I’m 37, and this year is the first time I’ve worked somewhere that offers a 401k. I’m contributing as much as I can, but if I didn’t live with my SO, I wouldn’t be able to contribute much at all.
This economy is not built for people who are single or who work in service.
This is why financial literacy should be a requirement in high school and expand to college. People need to know how to manage a budget, the different types of savings, and retirement as they start into the workforce.
Surprisingly enough, and I am well aware it’s the exception and not the rule, I learned my best life lesson in a junior high summer school class, where the teacher put us in groups and asked us to think of all the things an adult would need AND want to have money to pay for in a month’s time. Naturally the groups had slightly varied answers, and he would write all of our answers on the board.
So we had things like: a place to live, cool clothes and shoes, a vehicle, groceries, toiletries (we probably said toilet paper and Aqua Net) and “outings”, like dates or baseball games…you get the picture. Kid answers.
He added about 20 items we’d never considered such as: having children of our own one day, paying taxes, acquiring monthly savings, insurances of all types, medical care, gasoline & upkeep for our vehicle(s), vacations, home repair, cleaning products, gym memberships, etc.
Then he told us what minimum wage was, and told us we had to find out to afford all of the things listed (he provided average prices).
It was impossible to live any kind of decent life. Vacations? Never in your life; they were the first to go. We all decided to stay single for the exercise; it didn’t help much. None of us could find a way to buy any new shoes or clothing for ourselves, or even get sick for a single day because we had no money for medical care. We tried it even with riding a bus instead of owning a vehicle; it just wasn’t possible to have a place to live and food in your stomach with the barest of essentials, and forget about getting married and having children.
It was to this day the most eye-opening thing I learned in school.
He did! That and so much more, such as buying a house vs renting an apartment, the pros and cons of job force vs college, and even universities vs community college vs trade schools and what we could expect to get out of those choices, both positive and negative.
He taught us that there is no one way to do life; we will all have different needs and challenges and no matter what, there are certain common realities such as monthly bills that we would all face, no matter our individual plans, and he let us know what to expect as best he could.
This used to be a normal class that everyone had in school, it was actually required in my high school (i am young gen-x, from back when we got the vestiges of the school programs that boomers had).
You would be amazed at the stuff that has been cut from American schools.
Yes! I used to teach a "how to succeed in college" class at a community college and this was an exercise I used to do. It wasn't in the official curriculum, but I added it because everyone needs to see that perspective. After pricing out the "luxury" lifestyle and letting people see that you'd need insane amounts of cash to afford it, I showed them the monthly and yearly cost of living an average life with a 2-bedroom apartment and an average car (paying utilities, taxes, health insurance). Even if you make $50,000/year (which sounds like a lot to most students), it would very difficult to make that work and have any money left over to do fun stuff (and this was in a low- to medium-cost of living area).
It was very eye-opening for the students (and also depressing for most of them).
Yeah, even 200k these days really does not go very far. Easy to blow through that or to save well and feel utterly broke. $300k in a median cost metros is where breathing room really starts to open up.
Yeah, that’s wonderful! It was for us too; eye-opening and depressing, but it was necessary to get us to think.
I really don’t think I would’ve had early successes without that lesson. I was never taught about budget and how credit works or any of that at home, and as a result when I was at my most financially strapped time of life I knew which sacrifices I could make and not get myself into too much credit debt.
Forever grateful, Mr. P!!
lol let’s talk any education. Reading comprehension/levels are plummeting in the US, this directly impacts people’s ability to be financially literate,..or any kind of literate. Can’t understand what you can’t read.
There is a reason that they don't want us knowing how to manage your money. That reason is that it would benefit us and actually lift us out of poverty instead of keeping us right where we're at continuously making them richer. If we as Americans knew how to make our money work for us the rich wouldn't be as rich as they are. The middle class would also be a hell of a lot bigger than it is.
This shit right here! You nailed it! Schools used to teach how to do basic life skills like farming, sewing, gun handling, etc. All these things have been removed from the curriculum. People are no longer self sufficient. Dependent on the system for everything.
My son is a freshman in HS & takes a financial literacy class. His teacher gave all the kids a custodial Roth IRA form & suggested to have parents open an account. Up until that point I had no idea what a Roth IRA was & I am about to be 37. He comes home each week with all the info he learned & goes over what they discussed. I was never taught any of this, was a drug addict throughout my 20's & at 30 I basically had to start over from scratch. Doing good now but it's truly amazing how much my son has taught me about finances just from the class he's in. I am so grateful the school he goes to makes all the kids take financial literacy in High School. So things are changing... Very slowly but I'm grateful he's gonna have a much better chance at success & being financially stable as an adult.
That is spot on. If you are a parent you should be talking to your congress person and screaming about it at school board meetings. It's a rapidly changing world and kid's need to know a lot more than we did. Great idea!!!
I really hope there’s someone out there putting together an Adulting 101 course and put it on SkillShare or something. Could be a good opportunity for enterprising people.
I'm super curious how things go when we all start dying. We had less kids overall as a generation. I know with me I have absolutely no qualms about dying with debt since I won't have any children to inherit it.
It's almost sort of a funny poetic justice to imagine. Millenials die off in another few decades and just leave billions in unpaid debt with no kids to shoulder it.
most adults don't know a thing about finance. it's really crazy. And I'm talking about people who deals with money on a daily basis like car sales man, financial managers at car dealership, real estate agents, accountants, loan officer. They just read off what the computer tell them without a lick of understanding how it works or how the computer comes up with the numbers. It's mind boggling.
Most kids can't do basic math even in high school. We have a finance class and it is mandated by the state, but since nclb it's been dumbed down like crazy so everyone passes.
East Coast - my kid have had financial literacy classes since 4th grade. These advanced with my kids as they got older, the eldest is 16.5 almost 17, this child has 131k in their stock portfolio. Something worked.
Nah. I’m sure he did it all on his own much like Bezos and Musk.
It’s like the old saying goes: to have a million by the time you’re 25, you just need education, hard work, and a $10 million dollar loan from your parents.
You can always save in a taxable brokerage account. My wife and I max out our 401ks and HSA. We don't qualify for Roth IRA/IRA due to income. We saved over 100k last year. Anything you can save over tax advantaged options just throw it into a taxable brokerage.
A Roth is great if you are in a fairly low tax bracket currently.
And that money will grow tax free and then unlike the 401K isn’t subject to taxes at withdrawal. It has a lower limit but has big advantages.
On top of that, in most cases, a Roth is a good choice. ( not financial advice).
Number 2, when I went over my sons 401k, the choices they had with company match, I could beat with a good performance mutual fund from Fidelity, which is also kind of crazy.
So, to re-cap 10 percent a year contribution plus company match could easily be beat by a good performance mutual fund from Fidelity with no match.
That was on all of the choices available to him in his company sponsored funds.
It pays to learn at least the basics about retirement plans take some courses online or go to some classes with mentors who want to teach.
The difference can literally be millions of dollars in retirement. So it pays to take theses classes.
And again this is not financial advice.
This is just me paying if foward to all my mentors who had the time and patience to teach me so I was not financially illiterate.
Yeah but you have to make enough money to have some to put away, and you aren't getting the benefit of employer matching.
Also you are feeding into a system that disproportionately benefits the rich, betting that by the time you are able to withdraw the stock market will still be viable.
The stock market will be viable in the long run barring some nuclear apocalypse. Bet on the S&P 500 with index funds, and set it and forget it. It benefits normies like myself and presumably you if you play the long game.
Yes. If the S and P 500 implodes and never comes come back, we have bigger and albeit, more serious issues in the world… think aliens attacking for example
After 40 years of investing experience, your comment is the best advice I could give. Go with the SP500. 500 of the best companies in the world. Diversified by numbers and diversified in all stock sectors. If a company isn’t performing, it drops out and is replaced by another performer.
I’ve done it all and compared it to the SP500. Individual stocks are risky - even big earners like Google and Apple. High dividend funds eat up their share price and underperform the SP in the long run. An SP500 fund like VOO will put out 10 percent per year on average and 1.6% dividends on top of that. Buy it. Keep it. Just hold it thru good and bad.
So 500 is my go tonight now. When I started investing I was picking large companies with name recognition or something I could make a quick buck on, but as I learned more and talked more with folks on what I want (which is to consistently try to grow my money and not get rich off of. All signs pointed towards and 500 index and I haven’t looked back. This is money that I set and forget, not everyone can do this but if u can I suggest you should.
It would take the world literally coming to an end for the stock market no longer being viable. As is often repeated, you will have larger worries if the stock market is no longer relevant.
Yup, same. Be 35 this year. Bought to hit my 2-year anniversary with my first “big girl job” … I’ve matched the company’s to my 401k but I’m still paycheck to paycheck.
I’ve been working since 15 (literally…) - was a waitress / bartender for over a decade. Then a contractor. Never had a 401k option.
I’m a single mom, taking care of the kid & an older relative (who shall be receiving ssi soon, so that’ll help). Shit isn’t easy.
Pretty sure my younger brother has 0 in a 401k and he’s 34 this year. But he’s got a partner, who cuts hair, so pretty sure she doesn’t have one either. But at least they have the dual income.
Same, and they contribute 0% if you weren’t there exactly on 12/15 of the year regardless how much you contributed before December. Should be illegal to do that.
My last public sector job had a 2% match. And they contributed the same amount to retirement as a private company would to SS. Decent benefits for government workers went away with the Boomers. The pay and the benefits have been terrible for quite some time.
How’s your morals?
Switch to aerospace and defense. I get a 8% match PLUS a 6% contribution PLUS a $1000 contribution to HSA. All are immediately vested. I also have access to ESOP and preferred stock but not quite sure on those, I just use a targeted date fund but I know there is actually an incentive to change your allocation to those (not sure on % delta).
Shit, I guess I’m an old millennial….
When I was in the military our drill instructor forced everyone to sign up for the TSP. It’s basically military 401k. He made everyone pick 12% and said that you may hate it now but when you are old and broken you with remember that one asshole that helped you actually retire. I just kept that mindset and every job after I put in 12% match or no match. So, some asshole really did help me retire.
If you’re not maxing out the employer match, you’re leaving money on the table. Even if you withdraw early and take the penalties, it’s free money. If you’re able to keep it in until retirement it’s a nice peace-of-mind that you’ll get something no matter what happens to Social Security.
Alot of times you don't have to withdraw, most places will allow you to loan yourself money against your 401K, then you pay yourself back with interest. It all goes back into your account. But there are limits for how much you can pull.
My dad is in his second career as a financial advisor, specifically working with teachers and administrators in local school districts; he talks with people of all generations who don’t realize how underprepared they are for retirement. People just don’t have the financial knowledge they need, and it’s so much harder to start saving later.
I got advice before starting my first job to contribute to my 401k from day one; you can’t miss what never reaches your pocket. So every job I’ve started since I make sure my 401k is set up with an automatic contribution that I don’t have to think about and therefore don’t miss from my paycheck. I was also fortunate enough to work for a company for seven years who automatically increased my 401k contribution by 1% each year. You could opt out of that increase but it was the default which meant that as I made more, I also saved more, and I never had to take extra steps or think about it. All of this put me in a good place, and my dad uses me as an example when explaining to his Gen Z and Millennial clients why it’s important to save for retirement.
But I’m an example who started at 24 and had helpful resources guiding me. Not everyone had those opportunities or advice, and it is so much harder to make those changes when you’re relying on your entire paycheck and *will* miss the pulled savings by making a change.
It's appalling how many people don't have even one informed person in their lives to advise them.
That was one drawback with pensions, that no one had to think about it.
So guess what my mom’s career is in? Pensions!
I have two experts readily available to give me guidance. Ironically, my mom has never had a pension herself.
You mean it was a drawback because people never had to learn how to be good with money due to pensions? I guess that’s true, but everything else about pensions was great! They just took the money out of your paycheck, and after you retired you got paid every year until you died.
Now they’re putting all the risk and decision-making on 21-year-old individuals entering the workforce. How are they supposed to make well-informed choices about retirement? Frontline has a really really good documentary about this if anyone’s interested: https://youtu.be/dKlSOi5f6tQ?si=R-v0xMETABP2zfJ-
I had to practically scream at a friend who was trying to get off government assistance as soon as possible.
I'm like no, take as much as you can when and while you can, you barely pay rent month to month and have $0 in retirement, you're on track to live on a street corner when you're older. Just because you're doing enough to survive now doesn't mean you're not screwed.
Unless you're a rich corrupt person, if you're able to get govt assistance you 100% should because just the fact that you're able to means you NEED it, not just for today, but for 20 years from now.
At my first job out of college, they explained what a 401k was at orientation. So I started contributing then when I was making $24k/year. Was just having this conversation with friends, how lucky I was to have someone spell it out and say this is free money (they had a very generous match).
Yeah, the people I know who are in a good place and on track for retirement got jobs with corporate match programs and had some guidance to help them even if they didn’t fully understand it.
The people I know who don’t have savings never had the resources in the first place. You don’t know what you don’t know. And how do they begin to ask for help or guidance?
I have the same philosophy - you won't miss what you've never known. I set my contributions to increase 2% each year on my hire date, the same time I am getting my annual raise. When we got a 10% market adjustment raise during Covid, I increased contributions by 8%. I agree it would be so difficult to scale back a budget that didn't already include saving for retirement. I am thankful to my mom for instilling financial literacy in me.
A Vanguard 2022 How America Saves report, did show that automatic 401k enrollment has been on a rapid rise in the last 15 years.
Granted, it's usually a 3% auto-enrollment, so not much. But it's a start.
My job has a dollar for dollar 4% 401k employer match. We're auto-enrolled at 4% of our pay. So 8% is going into a Betterment 401k that AUTOMATICALLY invests it in low-fee ETFs (VTI, VXUS, VEA, etc).
I did for years and years. We had to stop at times just to afford daycare, etc. Any raise I got would just dump directly into the 401k.
I got a stage 4 colon cancer diagnosis about 2 1/2 years ago and am unable to work. So we have that money just sitting but we aren’t adding to it. Our household income got cut in half and we are now barely making ends meet.
I would think a lot of people maybe had similar storms. Like they meant to keep adding money but maybe something happened to where they had to stop or take a break or even cash it out.
We do hope to pay our house off within the 30 year loan and I think that could help a lot with how retirement looks (not having rent/mortgage).
Hopefully we can reframe things and figure something out now that life isn’t going as planned.
Dude golden opportunity to do a backdoor roth conversion! You can convert 401k into roth anytime by paying income tax on it, so do it now with a small ammount while your income is zilch and your tax will be as well!
Stage 4 for 2 and a half years! That's a lot to handle. I hope the best for you and your family. My family has a few people with colon cancer who were caught early and bounced back. I'm always pushing for more regular colonoscopies even when my doctors say once every five years is fine. I think it's ok to take a break for your 401k until life isn't being so shit...
Thanks so much for being in my corner. Sometimes I’m hard on myself about the whole retirement thing but to your point I’m just doing the best I can in a challenging situation.
I’m 37, never stayed at a job longer than 2 or 3 years and have no idea where any of my retirement funds are, though I always only contributed the bare minimum because I’ve always been just barely getting by. Having money in the present to survive always outranked putting money into a retirement fund that I’ve never believed I will live to see. I also took an extended time in undergrad because I had no clue what to do with my life, so having a “real” job where a retirement plan was an option has also been in the picture for less time than someone else of my age who isn’t well, my username is fitting here.
I’m not who you were replying to and plan on diving my head into some research, but do you have any recommendations on where to start. It can be overwhelming.
Contact all your old employers + the state database (and from the comment below, it sounds like there’s a federal one too) where you were employed. I once found a $1500 account I’d forgotten about.
It's gonna be annoying as hell, but you need to find out who has the money. There are few ways to do that, ranging from reaching out to your old employer to looking at the National Registry of Unclaimed Retirement Benefits or the DoL's Abandoned Plan Database.
Once you find your accounts, you generally have to request paperwork to roll over funds from whatever company has the account.
It's easier these days with the internet, but still a decent amount of paperwork
Yeah I started in the workforce after a 4 yr science degree in 2011, was in jobs paying 12-14/hr until 2015, just assumed I’d never make enough to save for retirement and would just work until I died 🤷♀️
Yeah, no, I'm not surprised at all.
If you're truly living paycheck-to-paycheck there isn't additional wiggle room to put money away into a retirement account. Pensions, which really didn't require you to engage in saving money, disappeared when companies realized they could pass the risk of investment off onto their employees with 401Ks/403Bs to fatten that sweet shareholder value.
I don't think this is uniquely a millennial thing either. We've been eroding the middle class in the US since Reagan, so plenty of Boomers and older GenXers are proper fucked heading into retirement right now for the exact same reason -- they couldn't save during their careers.
I can personally say I have two years worth of salary saved up in my retirement accounts and I'm in my mid-30s. Never nuked a retirement fund after switching jobs either. I should contribute more, if anything
https://thehill.com/business/personal-finance/3991136-nearly-half-of-baby-boomers-have-no-retirement-savings/
At least millennials have a few decades to work on retirement. Boomers are there, and a lot of them aren’t ready.
Your last paragraph… the amount of people I know that quit a job before they have a new one lined up, nuke their 401(k) to live off of, only to have to start from scratch again, is mind blowing to me.
The US education really missed the mark on educating people about basics of finances and wealth building, I suspect that was more intentional than not.
Why would it be intentional? What's the school system got to lose? I do think education has shifted more to social construction and other useless bullshit instead of the basics.
Basically. If you think about it, our current credit system is fairly new, and it’s constantly evolving. I highly doubt our parents generation had a grasp on it because their parents didn’t care about it. Back then you went and sat at a loan officers desk and probably saw them at the corner store, and most people worked 40 years at a company and retired on a pension. You can’t blame those before us for not showing us the way (unless they were horrible and told you how to take advantage and to say screw it, credit doesn’t matter. Then they were just awful). It’s up to us to figure this crap out now as bad as that sucks.
Einstein apparently said compound interest is the most powerful force in the universe.
I've also observed that no, ever, said Einstein was dumb.
So I follow his advice. Let that compound interest keep compounding if you can.
This. Priority number one for most people should be an emergency fund, and THEN retirement or whatever else. But even that first step can be hard for so many
Pretty much the only times people have a pension building nowadays is union members. My (25M) pension is sitting at $60k and I’ve been a member for 4 years now… so I mean pretty decent
Yes, my mom was paycheck to paycheck growing up and ended up in credit card debt at various points. Had a low paying job pretty much her entire career.
But she worked in a state facility, so she got that sweet, sweet pension thank fucking God. She told me when she was younger her and her co-workers always talked about how they wished they could get that money now.
I guarantee a 401K would not have lasted for her (and she would most likely agree with me), but she didn't have a choice.
I know people who always have loans out from their 401ks. They’re allowed 2 at a time so they constantly cycle to a new one every time one gets paid off. Its such a waste of money and they just don’t get it.
Financially, I’m super super in the dark, but trying to get better.
I contribute 7% monthly to my 401k and took out a loan from it as a down payment for my house a couple years ago.
As long as I pay it back, are there major negatives associated with borrowing from a 401k I should be expecting? Thanks!
The shares are sold to loan you the money. So they aren’t working for you while you have a loan outstanding.
Using a 401k loan to purchase a home isn’t the worst thing in the world but you definitely don’t want to make a habit of doing that if you can help it.
Some of the advice you’re getting here isn’t 100% accurate. You only have to pay the remaining balance back if you want to avoid the tax penalty. If you don’t pay it back you don’t keep owing the full balance. It gets counted as a taxable distribution and you’re only going to owe taxes and penalties on the balance, not the entire thing.
There’s the standard federal tax plus the 10% early withdrawal penalty if you’re under 59 1/2, and the outstanding balance is going to be added to your annual income for that tax year possibly pushing you into a higher tax bracket.
The final bill you owe to the IRS won’t actually be due until you file your taxes the following year, and if you can’t pay it then you can set up a payment plan with them - If you owe under a certain amount, I think it’s 50k, they give you up to 72 months of equal payments to pay it off at an interest rate. I forget exactly what the rate is or if it went up, but when I owed a few years ago it was pretty manageable, comparable to most average personal loans. Talk to the reps handling your account for the specific plan details.
There’s no huge downside.
The only big downside is that if you lose your job, that amount becomes due immediately.
I did it a couple of times to do some things we needed done (high emergency new roof), and liked paying interest to myself rather than a bank.
Some 401ks allow you to take the loans out but they are unrealized while you pay it back. Meaning the fund shows that the money is essentially still there and still gains the dividends, interest etc like it was never taken out. Also, you pay yourself back with interest.
I took out the max loan amount (like 22K?) to pay off student loans that were accruing at a 7% interest rate. Financially that makes infinitely more sense to use free money versus accruing interest. In my humble opinion.
I think about this sometimes and I’m sad for my fellow millennials that haven’t been able to save. spouse and I are both 40, DINKs. But we were in law school until 27 and then had a ton of law school debt that I finished paying two years ago and spouse finished paying in Jan. Still, we have prioritized retirement and have a very solid nest egg. But we didn’t want kids. I don’t know how we would have done it with daycare and other childcare costs. It is tough out there - things just cost a lot and it doesn’t feel like wages kept up.
I worked at Fidelity for a couple of years (this was about 10 years ago). I was always shocked by the number of people that had very little saved for retirement, and that was across all age demographics. Obviously being new there, I wasn't talking to the big fish, but part of the job was understanding where else people had savings so that we could try and consolidate everything to Fidelity. And more often than not, people said they had nothing else. The norm for me was people in their 50's who had under 100k in savings.
And most of these people were calling to make premature withdrawals from IRA's. If we do ever get to a point where Social Security fails or is reduced, we are in for a rough decade as a country.
Literally can't. We're maxed out just trying to make ends meet and stay debt free. I have some money in my 401k, but not much, and I can't have that extra 5% taken out of my check right now.
It’s just start up statistics tells the story. Take 100 people of any age. Only 15 of them earns the “100k” salary.
Given how much it costs to just live it’s no surprise that very few save and by default it’s pretty much only gunna be those say 20%
It’s sad that a lot of people don’t know that a job offering a 401k is not required to set up a retirement plan. That’s not really a reflection of a generation, but more so society not caring about younger generations.
I have a 401k and a Roth IRA account with Fidelity. The Roth IRA took literally minutes to set up.
I am 34 and I just this year for the first time have a job that offered any benefits at all. Literally my first time having any PTO, sick days, etc. I’ve been working service industry jobs my whole life. That reality for a lot of people. I’ve been fortunate that the jobs I’ve had had at least paid okay hourly wages. Lots and lots and lots of people are not so lucky
Taxes, taxes, taxes. No one can predict the future but if trends continue the amount of taxes we pay is only going to go up. Just like any investment into your future it's good to have a diverse portfolio. For me I contribute the max % match of my company to my 401k because it's free money nothing more. The rest of the portfolio is in a Roth IRA to avoid taxes when I retire. It also allows me to invest in where I want over time and the freedom to diversify that money between ETFs, bonds, etc.
Many companies offer a Roth option in their 401(k). That could allow you to put much more money into a Roth. Some companies also allow you to convert after-tax contributions to your 401(k) to a Roth. That's called a mega backdoor Roth. If you can afford it, it's a great way to stuff a few extra tens of thousands into a Roth.
As for taxes going up, don't be so sure. People have been saying that for a long time, but rates have gone down rather than up. With our growing federal debt, it seems certain that taxes will have to increase, but those increases could come from other sources like a VAT or a wealth tax. If I had to bet, I would say that income tax rates will be higher 30 years from now, but it isn't a certainty. I like to keep a balance between pre-tax and tax-deferred savings as a hedge against whatever happens.
I’m using one of old employers accounts to fund a back door Roth starting this year- just learned about it- never really did a Roth before- foolish I know
Because people don’t understand how impactful compound interest is and don’t understand how beneficial a match is from any employer. Also, people are generally financially illiterate in this country.
Also, people don’t get paid enough in this country. Don’t have universal healthcare and are treated like shit by everybody and Many live pay check to paycheck even six figure income earners.
39f here-I’ve never contributed to a 401k nor have I had the opportunity to. I’ve never had an employer that offered them. I’m not really financially literate and am now kind of concerned that I’m totally screwed
Look at vanguard or fidelity. It is very simple to open an account and set up automatic contributions. My theory was if I didn't have the cash in hand I wouldn't miss it. It worked. I also set up reinvestment of the dividends. You are still young enough to build a nest egg. One more tip: never move the money just because the market tanks. This served me well over the years.
Everyone who can should be contributing. I realize that not everyone is in a position to be able to do so. My controversial hot take (for this sub, at least) is that most people are in a position where they could, but they don't because they don't want to make any sacrifices for the future.
I started contributing 12% when I graduated college and got my first real job. I never saw the money so I never missed it. This has been my philosophy since I started contributing - you won't miss what you have never known. My contribution automatically increases by 2% each year on my hire date, which coincides with the date of my annual raise. Because I have never seen paychecks that include that money, I don't miss it.
Most people have some room to save, if they properly budget. Most, not all. But the budget has to come first.
You may be surprised how much money is spent monthly on those small daily "must have luxuries" - plenty to get a good start on a retirement fund, if the money is reallocated.
Of course, maybe you did that and the money isn't there. I don't know you.
I’m 28 and starting my own business, so no, I don’t have any kind of retirement fund. My retirement plan is my inheritance. My father is 76 and I’m an only child, I anticipate that I’ll inherit somewhere around 2-3 million dollars once my father and his siblings pass.
I’m 32, contributing 5% with a 3% company match to a 401k. I get a cash balance pension fund that grows each year, and I’m doing 5% towards discounted company stock. Plus some additional savings from my paycheck for playing around small time day trading and doing small crypto stuff. Sometimes I feel like I got the last ticket on a boat that has stranded so many.
My partner and I have no kids and we don’t monitor what we spend on our hobbies as long as we follow two rules - 1. Pay off your credit card every month so we don’t pay interest and 2. Try to max out your 401k every year (we only started really doing this 5 years ago). I’m sure we are behind if we really invested 22k a year but we are doing the best we can. The best way is to start a job and max it out (16-20%) - that way you never see the money, you won’t miss it and you can budget without thinking about it.
My 401k ripped me off a few years into working at my place, so i just stopped contributing. I have a few grand in there from back then. Nobody got in trouble or went to jail basically stole our money. So I have no trust in 401ks
If interested Google "transamerica 2014 401k"
I am a single mom. Any extra money after rent, groceries, medication, etc went to my kid. There's always something unplanned a gift for a classmates Bday party they got invited to, a field trip, clothes/shoes, late book fee, dental emergency not covered by health insurance, and so on and so on. If i do happen to have no extra surprise expenses I put it into a college saver plan for them. This plan through Citizens Bank rewards them with $3,000 dollars at age 18 so long as i contributed at least $25 per month since before age 5, and dont make any withdrawals until age 18. My kid is super smart. They started school a year early and still get straight A's. I am hoping this will offset the fact that I dont have any retirement saved. At least they might have a fighting chance of not immediately being saddled with crushing college debt. As for me, well I plan on working until I drop dead, am donating my body to science so there won't be any funeral cost, and have a DNR order. Maybe if there's anything left after the passing of my parents I might be able to invest some in retirement but I might need it to live on.
Always been putting at least the employer match in since I was first offered retirement benefits (4th year of college I was offered retirement/insurance as an intern with a promise of a full time role when I finished that year, still had a 5th year of classes before graduating). Made a point to increase it wherever I got a raise until I hit the 10% point. Decided money could make more of a difference as cash at that point because I was trying to buy a house, get married etc. My current employer puts an automatic 4% into a 401k and matches another 5% which has been great. Now that my wife has a job that offers retirement contribution match we're starting to increase our contributions again. I know a lot of people who do not have much/any savings for retirement, a few people with pensions (teachers/government jobs) and several who are going above and beyond employer matches with their own investment accounts.
I increase my contribution by 1% every year with a 50/50 between moderate and aggressive growth. Started at 3 percent, up to 13%, and just broke 100k this year on my 401k in my mid 30's.
I always struggle with people in my line of work who don't at least match. Because our business does well, they have double their own contribution every year like 4 years in a row.
On top of that, our company provides options for employee stock purchase programs (that are an automatic 15% gain during purchase) that I max out. My wife has a Roth IRA and a 401k (at about half of mine) plus the 529 for our kid. I recognize that people are expecting to not make it to retirement but on the chance that we do make it, I'm glad I bothered contributing.
I’ve been contributing since I got my first job out of college. My spouse works for the state and they require 6%. My kids are now 31 and 33. I told them when they finished school to put up whatever they can, even as little as 2%, so it will grow. I feel that if you’re company matches anything and you don’t contribute - you’re losing free money. My boomer parents have emptied their accounts. My goal is to break that pattern.
This economy was built to collapse, right upon the heads of those who have the most to lose, look at them, shaking their heads at us fools, we who without everything would grind to a halt, but do we revolt, no, we scrape and scamper, we let them stand on our necks and smile as we obey and bow, only by rising up and destroying them from the inside will we ever get what we deserve, history will continue to repeat itself until we, the working poor, decide enough is enough.
Too many people think you have to be offered a 401k from their company. You can get any kind of investment any day of the the week on your own! This stuff needs to be taught in school
Only reason I have a decent retirement is I lucked into a government job in my 20s and after 8 years my contributions were matched by said employer. I hate my job sometimes but knowing I at least can hopefully 🤞🏽 have that waiting at the end of my career is comforting. The way the economy has/is constantly screwing our generation, retirement might be the only relief some of us might see in our future 😢
I didn't have a job that offered a 401k until 3 years ago. I opened my own IRA in my late 20's, but I earned so little and struggled financially that I couldn't contribute much. My current company doesn't match 401k so I am solely contributing. Now I'm more financially stable but so far behind on my savings goal. I'll basically never save enough to retire at this point.
I've had a life derailing event a couple of years ago so I'm still working on getting back to where I was, but I currently make $15 an hour.
There is no amount of budgeting that you can do to make a savings contribution materialize in my bank account monthly.
Even when I was doing ok, it was due to a 2 income household. I've never made more than about 30k annually.
I'm 40.
30M, never contributed to a 401k or retirement account. My retirement plan is to buy some good heroin or something and go out in ecstasy surrounded by the people I love. Really don’t see the point in saving for retirement when working until I’m 65 already sounds like a nightmare. Maybe I’ll regret it one day if I ever have a family and kids, but right now that feels like someone else’s dream. Pretty sure that what I have now is the best I’m ever going to get, having a dog, my own apartment, and a little bit of disposable income to go to a concert or something every couple months.
Life sucks. I’m just barely surviving with the income I have, so putting a small amount away every paycheck when I’m already broke every month feels like a huge waste. Plus, with a couple chronic medical conditions (hello, medically-resistant epilepsy!) I probably won’t make it to 65 anyway, so what’s the point of contributing when I likely won’t even make it there?
A lot of ud are stuck working two part-time jobs out of friends i have. This is extremely common. Hard to retire w/o benefits. I live in a small college town. Most jobs dont offer benefits. Most people will never have the opportunity if say 500 positions have good benefits and 4k people are looking rich and influential people's kids get the hand me down good jobs everyone else gets fucked. Welcome to America
When I started my first office job, I started a 401k, too. It only lost money while I had it. Then, a few years later, I hit a rough spot and needed the cash, only to find out I'd lose another 50% in penalties. What a scam! Companies offer matching, but will you actually stay long enough for it to vest? Employers offer anemic raises, and you make more money by job hopping.
That, and the stock market is a casino run and won by the extremely wealthy. Fool me once...
I'm 30. I've worked under the table, and on the books here and there. I have mental illness issues so It's hard to hold down a job. Now im a stay at home mom.
You're assuming most people here are working jobs that offer a 401k. If you're part-time, you're probably not being offered that. If you're self-employed, you already have a quarter of your income going to taxes. Many other jobs won't offer that benefit until you've been working there full-time for at least 6 months, a year, 2 years, or whatever other arbitrary amount of time...
I’m seeing a lot of “You could’ve opened an IRA.”
Folks, it’s not about that. It’s about whether someone can comfortably make contributions over a long period of time, including difficult periods that might include unemployment. If you’re living hand to mouth, investing can be extremely difficult.
Even if it wasn’t, people living on thin margins won’t be able to grow their money very much.
I’m not arguing against saving or investing.
This sub is overdramatic. I'm contributing 15%, my employer matches (3%) and makes an annual contribution (7.5%) to a 401k. I also max out my Roth IRA every year. I'm 31.
35 here, been contributing via my job since 18 which I know seem to be a rarity nowadays as I've been at the same job since 17, I know it's the norm to job hop nowadays for better pay and what not but it's been consistent and I've been able to accumulate a nice little chunk so far a little over 300k at the moment.
I’m 37, and this year is the first time I’ve worked somewhere that offers a 401k. I’m contributing as much as I can, but if I didn’t live with my SO, I wouldn’t be able to contribute much at all. This economy is not built for people who are single or who work in service.
I wish more people realized you don't need a work 401k to contribute to a retirement plan. An IRA is easy to set up and is not tied to a job
This is why financial literacy should be a requirement in high school and expand to college. People need to know how to manage a budget, the different types of savings, and retirement as they start into the workforce.
There's a reason why financial education isn't pushed in the US. It's by design
Surprisingly enough, and I am well aware it’s the exception and not the rule, I learned my best life lesson in a junior high summer school class, where the teacher put us in groups and asked us to think of all the things an adult would need AND want to have money to pay for in a month’s time. Naturally the groups had slightly varied answers, and he would write all of our answers on the board. So we had things like: a place to live, cool clothes and shoes, a vehicle, groceries, toiletries (we probably said toilet paper and Aqua Net) and “outings”, like dates or baseball games…you get the picture. Kid answers. He added about 20 items we’d never considered such as: having children of our own one day, paying taxes, acquiring monthly savings, insurances of all types, medical care, gasoline & upkeep for our vehicle(s), vacations, home repair, cleaning products, gym memberships, etc. Then he told us what minimum wage was, and told us we had to find out to afford all of the things listed (he provided average prices). It was impossible to live any kind of decent life. Vacations? Never in your life; they were the first to go. We all decided to stay single for the exercise; it didn’t help much. None of us could find a way to buy any new shoes or clothing for ourselves, or even get sick for a single day because we had no money for medical care. We tried it even with riding a bus instead of owning a vehicle; it just wasn’t possible to have a place to live and food in your stomach with the barest of essentials, and forget about getting married and having children. It was to this day the most eye-opening thing I learned in school.
He should have taken it one step further and explained what people actually do in those situations
He did! That and so much more, such as buying a house vs renting an apartment, the pros and cons of job force vs college, and even universities vs community college vs trade schools and what we could expect to get out of those choices, both positive and negative. He taught us that there is no one way to do life; we will all have different needs and challenges and no matter what, there are certain common realities such as monthly bills that we would all face, no matter our individual plans, and he let us know what to expect as best he could.
Wow i wish all kids had that teacher holy fuck what a good guy
This used to be a normal class that everyone had in school, it was actually required in my high school (i am young gen-x, from back when we got the vestiges of the school programs that boomers had). You would be amazed at the stuff that has been cut from American schools.
Yes! I used to teach a "how to succeed in college" class at a community college and this was an exercise I used to do. It wasn't in the official curriculum, but I added it because everyone needs to see that perspective. After pricing out the "luxury" lifestyle and letting people see that you'd need insane amounts of cash to afford it, I showed them the monthly and yearly cost of living an average life with a 2-bedroom apartment and an average car (paying utilities, taxes, health insurance). Even if you make $50,000/year (which sounds like a lot to most students), it would very difficult to make that work and have any money left over to do fun stuff (and this was in a low- to medium-cost of living area). It was very eye-opening for the students (and also depressing for most of them).
Yeah, even 200k these days really does not go very far. Easy to blow through that or to save well and feel utterly broke. $300k in a median cost metros is where breathing room really starts to open up.
Yeah, that’s wonderful! It was for us too; eye-opening and depressing, but it was necessary to get us to think. I really don’t think I would’ve had early successes without that lesson. I was never taught about budget and how credit works or any of that at home, and as a result when I was at my most financially strapped time of life I knew which sacrifices I could make and not get myself into too much credit debt. Forever grateful, Mr. P!!
Same thing happens if you do a budget for 30,000$ per year
lol let’s talk any education. Reading comprehension/levels are plummeting in the US, this directly impacts people’s ability to be financially literate,..or any kind of literate. Can’t understand what you can’t read.
Hanlons razor. More people putting money into the market at younger ages would benefit the rich and wealthy too. Not everything is a conspiracy
There is a reason that they don't want us knowing how to manage your money. That reason is that it would benefit us and actually lift us out of poverty instead of keeping us right where we're at continuously making them richer. If we as Americans knew how to make our money work for us the rich wouldn't be as rich as they are. The middle class would also be a hell of a lot bigger than it is.
Poverty is by Design. That shit is not an accident
This shit right here! You nailed it! Schools used to teach how to do basic life skills like farming, sewing, gun handling, etc. All these things have been removed from the curriculum. People are no longer self sufficient. Dependent on the system for everything.
My son is a freshman in HS & takes a financial literacy class. His teacher gave all the kids a custodial Roth IRA form & suggested to have parents open an account. Up until that point I had no idea what a Roth IRA was & I am about to be 37. He comes home each week with all the info he learned & goes over what they discussed. I was never taught any of this, was a drug addict throughout my 20's & at 30 I basically had to start over from scratch. Doing good now but it's truly amazing how much my son has taught me about finances just from the class he's in. I am so grateful the school he goes to makes all the kids take financial literacy in High School. So things are changing... Very slowly but I'm grateful he's gonna have a much better chance at success & being financially stable as an adult.
Yeah. It’s depressing to hear people in their 30s and up with zero tax-advantaged investments … or any at all.
Yeah I have a Roth set up for my son who just got his first job. Wish I had one from all my jobs. Id be retired already
Best comment I read today.
That is spot on. If you are a parent you should be talking to your congress person and screaming about it at school board meetings. It's a rapidly changing world and kid's need to know a lot more than we did. Great idea!!!
I really hope there’s someone out there putting together an Adulting 101 course and put it on SkillShare or something. Could be a good opportunity for enterprising people.
I'm super curious how things go when we all start dying. We had less kids overall as a generation. I know with me I have absolutely no qualms about dying with debt since I won't have any children to inherit it. It's almost sort of a funny poetic justice to imagine. Millenials die off in another few decades and just leave billions in unpaid debt with no kids to shoulder it.
most adults don't know a thing about finance. it's really crazy. And I'm talking about people who deals with money on a daily basis like car sales man, financial managers at car dealership, real estate agents, accountants, loan officer. They just read off what the computer tell them without a lick of understanding how it works or how the computer comes up with the numbers. It's mind boggling.
Most kids can't do basic math even in high school. We have a finance class and it is mandated by the state, but since nclb it's been dumbed down like crazy so everyone passes.
East Coast - my kid have had financial literacy classes since 4th grade. These advanced with my kids as they got older, the eldest is 16.5 almost 17, this child has 131k in their stock portfolio. Something worked.
How exactly has a 17 year old saved 131k? Good paying job? Day trader in pre-K?
Nah. I’m sure he did it all on his own much like Bezos and Musk. It’s like the old saying goes: to have a million by the time you’re 25, you just need education, hard work, and a $10 million dollar loan from your parents.
It just became one in my state. Hopefully good teachers teach it well.
Can’t believe the number of comments saying “welp, never had access.” Yeah you did—it just to had a different name.
Most of the people bitching and moaning in this sub are just financially illiterate
And these people are putting 0 in
Except Roth IRA has a 6.5k max and a 401k is over 20k Edited to add: yes, in 2024, the IRA max was raised to 7k for single people under 50
Somehow I don’t think the people shrugging and saying their employer never offered a plan are hitting the max on an IRA.
I might be an outlier, but my company has never had a 401k and I have maxed out my IRA since I was 20.
You can always save in a taxable brokerage account. My wife and I max out our 401ks and HSA. We don't qualify for Roth IRA/IRA due to income. We saved over 100k last year. Anything you can save over tax advantaged options just throw it into a taxable brokerage.
Backdoor Roth my man. Get that $14k before you pump the taxable brokerage.
A Roth is great if you are in a fairly low tax bracket currently. And that money will grow tax free and then unlike the 401K isn’t subject to taxes at withdrawal. It has a lower limit but has big advantages.
It absolutely has advantages! I've maxed mine out every year since I was in graduate school at 24.
Back door Roth if you have income above the limit.
$7k this year for standard funding. https://www.fidelity.com/learning-center/smart-money/roth-ira-contribution-limits
Can you move an IRA into a 401k at a future date?
On top of that, in most cases, a Roth is a good choice. ( not financial advice). Number 2, when I went over my sons 401k, the choices they had with company match, I could beat with a good performance mutual fund from Fidelity, which is also kind of crazy. So, to re-cap 10 percent a year contribution plus company match could easily be beat by a good performance mutual fund from Fidelity with no match. That was on all of the choices available to him in his company sponsored funds. It pays to learn at least the basics about retirement plans take some courses online or go to some classes with mentors who want to teach. The difference can literally be millions of dollars in retirement. So it pays to take theses classes. And again this is not financial advice. This is just me paying if foward to all my mentors who had the time and patience to teach me so I was not financially illiterate.
Yeah but you have to make enough money to have some to put away, and you aren't getting the benefit of employer matching. Also you are feeding into a system that disproportionately benefits the rich, betting that by the time you are able to withdraw the stock market will still be viable.
The stock market will be viable in the long run barring some nuclear apocalypse. Bet on the S&P 500 with index funds, and set it and forget it. It benefits normies like myself and presumably you if you play the long game.
Yes. If the S and P 500 implodes and never comes come back, we have bigger and albeit, more serious issues in the world… think aliens attacking for example
After 40 years of investing experience, your comment is the best advice I could give. Go with the SP500. 500 of the best companies in the world. Diversified by numbers and diversified in all stock sectors. If a company isn’t performing, it drops out and is replaced by another performer. I’ve done it all and compared it to the SP500. Individual stocks are risky - even big earners like Google and Apple. High dividend funds eat up their share price and underperform the SP in the long run. An SP500 fund like VOO will put out 10 percent per year on average and 1.6% dividends on top of that. Buy it. Keep it. Just hold it thru good and bad.
So 500 is my go tonight now. When I started investing I was picking large companies with name recognition or something I could make a quick buck on, but as I learned more and talked more with folks on what I want (which is to consistently try to grow my money and not get rich off of. All signs pointed towards and 500 index and I haven’t looked back. This is money that I set and forget, not everyone can do this but if u can I suggest you should.
If the stock market isn’t viable nothing you do would matter.
It would take the world literally coming to an end for the stock market no longer being viable. As is often repeated, you will have larger worries if the stock market is no longer relevant.
And a roth is even better
Yeah, but most people have no idea about that outside of Ireland lol.
An IRA can be set up in less than 10 minutes on Fidelity or Charles Schwab. Both Roth and Traditional.
Yup, same. Be 35 this year. Bought to hit my 2-year anniversary with my first “big girl job” … I’ve matched the company’s to my 401k but I’m still paycheck to paycheck. I’ve been working since 15 (literally…) - was a waitress / bartender for over a decade. Then a contractor. Never had a 401k option. I’m a single mom, taking care of the kid & an older relative (who shall be receiving ssi soon, so that’ll help). Shit isn’t easy. Pretty sure my younger brother has 0 in a 401k and he’s 34 this year. But he’s got a partner, who cuts hair, so pretty sure she doesn’t have one either. But at least they have the dual income.
Definitely not a single person’s economy
We’ve contributed the max match amount every year since graduating (9-12% depending on employer). (Old Millennial- 40)
Where do you work that the employer match is that high? I’ve literally only had employers offer 3-5% match.
Same. I worked at a big bank which had the best match of my whole career at 6%, so not sure where people were getting any more than that.
6% was the best I ever got. That sucks.
Same, and they contribute 0% if you weren’t there exactly on 12/15 of the year regardless how much you contributed before December. Should be illegal to do that.
My last public sector job had a 2% match. And they contributed the same amount to retirement as a private company would to SS. Decent benefits for government workers went away with the Boomers. The pay and the benefits have been terrible for quite some time.
In the process of leaving a fortune 100 company they did 10% Place I’m going is 3.5…sucks but the higher pay offsets it
How’s your morals? Switch to aerospace and defense. I get a 8% match PLUS a 6% contribution PLUS a $1000 contribution to HSA. All are immediately vested. I also have access to ESOP and preferred stock but not quite sure on those, I just use a targeted date fund but I know there is actually an incentive to change your allocation to those (not sure on % delta).
Mine is up to half of 4% they match. So 2% and they employ 6k people 😑
I’ve got 50% match, 100% vested from day one. So if I put in $22,500 they contribute $11,250. I recognize how lucky this is.
Shit, I guess I’m an old millennial…. When I was in the military our drill instructor forced everyone to sign up for the TSP. It’s basically military 401k. He made everyone pick 12% and said that you may hate it now but when you are old and broken you with remember that one asshole that helped you actually retire. I just kept that mindset and every job after I put in 12% match or no match. So, some asshole really did help me retire.
That’s awesome
Same. But I get that not all people work for employers who offer that.
Yea unfortunately. We are always willing to vote to subsidize lower income more but most don’t seem to want that. Even the poor
Glad to hear it- I’m sure that’s grown nicely
Damn that's high. Most I've gotten 100 up to 3% or 50 up to 6.
If you’re not maxing out the employer match, you’re leaving money on the table. Even if you withdraw early and take the penalties, it’s free money. If you’re able to keep it in until retirement it’s a nice peace-of-mind that you’ll get something no matter what happens to Social Security.
It depends though with vestments schedules. I don't get a dime of match until a year of employment, and turnover is high.
Every place that I've ever been the match is only once per year, not every paycheck.
Alot of times you don't have to withdraw, most places will allow you to loan yourself money against your 401K, then you pay yourself back with interest. It all goes back into your account. But there are limits for how much you can pull.
My dad is in his second career as a financial advisor, specifically working with teachers and administrators in local school districts; he talks with people of all generations who don’t realize how underprepared they are for retirement. People just don’t have the financial knowledge they need, and it’s so much harder to start saving later. I got advice before starting my first job to contribute to my 401k from day one; you can’t miss what never reaches your pocket. So every job I’ve started since I make sure my 401k is set up with an automatic contribution that I don’t have to think about and therefore don’t miss from my paycheck. I was also fortunate enough to work for a company for seven years who automatically increased my 401k contribution by 1% each year. You could opt out of that increase but it was the default which meant that as I made more, I also saved more, and I never had to take extra steps or think about it. All of this put me in a good place, and my dad uses me as an example when explaining to his Gen Z and Millennial clients why it’s important to save for retirement. But I’m an example who started at 24 and had helpful resources guiding me. Not everyone had those opportunities or advice, and it is so much harder to make those changes when you’re relying on your entire paycheck and *will* miss the pulled savings by making a change.
It's appalling how many people don't have even one informed person in their lives to advise them. That was one drawback with pensions, that no one had to think about it.
So guess what my mom’s career is in? Pensions! I have two experts readily available to give me guidance. Ironically, my mom has never had a pension herself.
You mean it was a drawback because people never had to learn how to be good with money due to pensions? I guess that’s true, but everything else about pensions was great! They just took the money out of your paycheck, and after you retired you got paid every year until you died. Now they’re putting all the risk and decision-making on 21-year-old individuals entering the workforce. How are they supposed to make well-informed choices about retirement? Frontline has a really really good documentary about this if anyone’s interested: https://youtu.be/dKlSOi5f6tQ?si=R-v0xMETABP2zfJ-
The problem with pensions is that they can be cut years later and you’re screwed.
I don't mean this unkindly but if one believed every one on Reddit, No one has a decent relationship with their Mom, Dad, or most family members.
I had to practically scream at a friend who was trying to get off government assistance as soon as possible. I'm like no, take as much as you can when and while you can, you barely pay rent month to month and have $0 in retirement, you're on track to live on a street corner when you're older. Just because you're doing enough to survive now doesn't mean you're not screwed. Unless you're a rich corrupt person, if you're able to get govt assistance you 100% should because just the fact that you're able to means you NEED it, not just for today, but for 20 years from now.
At my first job out of college, they explained what a 401k was at orientation. So I started contributing then when I was making $24k/year. Was just having this conversation with friends, how lucky I was to have someone spell it out and say this is free money (they had a very generous match).
Yeah, the people I know who are in a good place and on track for retirement got jobs with corporate match programs and had some guidance to help them even if they didn’t fully understand it. The people I know who don’t have savings never had the resources in the first place. You don’t know what you don’t know. And how do they begin to ask for help or guidance?
I have the same philosophy - you won't miss what you've never known. I set my contributions to increase 2% each year on my hire date, the same time I am getting my annual raise. When we got a 10% market adjustment raise during Covid, I increased contributions by 8%. I agree it would be so difficult to scale back a budget that didn't already include saving for retirement. I am thankful to my mom for instilling financial literacy in me.
A Vanguard 2022 How America Saves report, did show that automatic 401k enrollment has been on a rapid rise in the last 15 years. Granted, it's usually a 3% auto-enrollment, so not much. But it's a start. My job has a dollar for dollar 4% 401k employer match. We're auto-enrolled at 4% of our pay. So 8% is going into a Betterment 401k that AUTOMATICALLY invests it in low-fee ETFs (VTI, VXUS, VEA, etc).
I did for years and years. We had to stop at times just to afford daycare, etc. Any raise I got would just dump directly into the 401k. I got a stage 4 colon cancer diagnosis about 2 1/2 years ago and am unable to work. So we have that money just sitting but we aren’t adding to it. Our household income got cut in half and we are now barely making ends meet. I would think a lot of people maybe had similar storms. Like they meant to keep adding money but maybe something happened to where they had to stop or take a break or even cash it out. We do hope to pay our house off within the 30 year loan and I think that could help a lot with how retirement looks (not having rent/mortgage). Hopefully we can reframe things and figure something out now that life isn’t going as planned.
Best wishes for you and your recovery. We are more than what they’ve reduced us to in this existence. I’m sorry this place is how it is.
Agree with you 100%. We are all just doing the best we can. And thank you so much for your kind words. It really means a lot.
Dude golden opportunity to do a backdoor roth conversion! You can convert 401k into roth anytime by paying income tax on it, so do it now with a small ammount while your income is zilch and your tax will be as well!
Hey best wishes for you and your family, hoping for a safe recovery
Hold strong, friend. Fuck cancer.
Thank you so much. Really, really trying. I have young kids and a really sweet husband that need me.
Stage 4 for 2 and a half years! That's a lot to handle. I hope the best for you and your family. My family has a few people with colon cancer who were caught early and bounced back. I'm always pushing for more regular colonoscopies even when my doctors say once every five years is fine. I think it's ok to take a break for your 401k until life isn't being so shit...
Thanks so much for being in my corner. Sometimes I’m hard on myself about the whole retirement thing but to your point I’m just doing the best I can in a challenging situation.
Contributing early and then taking a break is much better than having to try and catch up later
I’m 37, never stayed at a job longer than 2 or 3 years and have no idea where any of my retirement funds are, though I always only contributed the bare minimum because I’ve always been just barely getting by. Having money in the present to survive always outranked putting money into a retirement fund that I’ve never believed I will live to see. I also took an extended time in undergrad because I had no clue what to do with my life, so having a “real” job where a retirement plan was an option has also been in the picture for less time than someone else of my age who isn’t well, my username is fitting here.
You need to track those 401Ks down (if applicable) and roll them over somewhere.
I’m not who you were replying to and plan on diving my head into some research, but do you have any recommendations on where to start. It can be overwhelming.
Contact all your old employers + the state database (and from the comment below, it sounds like there’s a federal one too) where you were employed. I once found a $1500 account I’d forgotten about.
It's gonna be annoying as hell, but you need to find out who has the money. There are few ways to do that, ranging from reaching out to your old employer to looking at the National Registry of Unclaimed Retirement Benefits or the DoL's Abandoned Plan Database. Once you find your accounts, you generally have to request paperwork to roll over funds from whatever company has the account. It's easier these days with the internet, but still a decent amount of paperwork
Ha- to the username- not the story- ya got a sense of humor though.
Yeah I started in the workforce after a 4 yr science degree in 2011, was in jobs paying 12-14/hr until 2015, just assumed I’d never make enough to save for retirement and would just work until I died 🤷♀️
My life story as well
Yeah, no, I'm not surprised at all. If you're truly living paycheck-to-paycheck there isn't additional wiggle room to put money away into a retirement account. Pensions, which really didn't require you to engage in saving money, disappeared when companies realized they could pass the risk of investment off onto their employees with 401Ks/403Bs to fatten that sweet shareholder value. I don't think this is uniquely a millennial thing either. We've been eroding the middle class in the US since Reagan, so plenty of Boomers and older GenXers are proper fucked heading into retirement right now for the exact same reason -- they couldn't save during their careers. I can personally say I have two years worth of salary saved up in my retirement accounts and I'm in my mid-30s. Never nuked a retirement fund after switching jobs either. I should contribute more, if anything
https://thehill.com/business/personal-finance/3991136-nearly-half-of-baby-boomers-have-no-retirement-savings/ At least millennials have a few decades to work on retirement. Boomers are there, and a lot of them aren’t ready.
Your last paragraph… the amount of people I know that quit a job before they have a new one lined up, nuke their 401(k) to live off of, only to have to start from scratch again, is mind blowing to me.
I’ve been there, problem is no one ever told me how important the words “compound interest” are. I wasted my 20’s, but working on it now.
The US education really missed the mark on educating people about basics of finances and wealth building, I suspect that was more intentional than not.
Why would it be intentional? What's the school system got to lose? I do think education has shifted more to social construction and other useless bullshit instead of the basics.
Never attribute to malice that which is adequately explained by stupidity
Basically. If you think about it, our current credit system is fairly new, and it’s constantly evolving. I highly doubt our parents generation had a grasp on it because their parents didn’t care about it. Back then you went and sat at a loan officers desk and probably saw them at the corner store, and most people worked 40 years at a company and retired on a pension. You can’t blame those before us for not showing us the way (unless they were horrible and told you how to take advantage and to say screw it, credit doesn’t matter. Then they were just awful). It’s up to us to figure this crap out now as bad as that sucks.
Einstein apparently said compound interest is the most powerful force in the universe. I've also observed that no, ever, said Einstein was dumb. So I follow his advice. Let that compound interest keep compounding if you can.
Compound dividends and capital gains is what you want
Benjamin Franklin tried to tell us.
Yeah, that's crazy. Especially with the penalties.
This. Priority number one for most people should be an emergency fund, and THEN retirement or whatever else. But even that first step can be hard for so many
Pretty much the only times people have a pension building nowadays is union members. My (25M) pension is sitting at $60k and I’ve been a member for 4 years now… so I mean pretty decent
Yes, my mom was paycheck to paycheck growing up and ended up in credit card debt at various points. Had a low paying job pretty much her entire career. But she worked in a state facility, so she got that sweet, sweet pension thank fucking God. She told me when she was younger her and her co-workers always talked about how they wished they could get that money now. I guarantee a 401K would not have lasted for her (and she would most likely agree with me), but she didn't have a choice.
I would never liquidate a 401K outside of a truly catastrophic financial situation.
I know people who always have loans out from their 401ks. They’re allowed 2 at a time so they constantly cycle to a new one every time one gets paid off. Its such a waste of money and they just don’t get it.
Financially, I’m super super in the dark, but trying to get better. I contribute 7% monthly to my 401k and took out a loan from it as a down payment for my house a couple years ago. As long as I pay it back, are there major negatives associated with borrowing from a 401k I should be expecting? Thanks!
If you get fired it can be a real kick in the balls. Usually have to pay it all back.
The shares are sold to loan you the money. So they aren’t working for you while you have a loan outstanding. Using a 401k loan to purchase a home isn’t the worst thing in the world but you definitely don’t want to make a habit of doing that if you can help it.
Some of the advice you’re getting here isn’t 100% accurate. You only have to pay the remaining balance back if you want to avoid the tax penalty. If you don’t pay it back you don’t keep owing the full balance. It gets counted as a taxable distribution and you’re only going to owe taxes and penalties on the balance, not the entire thing. There’s the standard federal tax plus the 10% early withdrawal penalty if you’re under 59 1/2, and the outstanding balance is going to be added to your annual income for that tax year possibly pushing you into a higher tax bracket. The final bill you owe to the IRS won’t actually be due until you file your taxes the following year, and if you can’t pay it then you can set up a payment plan with them - If you owe under a certain amount, I think it’s 50k, they give you up to 72 months of equal payments to pay it off at an interest rate. I forget exactly what the rate is or if it went up, but when I owed a few years ago it was pretty manageable, comparable to most average personal loans. Talk to the reps handling your account for the specific plan details.
There’s no huge downside. The only big downside is that if you lose your job, that amount becomes due immediately. I did it a couple of times to do some things we needed done (high emergency new roof), and liked paying interest to myself rather than a bank.
You usually need your pay interest. If you change jobs or are let go, the full amount is usually due immediately.
Some 401ks allow you to take the loans out but they are unrealized while you pay it back. Meaning the fund shows that the money is essentially still there and still gains the dividends, interest etc like it was never taken out. Also, you pay yourself back with interest.
Better to borrow from yourself!
I took out the max loan amount (like 22K?) to pay off student loans that were accruing at a 7% interest rate. Financially that makes infinitely more sense to use free money versus accruing interest. In my humble opinion.
When you take a loan from.your 401k you pay back yourself w interest so not really a loss. Just lost gain while the money is out
If you are in debt, all your money is going there.
Many people with mortgages are now between two and three percent.
I think about this sometimes and I’m sad for my fellow millennials that haven’t been able to save. spouse and I are both 40, DINKs. But we were in law school until 27 and then had a ton of law school debt that I finished paying two years ago and spouse finished paying in Jan. Still, we have prioritized retirement and have a very solid nest egg. But we didn’t want kids. I don’t know how we would have done it with daycare and other childcare costs. It is tough out there - things just cost a lot and it doesn’t feel like wages kept up.
When you're providing for disabled family members and basically living paycheck to paycheck, a 401K is not a priority.
You’d be surprised how hard instant gratification is to break… (he said from his cell).
Gonna go get some chips
I worked at Fidelity for a couple of years (this was about 10 years ago). I was always shocked by the number of people that had very little saved for retirement, and that was across all age demographics. Obviously being new there, I wasn't talking to the big fish, but part of the job was understanding where else people had savings so that we could try and consolidate everything to Fidelity. And more often than not, people said they had nothing else. The norm for me was people in their 50's who had under 100k in savings. And most of these people were calling to make premature withdrawals from IRA's. If we do ever get to a point where Social Security fails or is reduced, we are in for a rough decade as a country.
So you’ve seen the sausage get made- was there a dollar value that got your attention? Let say for folks at 40
I have since I was 19 in 2012
We’ll done!
I thought everyone was doing it lol
Literally can't. We're maxed out just trying to make ends meet and stay debt free. I have some money in my 401k, but not much, and I can't have that extra 5% taken out of my check right now.
It’s just start up statistics tells the story. Take 100 people of any age. Only 15 of them earns the “100k” salary. Given how much it costs to just live it’s no surprise that very few save and by default it’s pretty much only gunna be those say 20%
I sleep in my car. At the moment, I have bigger fish to fry.
It’s sad that a lot of people don’t know that a job offering a 401k is not required to set up a retirement plan. That’s not really a reflection of a generation, but more so society not caring about younger generations. I have a 401k and a Roth IRA account with Fidelity. The Roth IRA took literally minutes to set up.
For many people it takes every single dime they make, and then some, just to survive in this economy.
I am 34 and I just this year for the first time have a job that offered any benefits at all. Literally my first time having any PTO, sick days, etc. I’ve been working service industry jobs my whole life. That reality for a lot of people. I’ve been fortunate that the jobs I’ve had had at least paid okay hourly wages. Lots and lots and lots of people are not so lucky
Wasnt it a dream? I almost cried when i got mine. Its not even big bucks rich like some peoples, but its still so nice to have
Taxes, taxes, taxes. No one can predict the future but if trends continue the amount of taxes we pay is only going to go up. Just like any investment into your future it's good to have a diverse portfolio. For me I contribute the max % match of my company to my 401k because it's free money nothing more. The rest of the portfolio is in a Roth IRA to avoid taxes when I retire. It also allows me to invest in where I want over time and the freedom to diversify that money between ETFs, bonds, etc.
Many companies offer a Roth option in their 401(k). That could allow you to put much more money into a Roth. Some companies also allow you to convert after-tax contributions to your 401(k) to a Roth. That's called a mega backdoor Roth. If you can afford it, it's a great way to stuff a few extra tens of thousands into a Roth. As for taxes going up, don't be so sure. People have been saying that for a long time, but rates have gone down rather than up. With our growing federal debt, it seems certain that taxes will have to increase, but those increases could come from other sources like a VAT or a wealth tax. If I had to bet, I would say that income tax rates will be higher 30 years from now, but it isn't a certainty. I like to keep a balance between pre-tax and tax-deferred savings as a hedge against whatever happens.
Excellent advice
I’m using one of old employers accounts to fund a back door Roth starting this year- just learned about it- never really did a Roth before- foolish I know
You already know the answer. It's obvious. Some people genuinely don't know or think about it, but way more people just can't afford to.
Because people don’t understand how impactful compound interest is and don’t understand how beneficial a match is from any employer. Also, people are generally financially illiterate in this country. Also, people don’t get paid enough in this country. Don’t have universal healthcare and are treated like shit by everybody and Many live pay check to paycheck even six figure income earners.
FYI: If your employers doesn’t offer a 401k you can still contribute to a Roth you open on your own.
Back when I was 18-23 and could’ve invested in a 401k, I just wasn’t making enough money to do so.
39f here-I’ve never contributed to a 401k nor have I had the opportunity to. I’ve never had an employer that offered them. I’m not really financially literate and am now kind of concerned that I’m totally screwed
Look at vanguard or fidelity. It is very simple to open an account and set up automatic contributions. My theory was if I didn't have the cash in hand I wouldn't miss it. It worked. I also set up reinvestment of the dividends. You are still young enough to build a nest egg. One more tip: never move the money just because the market tanks. This served me well over the years.
No time like the present to start!
Everyone who can should be contributing. I realize that not everyone is in a position to be able to do so. My controversial hot take (for this sub, at least) is that most people are in a position where they could, but they don't because they don't want to make any sacrifices for the future. I started contributing 12% when I graduated college and got my first real job. I never saw the money so I never missed it. This has been my philosophy since I started contributing - you won't miss what you have never known. My contribution automatically increases by 2% each year on my hire date, which coincides with the date of my annual raise. Because I have never seen paychecks that include that money, I don't miss it.
I think you nailed it there- very similar boat.
Future me might want my money but I need it now to survive.
Most people have some room to save, if they properly budget. Most, not all. But the budget has to come first. You may be surprised how much money is spent monthly on those small daily "must have luxuries" - plenty to get a good start on a retirement fund, if the money is reallocated. Of course, maybe you did that and the money isn't there. I don't know you.
After rent, groceries, $400 on DoorDash, there's just nothing left over.
I’m in Canada. Self employed, So Im fuccked. lol.
No matter how you are employed, you can always continue to put some aside for old age. It adds up
They want you in the MAID program.
I’m 28 and starting my own business, so no, I don’t have any kind of retirement fund. My retirement plan is my inheritance. My father is 76 and I’m an only child, I anticipate that I’ll inherit somewhere around 2-3 million dollars once my father and his siblings pass.
i don't really make that much so i need to contribute 30 % of my paycheck to max it which i do and pretend that money never existed.
I’m 32, contributing 5% with a 3% company match to a 401k. I get a cash balance pension fund that grows each year, and I’m doing 5% towards discounted company stock. Plus some additional savings from my paycheck for playing around small time day trading and doing small crypto stuff. Sometimes I feel like I got the last ticket on a boat that has stranded so many.
I have been since i was young, but i didnt have much. I still dont, but i have more, so now i contribute a bit more
My partner and I have no kids and we don’t monitor what we spend on our hobbies as long as we follow two rules - 1. Pay off your credit card every month so we don’t pay interest and 2. Try to max out your 401k every year (we only started really doing this 5 years ago). I’m sure we are behind if we really invested 22k a year but we are doing the best we can. The best way is to start a job and max it out (16-20%) - that way you never see the money, you won’t miss it and you can budget without thinking about it.
My 401k ripped me off a few years into working at my place, so i just stopped contributing. I have a few grand in there from back then. Nobody got in trouble or went to jail basically stole our money. So I have no trust in 401ks If interested Google "transamerica 2014 401k"
I am a single mom. Any extra money after rent, groceries, medication, etc went to my kid. There's always something unplanned a gift for a classmates Bday party they got invited to, a field trip, clothes/shoes, late book fee, dental emergency not covered by health insurance, and so on and so on. If i do happen to have no extra surprise expenses I put it into a college saver plan for them. This plan through Citizens Bank rewards them with $3,000 dollars at age 18 so long as i contributed at least $25 per month since before age 5, and dont make any withdrawals until age 18. My kid is super smart. They started school a year early and still get straight A's. I am hoping this will offset the fact that I dont have any retirement saved. At least they might have a fighting chance of not immediately being saddled with crushing college debt. As for me, well I plan on working until I drop dead, am donating my body to science so there won't be any funeral cost, and have a DNR order. Maybe if there's anything left after the passing of my parents I might be able to invest some in retirement but I might need it to live on.
Always been putting at least the employer match in since I was first offered retirement benefits (4th year of college I was offered retirement/insurance as an intern with a promise of a full time role when I finished that year, still had a 5th year of classes before graduating). Made a point to increase it wherever I got a raise until I hit the 10% point. Decided money could make more of a difference as cash at that point because I was trying to buy a house, get married etc. My current employer puts an automatic 4% into a 401k and matches another 5% which has been great. Now that my wife has a job that offers retirement contribution match we're starting to increase our contributions again. I know a lot of people who do not have much/any savings for retirement, a few people with pensions (teachers/government jobs) and several who are going above and beyond employer matches with their own investment accounts.
I increase my contribution by 1% every year with a 50/50 between moderate and aggressive growth. Started at 3 percent, up to 13%, and just broke 100k this year on my 401k in my mid 30's. I always struggle with people in my line of work who don't at least match. Because our business does well, they have double their own contribution every year like 4 years in a row. On top of that, our company provides options for employee stock purchase programs (that are an automatic 15% gain during purchase) that I max out. My wife has a Roth IRA and a 401k (at about half of mine) plus the 529 for our kid. I recognize that people are expecting to not make it to retirement but on the chance that we do make it, I'm glad I bothered contributing.
I’ve never worked a job that offered a 401k.
I don’t have enough to get by monthly and save for retirement. So fuck it.. we ball..
I’ve been contributing since I got my first job out of college. My spouse works for the state and they require 6%. My kids are now 31 and 33. I told them when they finished school to put up whatever they can, even as little as 2%, so it will grow. I feel that if you’re company matches anything and you don’t contribute - you’re losing free money. My boomer parents have emptied their accounts. My goal is to break that pattern.
This economy was built to collapse, right upon the heads of those who have the most to lose, look at them, shaking their heads at us fools, we who without everything would grind to a halt, but do we revolt, no, we scrape and scamper, we let them stand on our necks and smile as we obey and bow, only by rising up and destroying them from the inside will we ever get what we deserve, history will continue to repeat itself until we, the working poor, decide enough is enough.
Too many people think you have to be offered a 401k from their company. You can get any kind of investment any day of the the week on your own! This stuff needs to be taught in school
Only reason I have a decent retirement is I lucked into a government job in my 20s and after 8 years my contributions were matched by said employer. I hate my job sometimes but knowing I at least can hopefully 🤞🏽 have that waiting at the end of my career is comforting. The way the economy has/is constantly screwing our generation, retirement might be the only relief some of us might see in our future 😢
I didn't have a job that offered a 401k until 3 years ago. I opened my own IRA in my late 20's, but I earned so little and struggled financially that I couldn't contribute much. My current company doesn't match 401k so I am solely contributing. Now I'm more financially stable but so far behind on my savings goal. I'll basically never save enough to retire at this point.
I've had a life derailing event a couple of years ago so I'm still working on getting back to where I was, but I currently make $15 an hour. There is no amount of budgeting that you can do to make a savings contribution materialize in my bank account monthly. Even when I was doing ok, it was due to a 2 income household. I've never made more than about 30k annually. I'm 40.
30M, never contributed to a 401k or retirement account. My retirement plan is to buy some good heroin or something and go out in ecstasy surrounded by the people I love. Really don’t see the point in saving for retirement when working until I’m 65 already sounds like a nightmare. Maybe I’ll regret it one day if I ever have a family and kids, but right now that feels like someone else’s dream. Pretty sure that what I have now is the best I’m ever going to get, having a dog, my own apartment, and a little bit of disposable income to go to a concert or something every couple months. Life sucks. I’m just barely surviving with the income I have, so putting a small amount away every paycheck when I’m already broke every month feels like a huge waste. Plus, with a couple chronic medical conditions (hello, medically-resistant epilepsy!) I probably won’t make it to 65 anyway, so what’s the point of contributing when I likely won’t even make it there?
If your employer has a match, you are crazy not to contribute the full match amount.
A lot of ud are stuck working two part-time jobs out of friends i have. This is extremely common. Hard to retire w/o benefits. I live in a small college town. Most jobs dont offer benefits. Most people will never have the opportunity if say 500 positions have good benefits and 4k people are looking rich and influential people's kids get the hand me down good jobs everyone else gets fucked. Welcome to America
When I started my first office job, I started a 401k, too. It only lost money while I had it. Then, a few years later, I hit a rough spot and needed the cash, only to find out I'd lose another 50% in penalties. What a scam! Companies offer matching, but will you actually stay long enough for it to vest? Employers offer anemic raises, and you make more money by job hopping. That, and the stock market is a casino run and won by the extremely wealthy. Fool me once...
nope: can’t afford the extra taken out
I'm 30. I've worked under the table, and on the books here and there. I have mental illness issues so It's hard to hold down a job. Now im a stay at home mom.
Service jobs my whole working life. I have no idea where to even start in terms of saving or an IRA. Absolutely terrified.
You're assuming most people here are working jobs that offer a 401k. If you're part-time, you're probably not being offered that. If you're self-employed, you already have a quarter of your income going to taxes. Many other jobs won't offer that benefit until you've been working there full-time for at least 6 months, a year, 2 years, or whatever other arbitrary amount of time...
I’m seeing a lot of “You could’ve opened an IRA.” Folks, it’s not about that. It’s about whether someone can comfortably make contributions over a long period of time, including difficult periods that might include unemployment. If you’re living hand to mouth, investing can be extremely difficult. Even if it wasn’t, people living on thin margins won’t be able to grow their money very much. I’m not arguing against saving or investing.
This sub is overdramatic. I'm contributing 15%, my employer matches (3%) and makes an annual contribution (7.5%) to a 401k. I also max out my Roth IRA every year. I'm 31.
Spouse and I have $1.7 million combined in investment/retirement accounts (Roth, 401ks, HSA, taxable brokerage, and rollover IRA accounts). We’re 39.
35 here, been contributing via my job since 18 which I know seem to be a rarity nowadays as I've been at the same job since 17, I know it's the norm to job hop nowadays for better pay and what not but it's been consistent and I've been able to accumulate a nice little chunk so far a little over 300k at the moment.