Quote :

"a kitchenaid mixer"

KitchenAid kills. My dad got me started on them...I'm not a big cook, but most of the kitchen stuff I buy comes from them.

I'm pretty sure their heavy duty mixer would mix concrete.

1/11/2011 11:58:07 PM

Quote :

"damn my crappy math but i will hit it in 2011 for sure."

Haha. I did the same thing. Ended up short about $150 but should hit the max for my roth 401K this year.
Maxed out my roth IRA.
Invested 2K in my brokerage account.
Have about 20% equity in my house although I don't plan on prepaying the mortgage at 4.75%

1/12/2011 9:36:25 AM

I feel sure a lot of us are ahead of the curve, but an interesting article nevertheless.

Your 20s: Planning pays off richly

http://articles.moneycentral.msn.com/CollegeAndFamily/MoneyInYour20s/Your20sSeeHowYourWealthMeasuresUp.aspx

1/12/2011 10:32:54 AM

federal max on the 401k or company match max?

if it's the former, well done!

once my wife is done with residency, I'll be able to get over that hump.

1/12/2011 10:33:31 AM

Thanks! Federal. I missed last year since I didn't realize it had been upped to 16.5 and missed this year since work got rid of our pager pay and I forgot to adjust.

1/12/2011 10:37:50 AM

I was just vested in my companies pension plan on 1/1/11

only a couple hundred bucks per month as of now, but its something.

1/12/2011 11:12:15 AM

i'm assuming my company's pension will not exist by the time i retire.

relying on any pension in this economic environment seems rather silly.

1/12/2011 11:21:02 AM

For you all meeting the Federal max, any chance I can ask what type of salary you're making? I've probably gotten too accustomed to only contributing between 7-10%, but making the jump so that I would hit $16,500 seems like it would take a big chunk out of my take home.

1/12/2011 11:22:14 AM

This might be the right thread, I'm not sure. I'm wondering if I should buy a house.

I have no debt at all and about 20k socked away. I don't make $BobbyDigital$, but a decent wage (55k).

I like the area I'm in, but not sure how long I want to be here (probably not more than 5 more years). If I did buy a house, I'd rent out part of it to roommates since I'm single and like community living.

Currently I'm saving 5% to my 401k, about 1300 a month in cash/stocks. Any advise or things I should consider?

My rent right now (living with 7 people in a huge home) is only 250, so it'd be rough to have to pay a mortgage.

1/12/2011 11:32:45 AM

It seems silly to sock all that cash away if you don't plan on buying a house.
You could always invest in an ira or up your 401K contributions.
@55K a small mortgage should be bearable especially with a roommate, but if you're 100% certain you'll be gone in 5 years max it probably isn't worth the effort.

1/12/2011 11:45:02 AM

Quote :

"I've probably gotten too accustomed to only contributing between 7-10%, but making the jump so that I would hit $16,500 seems like it would take a big chunk out of my take home."

Keep in mind, that if someone is contributing 7-10% @ 30K that same person can contribute a much higher % if they are making 40K, 50, or 60K. I mean, if you keep the same standard of living you could easily bank the difference and max out in no time. The more money you make the more your contribution should increase exponentially, not logarithmically.

1/12/2011 11:52:49 AM

Quote :

"i'm assuming my company's pension will not exist by the time i retire. relying on any pension in this economic environment seems rather silly."

My companies doesn't exist anymore, unless you're grandfathered in

and who said anything about relying on?...as a matter of fact, I pointed out its meagerness atm.

1/12/2011 12:36:55 PM

i, too, am grandfathered in.

1/12/2011 12:40:19 PM

I missed being grandfathered in which I'm kind of annoying at since the former pension guys get a bigger 401K match.

1/12/2011 12:56:47 PM

^^so your companies plan isn't Federally insured?

1/12/2011 1:02:49 PM

yeah sure

idk, they did a whole benefits restructuring a few years ago, moving towards more 401k contributions and less pension.... left a lot of people who were nearing retirement/mid-late career that hadn't had a long history of 401k company matches kinda boned, by having the calculations changed and not a lot of time to make up for lost ground with 401k additions. when the payout calcs used the year you got paid the most as the basis point for distribution, then froze that amount, say... 15 years out from retirement, it makes a pretty tangible difference. it hadn't changed in 100 or so years, so a lot of them were banking on it.

for early career people, works great though. more years to take advantage of the contribution + 100% matched.

just hammered home the "if you want to have the money there, save it yourself and don't depend on anyone else" mentality.

1/12/2011 1:33:36 PM

Right now my wife is contract and doesn't get any match in her 401k so she is just maxing out her Roth IRA.

I am maxing out a Roth IRA and also contributing 10% to my 401k. (Company matches 1:1 of the first 5%).

Outside of the Roth we are dumping another 20% of our after-tax income into a money market and a handful of mutual funds.

I feel like we are doing ok but it is always hard to judge that since there are no magic, hard-set numbers to strive for. The only debt we have is the last $13k on my student loans (I'm paying 3x the minimum payment right now to finish them off) and our mortgage.

1/12/2011 1:35:14 PM

What's the rate on the student loans? Why so eager to pay them off? Why make non tax advantage investments when you aren't forced to do so?

1/12/2011 2:00:22 PM

The rates on the student loans average about 5%. High enough that I've been wanting to just get rid of them since I am so close, although I know they aren't super high rates. If it was a car loan at 1% or something I would just invest the extra money in a CD or something almost guaranteed higher than 1% instead of paying extra money but for some reason once something gets above 5% I hate having the debt sitting there right now.

I guess I'm still just a bit too conservative for my own good for my age.

Example: My etrade account I finally opened for non-retirement investments. (initial investment -ie the minimum buy-in- listed to the side)

T. Rowe Price Small-Cap Value (PRSVX) $2.5k
Vanguard Dividend Growth Inv (VDIGX) $3k

Vanguard Short Term Investment Grade (VFSTX) $3k
Vanguard Wellesley Income Inv. (VWINX) $3k
Harbor Bond Instl (HABDX) $2k

Only the first 2 are stock heavy, and the last 3 are bond-heavy. But I guess at least that should (hopefully) outgain the money market I had tons of money sitting in In other words: "It's a start."

1/12/2011 2:19:50 PM

I guess I don't see why you wouldn't just buy similar funds in your 401K assuming your choices don't suck.

1/12/2011 2:27:53 PM

I have lots of choices in my 401k but most of my stuff is an a target retirement fund (same for the Roths).

As I stated, for myself I'm putting 10% into my 401k (ends up being 15% with the company match) and maxing out a Roth IRA. I mean, yeah I guess I could just keep contributing more into the 401k but then I'm not able to use any of the gains until what 59 1/2? I understand the tax benefits of the 401k but as much as I feel the urge to make sure I have a healthy retirement (I think/hope what I am doing is still viewed as solid for that), I also would like to work on gains that can be tapped 10, 20, 30 years down the line. Do you disagree with my thinking? I know you max out your 401k completely right?

1/12/2011 2:42:54 PM

I assume you meant to say "in a target retirement fund".
Even if that's the case, you can still easily buy other funds in addition to this.

Quote :

"I also would like to work on gains that can be tapped 10, 20, 30 years down the line. Do you disagree with my thinking?"

Good point but you can actually take out your roth principle tax and penalty free after five years so you always have that option. For the record I'm pretty sure you can tap the 401K at 55.

1/12/2011 2:50:24 PM

^yeah, my bad on the typo. And I do know that the Roth has the nice benefit of being able to pull out the principle if needed. You are probably right on the 401k date, I was probably thinking of the Roth IRA date.

Maybe you're right as far as my future investments go. I'll definitely consider bumping my 401k investments up a little higher perhaps. Either way, I have a decent chunk of money that is already past the 401k opportunity and I already max my Roth (I mentioned this in the Stock Market 2010 - money I had sitting in a money market) and that is what I opened up the etrade stuff for. I only put about 20% of the available money in for now though to test the water since it is my first time with non-retirement brokerage accounts. My goal was to make decent, steady growth investments with more risk than a CD or just straight bonds but less risk than nearly all out stock investments like my retirement portfolios. Hopefully with the 5 funds I picked I did that, but I guess we'll see (only been in like 2 months atm).

I appreciate your insight though; you've always been really helpful relating to investments on here

1/12/2011 3:03:59 PM

You're quite welcome.

1/12/2011 5:13:02 PM

Quote :

"federal max on the 401k or company match max?"

definitely talking federal max, which leads me to a question i can never remember the answer to...

my company matches 6% on the 401k. so, does the $ they put in my 401k count toward my federal max or is that federal max just the max that i can put in myself? i think the employer match can take you over the federal max. can anyone confirm?

wadhead1, i make what i consider a comfortable salary for myself. i'm under $70k but remember that 401k contributions are PRE TAX so if you're paying around 30% in federal tax on your income, it doesn't really impact your paycheck as severely as you might think since almost half of your salary is going toward taxes and fica and whatever the fuck else

so effectively, contributing is one way to lower your taxable income!

my company has a pension but for us new people they just give us a slice of cheese into our 401k that is replacing the actual pension at retirement. i forget all the details, i just know there is no pension at retirement anymore, they're just tossing $ into my 401k for me to manage myself and that is separate from their matching

1/12/2011 8:02:51 PM

what's the point saving when we get old the gov is going to tax our retirement savings (even our roth's i'd bet) so the poor schmucks who had all the fun in their 20s and 30s can get their check

1/12/2011 8:32:35 PM

Quote :

"my company matches 6% on the 401k. so, does the $ they put in my 401k count toward my federal max or is that federal max just the max that i can put in myself? i think the employer match can take you over the federal max. can anyone confirm?"

any company match to your 401k does not count toward the federal max.


i've been maxing out my roth ira for a few years, but i've been doing a lump sum toward the end of the year. is there any real benefit to splitting up on a monthly basis?

i save a lot of money (401k, roth, other mutual funds, generic slush fund savings), but i make sure i take a *big* fun trip every year or so.

1/12/2011 8:46:39 PM

Quote :

"is there any real benefit to splitting up on a monthly basis?"

If you split the contributions into equals monthly payment vs one lump sum at the end of the year, it will have more time to increase in value.

A $5000 annual contribution for 30 years at 10% roi will result in $822,470
A $416.67 monthly contribution for 30 years at 10% roi will result in $941,878

1/13/2011 12:48:41 PM

^agreed, that is really the only difference but it could be big over time as shown. The other intangible is that for some people it is much harder to take $5000 out of their bank account at the end of the year/tax time to contribute to a Roth as opposed to just automatically contributing a certain amount each month. You start getting used to seeing your income as $416.67 higher than it really is.

You might not be like that, but many people are.

1/13/2011 2:03:14 PM

Yeah, I have vanguard take out ~$100 from my bank account each week for my roth ira with them.

1/13/2011 2:06:47 PM

I take it you have your Roth IRA open directly with Vanguard then? Well I guess by your post that is obvious. I just wasn't sure previously whether you were invested in Vanguard funds via etrade or just direct with Vanguard.

1/13/2011 2:23:22 PM

I have two separate roth iras, but yes, I am currently investing in a roth ira directly with Vanguard.

1/13/2011 3:27:27 PM

My current company offers a retirement plan as well as 401k contributions. When I first started working here after college the whole slew of new "adult" decisions (insurance options, dental, vision, 401k, pension, vacation, etc) overwhelmed me while I was also trying to learn the job.

When it came to a retirement plan, I went with the default "traditional pension plan" instead of an option that pays out a lump sum. Now that I am leaving the company, I could have recieved ~10% of my salary as a lump payout, but instead now have some pittance of a pension that may or may not be around in 40 years when I could draw for it.

Luckily one or the reasons I skipped over studying the pension plan was that I never intended on actually relying on a company pension, so I still have solid investments in the 401k and roth.

Life lesson...read (and understand) everything!

1/14/2011 4:14:44 PM

6% of salary plus 4% match into 401k ...
Max Roth for wifey and myself (going on 5 years now).
pay off 20k of the house each year (no house payment 10 years from now).
side business makes about 30k per year, and 100% of that goes into my "business savings", which is just a scottrade account that I target for 10% per year.

Hoping that in 10 years (ill be 40), I can quit my job, and live off the business income/savings til Im 60, at which point Ill start digging into my 401k/Roth/SS(if its there). Should have no house payment after Im 40, so we could easily live off of 1500/month for food/utils/tax/things ... and 3k/month, which is about what the buisness makes, would be plenty.

At least, thats the dream Im targeting right now... who knows really

1/15/2011 9:15:05 PM

Being broke as a joke for a few years put my saving for retirement on hold. Now that I'm not living off of ramen anymore I'm doing just swell. I keep my credit card paid off (one and only), pay on my student loans every month (in no hurry to pay them off, though I'm sure I will in a few years just because I can), don't have a car (yay), put 15% of my income pre-tax into my 401(k) and put $1k/mo into savings for the next few months.

I'm about to hit my goal for my emergency fund (enough for me to not worry about getting laid off in NYC and having to move if I can't find a job within 6 months). Once I hit that goal some of the $1k will go towards maxing out the 401(k) and the rest will be likely put into either a Roth 401(k) or a Roth IRA, splitting that 70/30 with an investment account.

1/16/2011 1:28:25 AM

Thanks to David0603 continually questioning why I am paying 3x my student loan minimum payment, I have backed off my student loan payments from $750 to $625 (minimum is $235) and bumped my 401k from 10% to 15%.

I'm now at 15% salary in my 401k, maxing out my Roth IRA, maxing out my wife's Roth IRA, still waiting on my wife to get a direct job that matches on 401k (until then I'm not having her contribute to the 401k offered).

I feel pretty good about that. If things continue to go well this year I'll try and work towards 20% contribution in the 401k. If I get the raise + promotion (and pay grade increase) I am really thinking I deserve that would just make it that much easier since we don't need a physical jump in take-home pay at all right now. I'd happily dump all the extra into the 401k.

1/17/2011 3:17:53 PM

1/17/2011 3:38:38 PM

Quote :

"It seems silly to sock all that cash away if you don't plan on buying a house. You could always invest in an ira or up your 401K contributions. @55K a small mortgage should be bearable especially with a roommate, but if you're 100% certain you'll be gone in 5 years max it probably isn't worth the effort"

Thanks for the advice. What about potentially renting the house after I leave instead of selling? Anyone have and experience being landlords? Would I get a better ROI than investing in an IRA?

1/17/2011 6:56:28 PM

I would be tempted to buy before the rates start going up. How secure is your job? I'd definitely be maxing out an IRA if I had 20K sitting around earning 1%. I know nothing about being a landlord but I've always preferred the liquidity of an IRA. Plus there are so many other expenses that being a landlord hardly seems profitable in the long run. That said I may end up renting my primary residence out if I move in a few years. Something about giving back money borrowed at 4.75% just seems inherently wrong.

1/17/2011 7:47:58 PM

be careful about using properties as investments if you don't know what you're doing

its a good investment strategy if you know what you're doing, imo but opinions on here may vay

my boyfriend and i both own homes and when we move in together we don't have plans to sell, our strategy has always been to acquire more property and rent out the homes. but you have to have a sweet spot on the mortgage and his is more ripe for that than mine

also the type of home you're renting will attract different renters. so buying a home and having someone else pay the mortgage on it isn't necessarily a bad idea, just do your research and run lots of numbers and also be sure you can pay the mortgage if it goes unrented for a couple of months, especially between tenants

1/18/2011 5:21:42 PM

This may be an extremely silly question, but let's say I save/earn $1.5million for retirement through investing and such. Is there a way to earn interest on that money at like 4-5% annually when I retire? What I am thinking is that I'd be able to live simply off of the interest while the principal remains intact.

1/24/2011 1:12:53 PM

First, who knows what the interest rate will be and the impact inflation will have by the time any of us are retired. However, using today's rates as comparison, if you knew a way to guarantee people they could earn 4-5% on their entire retirement portfolio while in retirement you'd be a pretty popular guy.

Obviously there are plenty of ways to earn 4-5% or even much higher (using today's market/interest rates etc. again), however almost all of those ways are associated with risk. The problem there is that by the time you will have reached a time to actually retire, a huge portion of your money should ideally be in very low risk, low return investments. At that point, I think most people would say that taking a guaranteed $2 million (or whatever you have earned) is better than losing half of your retirement in search of squeezing some more juice out of your portfolio. Basically a "1 in the hand is worth 2 in the bush" scenario.

It certainly gets very tempting as you start looking at "well, if I could only earn 4-5% then that is a lot on $1.5 million!...I don't need to be too aggressive," but I think you would have to save a boatload of money and be willing to live off of much less than your current projected "retirement salary" to simply try and live off of the interest. Then again, someone else here might think completely differently than I do; I tend to think conservatively with this stuff.

1/24/2011 1:32:13 PM

Fair enough. I understand and agree about the low risk tolerance at retirement. I also hadn't factored in inflation when I prompted my scenario. So living off of interest is a myth?

1/24/2011 1:40:41 PM

It's not a myth. Up until a few years ago you were able to gets cds and bonds at 4%-5% which had 0 risk.

1/24/2011 1:44:56 PM

Like I said, I could be off-base; that is just my view on this. In reality you obviously will want to continue earning money on what you have saved and that will certainly contribute to what you can withdraw during retirement. Some of your money should definitely still be exposed to stocks, just not a large portion (again imo). So, in a sense you will be living off of a mixture of capital and interest. It really depends on how much you actually want to be able to bring in for a "salary" when you are retired as well as relying on what the economy is like then (like he^ said). Right now there is hardly anything you could find at 4-5% interest with 0 risk. By the time you retire? Who knows. Save a lot, but don't depend on living off interest and if the economy is such that you can by the time you/we retire then you're in even better shape than you planned on.

1/24/2011 1:50:15 PM

Fair enough. And in truth I'd like to work part time well after "retirement" doing something l love which will either be in weather still or environmental conservation. Retirement to me isn't a date or deadline, it's about options. I want the freedom and flexibility to just stay home and tend to my trees and enjoy warm afternoons watching the birds while drinking sweet tea and then pick up and visit Canada or something.

1/24/2011 1:57:42 PM

In the early 80s you could get cds at 16%. Wouldn't mind seeing that again when I retire.

1/24/2011 2:57:12 PM

^ ha but didn't that also come with like 20% APR for home mortgages?

1/24/2011 11:40:55 PM

My wife and i each contribute 5% of our pay to roth 401(k) and the company "matches" with 9% in a tradition 401(k). We also just started our roth IRAs this January and we plan on using any money we get from raises to increase monthly contributions until we max out. I also contribute to a Templeton Mutual fund on a monthly basis. We'll have the house paid off by the time we're 54, at the latest. Hopefully in about 5 years, we can start making close to double payments and finish before we're 39.

I believe we're set for retirement, however, I would like a little bit more cash in pocket today...

1/25/2011 2:38:13 AM

Surprised that people here are for maxing out IRAs/401ks and stretching out house payments. A great idea in theory, not always the best in practice. I just looked at my IRA, and over the past 7 years has gained about 3%.....that's terrible. Making payments on a home would of done me a lot better.

1/25/2011 6:58:48 AM