Ok, here we go... I am 23. I make $43,000 before taxes, with a 2-3% raise per year. My employer will match my contribution to my 401k up to 6%, which is what I plan on putting into it. What I want to know is, how much of my pay check should I save? 5%? 10%? I know ay my age, my assets should be more focused on stocks. Of my savings, how much should I put into stocks, cash, real estate? Basically Im looking for a ball park answer. Im going to create a budget soon and based off the answers I get here, figure out how much I need to save in order to do things like buy a nice house in 10 years, and retire at 55. I know this is running on but also, as far as I know I cant take out of my 401k until 65ish? If I did want to retire at 55, what would be the penalty for that?
i read how much should i shave....was creeped outmfor a second as long as you take advantage of the 6% thats good.
I think it is 59.5, not 65. If you are permanently laid off, quit, retire early or are terminated at 55 or older I don't believe there is a penalty.
pay off all CC debt if you have any have 6 months emergency fund contribute to your 401k max out your roth IRA ($5000/year) save for a down payment of a house, Spoiler or put that down payment in an index fund and rent forever (that's what i would do but that's a whole other thread.)
I need more info on Roth IRA. Index fund sounds interesting, especially given the fact we are thinking about selling our house later this year. More info please. Maybe somebody needs to start a finances thread. Saving, investing, spending, retirement, etc. all in one place.
you can't go wrong with vanguard for all that info. https://personal.vanguard.com/us/whatweoffer/ira/whichiraABTest?Link=facet?WT.srch=1 here's the gist: Roth IRA $10,000 maximum contribution per year for married couples making less than $173,000 can withdraw CONTRIBUTIONS any time without penalty withdrawals are tax free after at least 5 years and 59 1/2 years of age for simplicity of selection of index funds, look into the target retirement funds. https://personal.vanguard.com/us/whatweoffer/ira/retirementfundchoices?Link=facet
WTF? You need to be buying watches and ****. and spending money at nice steak restaurants and going on washington and doing Coke. Saving, wtf.
If I contribute 12% ( with company match) do I really need a roth IRA? And yeah I would do coke, but finding dealers is tough. New to the city so gotta work on my connects.
get your investment hustle on not necessarily conventional investments either. not illegal activity necessarily either
ah, to be young and ignorant. when you understand the power of compound interest you're going to regret not contributing to a roth IRA.
If you are contributing 6% with an employee match at age 23, you are better off than 90% of today's 23 year-olds. After this, focus most on not running up any credit card debt (or any other debt for that matter). If you do this also, you are better off than 99.5% of 23 year-olds. (Next step is whenever you decide to marry, choose someone else who isn't in debt). BTW, you can take low-interest loans against a 401K but not an IRA. Keep this in mind.
Only you can really decide what the right amount to save is - it depends on how long you want to work and what kind of lifestyle you want in retirement. There are plenty of online retirement calculators will show you how much yearly income you can expect to have depending on how much you save. Everyone says to focus on retirement, but there's a balance to be had - if you miss out on life's opportunities over the next 30 years to have a great retirement, you may have regrets over things you didn't do. So you have to figure out what amount is best for you. But that said, there is a right and wrong way to maximize your savings. First, you want to max your matched 401k, as you're doing. You get an immediate 100% return there, so that's more valuable than anything else. After that, if you still want to save more, you want to look at an IRA - Traditional or ROTH. Either way, you'll end up with the same amount of money at retirement if tax rates stay the same. The real question is whether you expect your tax rate to be higher or lower now vs retirement. If you expect you tax rate is higher now, you want to use a Traditional IRA. If you expect your tax rate will be higher then, you want to ROTH. The tax rates could be different because of your income level or just overall tax policy of the country. There are other small differences between the two that you should look at before investing, but from a purely financial standpoint, relative tax rates is what to look at. If you want to save further after that, you're looking at a non-retirement account - whether that be simple savings or investing in the market or buying gold or whatever else you can throw money into. There are no tax benefits there, but you also get flexibility here that the money is more accessible if your life circumstances change.
You could consider wanting to go back to school, or the prospect of hating your coworkers so much that you'd like to afford to take a lesser paying job.
I have no debt other then my truck being financed, which I owe 7k on left. You'll have to excuse me but I'm not sure what taking a loan out on a 401k means. I never went to college, I thought school was boring, and instead I joined the Marines. Now that that'd over and done with, I'm just trying to get on the right foot for the rest of my life. Thanks for all the input.
Thank you for your service. - Is the 12% in a company retirement plan? Does it involve stock in the company? Are you real sure you know what you are contributing to? The reason I ask is that I know people that contributed to a company retirement plan that was partly made up of stock in the company, and when the company went under, were left with a fraction of what they expected to have for retirement. As for Roth IRA's, you should strongly consider opening one. It's better to have mulitple resources for retirement. Several income streams are far better than one, IMO. And consider going to college, if you can. You are obviously young enough to be able to do it and begin a new career. Hell, a degree in anything is better than no degree at all.
I'm in the "don't miss life while you're young' boat somewhat. Save and plan by all means but don't forgo 'experiences' now, life is for living and every day could be your last. I see a lot of people a little bit older than me that worked like hell all their lives to get to retirement and now they are sick, dead or bored talking about their 'conditions'. It takes value judgments every day. Look for good returns on experiences as well as investments. Frugally priced big fun along the way is not money wasted.
I'm 24 and started working at 22. I'm giving myself 3 years to just screw around and have fun before I seriously start saving. That is not to say I'm being irresponsible and maxing out my credit cards or anything like that, I'm still paying off my college loans at $600 a month and will be done with it within a few months (paid off a chunk with my signing bonus, was a small loan to begin with). I still pay off my credit card every month and never keep a balance. I have about 3 months salary in my checking account. I'm in the last year of this 3 year plan and I'm having the time of my life. I bought a new sports car, took trips to Europe, Cancun, Vegas (which ended up being the most expensive trip for obvious reasons), started a respectable collection of watches and live in a nice apartment. I'm very strongly in the "live it up while you're young" mold.
That's terrible advice. The dollars you save in your 20's produce exponentially more money than what you put away in your 30's.
