Community Discussions

I'm in my mid 30s, making about ~$35,000 a year. I started contributing to my 401K a couple of years ago, putting in just enough to get the company's matching rate. So far I have ~$10,000 in a target date fund.

Is it even worth it to continue to contribute? Will it really make a difference? I could really use the extra $60 a month. I'm currently in school and hope in the next 4 years to receive my B.Sc. Comp Sci.

Edit: I haven't strictly followed the prime directive. I have a loose budget and I have about $600 emergency fund, which I'm contributing to every paycheck.

Top Comment: It is absolutely worth it. That match is a guaranteed 100% rate of return.

Forum: r/personalfinance

"You're wasting your money by dumping it into a 401K"

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Started a new job and was looking to move roughly $40K to my new 401K from my previous pension account.

I was told by an financial advisor at the company that the only benefit of having money in a 401K is the initial contribution, which my company will match. He went on to say "You're wasting your other money by dumping it into a 401(k)".

Is this true? By all accounts it appears that the more money you have in your account, the more interest it will accrue.

Top Comment: Was this financial advisor acting in a fiduciary advisory capacity to you? Or was this just a co-worker who happens to masquerade as a "financial advisor?" What alternative was this "financial advisor" offering as an alternative? Was it some sort of insurance product as an "investment?"

Forum: r/personalfinance

Did I screw up by not maxing out 401k all these years?

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Did I completely screw up by not maxing out my 401k for the past 15 years?

How do people even DO this while keeping up with life??

I've had a wedding, had a baby, I am saving significantly for a downpayment in a HYSA.

Pleased to say wedding is paid off, car is paid off, only debt is from a credit card, but I am (married) and looking to buy a house in the next year (although I live in CT and while I'm sure the housing market is insane everywhere, it's so so bleak.)

Anyway, laying awake at night at 3am I decided would be a good time to panic.

My employer matches 100% on your first 1% and then 80% on your next 5%, so I've always contributed 6-8% over the past 10 years or so. But I've never done above that because - life! It was more important to me to not accumulate debt when in the peak years of many expenses. I mean how do people even max out??? I am sooo financially illiterate and feel like an idiot, is it too late to fix this? What should I do going forward?

I have two 401K's -- One now has 186k One has 32k

Obviously both have gone down lately.

$131k annual income. Currently contributing just 7% (not including the 6% company match)

I also have an IRA that I'm going to try to max out this year to the 7k, but i've never maxed out before.

Please help and try to be kind, I'm so stressed out.

EDITED TO ADD: I’m almost 40!

EDITED TO ADD: by credit card debt I mean around $2k that fluctuates up and down and i try not to go over this

EDIT TO ADD: I did not finance a wedding, just meant that this was one of the big expenses over the last few years that we paid for to account for “where all my money has gone”

Top Comment: You’re way ahead of a lot of people. It’s incredibly difficult to save the way you’re “supposed to” for retirement, for all the reasons you mentioned. That’s why most people don’t. All you can do is keep putting in as much as you can now going forward. If you’re mid 30s with $200k+ in your retirement, you’re doing way better than the average American.

Forum: r/personalfinance

Personal Finance

Main Post: Personal Finance

Forum: r/personalfinance

26 y/o confused how much I should contribute to my 401k

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For context, I earn $72,800/year in NYC and my employer match is 5%. I have had my contributions set to 5%, but have read countless times that I should be maxing out my 401k. Given that the contribution limit for 2024 is $23,000 (almost half of my take-home pay after taxes), I obviously don't think I can hit that maximum.

I also have a Roth IRA I maxed out last year and plan to max out again this year, and about $50k in a HYSA (i know that's too much, will be investing some soon but starting off with the basics ie 401k), and no debt.

Given that I can't max out the 401k, what percentage would you recommend I contribute? Should I pour all of my investing into the 401k and Roth, or also simultaneously invest elsewhere? If I invest in all 3 places, what would you recommend in terms of a percentage breakdown? A friend suggested I max out my 401k and "pay" myself from my savings, but not sure I love that idea. Open to any and all advice! Thanks.

Top Comment: Starting at 15% at age 25 will allow you to replace 100% of your income at age 65. Waiting until age 30 to invest means you'll need to do 20% to replace 95% of your income at age 65. Doing 5% minimum into your 401k and puting the rest towards your Roth IRA. This will put you at 14.6% gross investment rate. If you do 6% into your 401k and 7000 into your Roth IRA, it'll put you at about 15.6%. I would not count your 401k match into your savings rate until you're vested in it. Either way, I do highly recommend 20% at your age. That way if you need to dial back at an older age, you won't be behind for retirement. The earlier your dollars are invested, the more they can compound and work harder than you can. Source: The Money Guy Show

Forum: r/FinancialPlanning