How much do you contribute to your 401(K) and how much are you earning?

[RottenWillow]

(Mods/Admin, can we can we keep this in Chat a while before moving it since we'll get a lot more input here?)


My fiance and I just saw a program on PBS about the history of the 401(k) and learned that most peeps do not contribute a large enough portion of their income to retire with reasonable comfort nor do that make wise enough choices to earn decent returns. The analyst said that really the minimum is 15% of your yearly income if you want to maintain your working life income for more than 10 years post-retirement.

In my case I make almost exactly $40k and contribute $3k exactly. I made 9.68% the first year of my investment in the program. According to the analyst I need to double my contributions to $6k to reach the minimum of 15%. My earning rate seems to be a little better than average for 401(k) investors.

So I'm wondering how much you guys invest and how much are you earning?

 

[vansmack2000]

usually around 20%, but i have no kids, no wife (ala money pits). Also have a few other investments besides a 401k.

~74K (oh wait this is the internets so i mean, err,i make $325,000, along with my 12 inch cawk, 6'3, 255lbs 7% bf, and have a supermodel slut on as my girl)

 

[RottenWillow]

usually around 20%, but i have no kids, no wife (ala money pits). Also have a few other investments besides a 401k.

~74K (oh wait this is the internets so i mean, err,i make $325,000)

20%....that's awesome. You're obviously wise about not overloading yourself with debit so you have plenty leftover to save. What's your average yearly return on the 401?

 

[SC4EVA]

First off - Mods thanks for keeping this in C&C for a while as it is very benefical) started my 401k my first day of work (4 years now) I contribute at least 10% plus 20% of bonus annually. (My company also matches up to first 6%) Over the past four years I have earned an average return of about 14% which is pretty good IMO b/c I know nothing about investing (despite working for a financial firm and having an MBA)

My biggest problem with the forecasters or other online systems is how you can accurately determine something forty years away. For example I am 27 now and my salary has thankfully kept moving up and will. How can I determine what I need my yearly salary to be in 30+ years. (Unless I am fortunate enough to retire early.)

Funny this post came up b/c my work just sent me information about a new service they are going to offer on 1/1/07 - It is a ROTH 401(k). Basically it works just like a ROTH IRA except the company will match up to 5% of after tax contributions. Pretty good. - My only worry is too much is pumping too much money from my paycheck into these programs and not enough into everyday savings or paying off student loans. IMO you should really be close to debt free before investing heavily b/c Credit Card and other loan interest rates are sometimes higher then investment returns.

 

[jh1]

I don't contribute. I spend all my money on meth for highschool girlies in hopes of measuring their taint.

helpful?

 

[UA_Iron]

Well, what you really want to do is when you first get a decently paying job invest as MUCH AS YOU CAN for the first 5 years. Be prudent, be stingy, be a jew but invest as much as you can.

Those initial investments will see the best gains and compound over time.

 

[Lao Tzu]

I am still in college, so cannot answer. But I hope to put 10-15% in a year, which would be about 4-6k a year to start and work its way up to 10k a year, going by median salaries for my education.

Did this special take into account things like social security, reverse mortgages, part time jobs, etc, or were they assuming that retirement was 100% funded by 401k investments?

There is a book called 'retire on less than you think' that says with home equity, reverse mortgages, social security, paying off all debts and a willingness to move to an area with lower real estate values that you can retire comfortably on far less than the level of money most people say you need.

 

[gonelifting]

UA-Iron hit it pretty well. If you start out early in your carreer, then you have more time for the money to grow itslef. That IS the hardest time of all to invest, but if it were that easy, everybody would be rich. Put in as much as you can and as consistantly as you can. I wouldn't worry about the returns so much right now. As long as you're in good investments, you'll be OK because the average return of the stock market has always been better than keeping it in the bakn or under your mattress. Couple that with tax free growth, your employer adding to your contributions, Tax deferred investing, meaning you put 100/week into the plan and you don't get taced on that $100 from your paycheck. If you did NOT put the $100 into the plan, you'd only being home $70 or so from the $100. So, right away you're gaining $30 from day one. Can't beat that really.

The scariest thing is the CC debt one may have. School loansd are generally lower payments anfd would still allow you to invest in a 401k and the like without losing money. But cc have higher interest rates and aren't tax deductible so you'll probably bw better off paying them off first before the 401k investin. You may get other advise than this, but that's my opinion. I'm unemployed, what do I know. Good luck

 

[SC4EVA]

Lets get Bran up in here on this one. I totally agree with gonelifting. You gotta gid rid of the debts first before investing. My one and only credit card is 7.9% and my student loans are 2.9%

 

[rnch]

one of the reasons i have "stayed the course" at my Simple Civil Service Sufferer job is the 401K plan...i've been maxed out in the government's thrift savings plan since my first day on the job, right at 20 years ago....looking forward to early out at age 55 partly because of stashing it away every pay period.