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retirement accounts - maxing out 401(k)

brad_hbrad_h
in Everything Else
Good to contribute max to company sponsored 401(k). How much is your company matching btw?

Are you guys maxing out a secondary retirement account, such a Roth?

What percent of income goes to trading individual stocks? I assume your retirement accounts are index funds / non-managed funds. If so, are they broad-market like S and P 500 index funds or ones that focus on low cap??

Comments

  • MattMatt
    Max out that account. Any company worth your time should be matching 5%. Most good 401(k)-type plans will actually include the option for a Roth-type fund. You are still subject to the max annual contribution (~$16,500?) but you can divvy up between pre-tax and post-tax funds.

    Fuck playing around with individual stocks. I have a modest account ($5k) that is my personal max for playing around with stocks. And key term there is playing. It's like a casino, and I don't expect to win anything.

    There was that one time I bought several thousands of dollars of Netflix stock at like $75 after the Flixster debacle, and was yelling loudly for everyone to buy. It was super fucking risky, and I sold just shy of trippling the value because I was pulling cash together to buy a second house.

    I also should have a pension that will pay me 30-40% of my max salary, and then social security checks. So I'm set. Unless those last two things disappear due to politics and I have to riot.
  • AprecheApreche
    Actually just got an e-mail from HR about this today. We have 5% match with an $18,000 limit. Not sure if I'm hitting the limit, however I learned that the 5% is 5% per paycheck. So if you hit the limit before the end of the year, you lose money. I have to make sure I'm doing it right so I hit the limit on the final paycheck of the year.
  • CremlianCremlian
    edited March 2016
    Ah..... no? The money isn't lost... It's just double taxed which is bad... However "Employer Contributions Don’t Count
    One thing to note here is that employer contributions do not count against your 401(k) contribution limit. So if your employer has a matching program, you can contribute up to your 401k limit plus the employers’ matching amount.."
    Post edited by Cremlian on
  • okeefeokeefe
    The “free” money that is the company match wouldn't be collected because the account is maxed out for that year. I'd rather fill the account with my employer's money than mine.
  • AprecheApreche
    edited March 2016
    Cremlian said:

    Ah..... no? The money isn't lost... it would just stop being put into the 401k.

    The limit is $18000. With 24 paychecks I want to contribute $750 per paycheck to hit the limit precisely.

    A standard match is 50 cents on the dollar up to 5% of salary. The 5% is per-paycheck. With a $100k salary that means you could get $104 dollars for free every paycheck as long as you contribute at least $208 per paycheck.

    You want to get that $104 or free money 24 times a year. If you contribute too much and hit the $18,000 limit in November, that means you won't get a match on the final 2-3 paychecks of the year. You just lost $208 or $312.
    Post edited by Apreche on
  • Linkigi(Link-ee-jee)Linkigi(Link-ee-jee)
    edited March 2016
    Always max out your 401k if you can afford it. To get the most out of an employer match, make sure you're contributing such that you don't hit the contribution limit until your last paystub of the year. (So 18k divided by 52/26/12 depending on your pay cycle).
    Easy peasy.
    Google's 401k match is 100% up to $3k or 50% up to the contribution limit (whichever is higher), which seems to be rather good.

    I currently don't have secondary retirement or investment accounts, though I'm now around the point where I should start doing that.
    Post edited by Linkigi(Link-ee-jee) on
  • CremlianCremlian
    edited March 2016
    Well we are arguing too different things but technically you are wrong because the match would happen regardless of the 18k limit since it's not part of that limit. It's just that the non-matched funds would get double taxed.

    Also you can afford 750 a paycheck? You are sooo rich :-p
    Post edited by Cremlian on
  • AprecheApreche
    Cremlian said:

    Well we are arguing too different things but technically you are wrong because the match would happen regardless of the 18k limit since it's not part of that limit. It's just that the non-matched funds would get double taxed.

    Also you can afford 750 a paycheck? You are sooo rich :-p

    Correct, the match does not contribute to the limit itself. However, let me illustrate why you are wrong with the extreme example.

    Let's say you get 12 paychecks a year. You contribute $18,000 on the very first check. Your company gives you $104 for free. For the remaining 11 paychecks that year you contribute nothing to the 401k and get no free money. Your total annual free money is $104.

    Now let's say you split that up. You contribute $1500 each check, 12 times a year. Now you get $104 each paycheck in free money. That's total annual free money of $1248.

    You gotta spread it out!
  • okeefeokeefe
    Cremlian said:

    Well we are arguing too different things but technically you are wrong because the match would happen regardless of the 18k limit since it's not part of that limit.

    My company warns me that they won't do the match if I'm at my limit. I assume they're not unique in that respect.
  • Linkigi(Link-ee-jee)Linkigi(Link-ee-jee)
    edited March 2016
    Cremlian said:

    Also you can afford 750 a paycheck? You are sooo rich :-p

    Software engineering's a helluva job.
    Post edited by Linkigi(Link-ee-jee) on
  • MattMatt
    With my version of a 401k/Roth, the Gov'ts Thrift Savings Plan, you def lose the match if you hit the max limit for the year. They just cut you off.
  • TheWhaleSharkTheWhaleShark
    I'm just sitting here building up my pension like a boss.
  • CremlianCremlian
    TheWhaleShark said:

    I'm just sitting here building up my pension like a boss.

    Give Scott and Rym their Tax money back :-p
  • AprecheApreche
    Cremlian said:

    TheWhaleShark said:

    I'm just sitting here building up my pension like a boss.

    Give Scott and Rym their Tax money back :-p
    I pay more in taxes per paycheck than I put in the 401k. Also, no pension for me.
  • TheWhaleSharkTheWhaleShark
    edited March 2016
    I'm in the last reasonable pension tier in New York. I'll be retiring at 55 with 75% of my final average salary (average of three consecutive years) per year and subsidized healthcare.

    Or maybe 62 was the 75% mark, and 55 was 60%. I'll have to do the math again.

    After I buy the house and have money again (HAHA YEAH RIGHT), I'm going to catch up on the deferred comp that I should've been using for the last 11 years.

    EDIT: Nope, age 55 is 64.5% FAS, and 62 is 75%.

    Pretty sure the way the math works out, it's still better for me to retire at 55 if I can make it on that salary.

    I could retire at 52 and 60% FAS, which might be pretty sweet.
    Post edited by TheWhaleShark on
  • AaronCAaronC
    If you are looking for education on investing I can't recommend these guys enough:

    https://vestu.com/

    They had a kickstarter:

    https://www.kickstarter.com/projects/vestu/vestucom-clear-unbiased-investment-education

    It's been developed by my Cousin and my Uncle. My cousin was an early internet guy, tech evangelist and such and got out before the crash because he saw it coming. My Uncle was the head of University of Texas's endowment and kept them out of the meltdown.

    The program is great and really good ad providing an investing education so you can make your own decisions.
  • MattMatt
    Damn, that is a sweet pension! The federal gov't had a similar system up until 1987. There are a lot of old dudes walking around here with sweet deals. Teachers in NJ have a similar setup. Before the recent political drama and crackdown on teacher benefits started, there were a lot of teachers retiring with annual benefits well north of $100k and 100% paid health benefits to boot (no copay, no deductible, smallest premiums I've ever seen).

    The current federal setup is 1% for every year you work. Have to be at least 57, and hit 30 years (although there are some loopholes for those who start late, or get out early during voluntary downsizing periods). If you make it all the way to 62, you get an extra 0.1%.

    I really can't see myself making it to 62, even though it could net me as much as $15k/year extra for the rest of my life. It's not like I'm gonna be hanging around putting a bunch of kids through college. By time I hit the age 57 minimum retirement age, my kid will be 31, and I'm gonna be ready to sail a boat around the world.
  • TheWhaleSharkTheWhaleShark
    edited March 2016
    1% for every year worked? That really kinda sucks.

    This pension is probably the single biggest reason I'm still in civil service.
    Post edited by TheWhaleShark on
  • CremlianCremlian
    or at 52, you can you know do something else that pays you and collect the pension and another salary for a few years.
  • TheWhaleSharkTheWhaleShark
    Actually, I can't collect on the pension till I'm 55 no matter what, so I might as well go till then. My salary will go up and I'll take a larger chunk of my FAS home.
  • MattMatt
    Yeah, that is always an option, and one I will consider if there is a well-paying or enjoyable second career that can at least pay my bills until deferred retirement. The only downside there is you can't retain lifelong federal health benefits unless you've had them for the immediate 5 years preceding retirement.

    The 1% per year is kinda lame compared to most pensions, but pensions are super hard to come by anyway, and I'm still grinding away in civil service for a few reasons. It's not an overly demanding job, and is ridiculously stable, while my wife's industry is super unstable. Even though it's only 1% per year, the three-pronged retirement approach of pension, 401k (TSP), and social security check should be more than enough money to live an awesome retirement
  • TheWhaleSharkTheWhaleShark
    The stability and security is pretty nice, no lie.

    Also, the ability to have this discussion while at work with essentially 0 repercussions is pretty sweet.
  • MattMatt
    Yeah I guess I should go do some work.
  • AprecheApreche
    I've got you beat on that front at least. Private employer, Internets all I want.
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