal for retirement savings as a ratio of salary
Posted on 4/3/24 at 9:05 am to JohnnyKilroy
Posted on 4/3/24 at 9:05 am to JohnnyKilroy
quote:
I think that it is risky to assume that your expenses will go down in retirement years.
Why? It's normal for spending in retirement to be less.
_________________
What is normal? How many kids/grandkids does one have? And how much do you want to help them? Are your grown kids at a 5th grade level of financial maturity? How much travel? Buying new cars or boats? Do you want a vacation home? What is your health situation?
Normal and averages do not describe individuals.
I think that it is risky to assume that your expenses will go down in retirement years.
Why? It's normal for spending in retirement to be less.
_________________
What is normal? How many kids/grandkids does one have? And how much do you want to help them? Are your grown kids at a 5th grade level of financial maturity? How much travel? Buying new cars or boats? Do you want a vacation home? What is your health situation?
Normal and averages do not describe individuals.
0
Posted on 4/3/24 at 9:19 am to I Love Bama
I started my first Ira about 40 years ago and the company I worked for in college had a 401k which I invested. Then In mid 1990’s I converted as much as I could afford to pay in taxes to Roth IRA.
I never made over six figures until about 2009 or so. And I never purchased a new car, and tried to be smart with my money. I was always a little envious when my friends had cool toys such as boats and 4 wheelers etc
I never made over six figures until about 2009 or so. And I never purchased a new car, and tried to be smart with my money. I was always a little envious when my friends had cool toys such as boats and 4 wheelers etc
Posted on 4/3/24 at 12:33 pm to Boss
quote:
Wife and I are in mid 40s. Our gross monthly income is 25,000 before bonuses etc. We currently put 20% into 401k,
not trying be argumentative or anything but you can't be doing that. Maybe if you were in the "catch up" window but mid 40s isn't there.
Posted on 4/3/24 at 1:57 pm to notsince98
What do you mean isn’t there?
Posted on 4/3/24 at 1:58 pm to Gorilla Ball
It isn’t there legally.
You can’t make increased catch up contributions until 55 (right?)
You can’t make increased catch up contributions until 55 (right?)
Posted on 4/3/24 at 2:14 pm to Gorilla Ball
quote:
What do you mean isn’t there?
Mid 40s isnt within the the catch-up window.
Posted on 4/3/24 at 2:17 pm to notsince98
My 401k allows up to $65,000 per year - I might be a little off on the exact dollar amount
Posted on 4/3/24 at 2:22 pm to CharlesUFarley
quote:
If you want to become a jet setter and collect European girlfriends after retirement, you'll need a lot more.
Let’s talk about this option more.
Posted on 4/3/24 at 2:39 pm to Gorilla Ball
Are you self employed?
Posted on 4/3/24 at 2:39 pm to Gorilla Ball
quote:
My 401k allows up to $65,000 per year - I might be a little off on the exact dollar amount
I think that becomes "safe harbor".
The funds don't meet the pretax qualification of traditional 401k.
But the account does not reject the funds either.
I'm with fidelity and commission based income.
It is impossible to hit the 401k cap on the nose. And the overage goes to the safe harbor designation.
$65k also includes what your employer is able to match on your behalf (if it mirrors what my 401k does).
Some on the board may recommend you self direct those funds to a brokerage account (to possibly save on fees that the 401k administrator has)
Posted on 4/3/24 at 3:33 pm to Gorilla Ball
quote:
My 401k allows up to $65,000 per year - I might be a little off on the exact dollar amount
$23k per 401k is the limit for personal 401k contributions. There are other employer contributions that can be still be made beyond that number, but not your personal $.
If you have some other type of self-business 401k, then ignore it.
Posted on 4/3/24 at 3:36 pm to meansonny
quote:
It is impossible to hit the 401k cap on the nose. And the overage goes to the safe harbor designation.
My company uses Schwab for the 401k and this is luckily not an issue for us. Somehow, Schwab is tied directly to our payroll system. Whenever you hit the 401k limit, the money automatically stops coming out of your paycheck and ends up in your take home pay so you can hit the 401k right on the number every time. I typically hit the 401k limit in November and then my paycheck jumps up. I take that extra take home money and put it in IRAs to maintain the same retirement contribution % all year round. Very convenient.
Posted on 4/3/24 at 4:31 pm to notsince98
Well then I don’t know, but my contribution was $61000 last year and $62,000 the year before.
From what fidelity has told me it varies by provider. When it gets to a certain dollar amount it moves from a pre- tax to a post tax account contribution
From what fidelity has told me it varies by provider. When it gets to a certain dollar amount it moves from a pre- tax to a post tax account contribution
Posted on 4/3/24 at 4:52 pm to notsince98
quote:
I typically hit the 401k limit in November and then my paycheck jumps up. I take that extra take home money and put it in IRAs to maintain the same retirement contribution % all year round. Very convenient
If your company does a match... then you are losing money without having a December contribution.
I'd prefer the safe harbor where I can hit my 401k limit in October and still get company matches the next 2.5 months with the safe harbor provision.
Posted on 4/3/24 at 5:03 pm to notsince98
Her company puts in 9% so yes we are there. Employer match doesn’t count against cap so we are putting in 40k+ a year.
Posted on 4/3/24 at 9:56 pm to meansonny
Explain your logic to forgoing the match if the contributions are maxed ahead of year end.
Posted on 4/3/24 at 10:20 pm to notsince98
quote:
Mid 40s isnt within the the catch-up window.
catch up starts at 50 for 401k and roth IRA, etc.
Posted on 4/3/24 at 11:42 pm to Gorilla Ball
Some 401k plans allow additional post tax contributions. That and in service distributions are the essential tools to "mega backdoor Roth."
Posted on 4/4/24 at 4:34 am to TorchtheFlyingTiger
Yes thanks for clarifying- i probably just wasn’t explaining it well enough
Posted on 4/4/24 at 5:58 am to lynxcat
quote:
Explain your logic to forgoing the match if the contributions are maxed ahead of year end.
I didn't say forgo the match.
When I max out my 401k in October, I lower my 401k contributions to 8% (my employer matches 50% of my contributions up to 4% of my income).
My argument is to continue 401k contributions after maxing the annual allotment in order to not leave money on the table for the remaining pay periods.
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