401k, how much do you put in % wise?

[rcpratt]

8+6%

 

[dullard]

I'll have to calculate sometime to see that it all works out: 401k with the 50% match that's contributing to expensive investments, or forfeit the 50% match and dump all of it into the low-cost index fund investments. Every bit that the fees sap away is money that's not compounding, or rather, it's not compounding in my account, it's compounding in the 401k company's account.

I'll calculate it for you.

A free 50% is very difficult to beat. Suppose you compared a 50% matched 401k at 1.9% fee with a 0% match IRA with a 0.19% fee (typical for low-fee Vanguard funds). After 10 years, you'll be about ~37% better with the 401k.

Here are numbers. Consider you have $400/month to invest. You could either put it in the 401k and with the match get $600/month or put $400/month in the IRA. That would come close to maxing out the IRA for the year. Assume a 1.9% fee in the 401k and a 0.19% fee in the IRA. Assume 8% returns before the fee. After 10 years with the 401k, you'd have $99,966. After 10 years with the IRA, you'd have $73,279. A 36.4% better performance in the high-fee 401k.

That is assuming that the pre-fee returns are the same. Sometimes 401ks give you crap to invest in and in that case, you might do less than 37% better with the 401k, but still a free 50% gain is hard to beat in the IRA. The only way the 401k would do worse is if the 401k choices were so bad that you got an average 6% (or more) better return on the IRA during that 10 year period. And that isn't going to happen.


With that said, only invest in your 401k up until you max out the company match. Then put the rest that you want to save (if any) into the IRA. Don't go over the company match if you have high 401k fees and can contribute to some form of IRA.

 

[TXHokie]

6%, my company give 100% up to 6%.

That's really good. I put in 8% to get the 50% match. Wish I can do more but times are tough.

 

[ch33zw1z]

That's really good. I put in 8% to get the 50% match. Wish I can do more but times are tough.

From what I have heard it's good. They did away with pensions some time back, prior to my employment. Many employees who were within 10 years of retirement lost the pension, the 6% match was the bone that was thrown it seems. This is the way it was explained to me, by people who lost they're pensions.

 

[soulcougher73]

I put in 6%, company puts in 3%. Not a very good 401k match policy here

 

[QuantumPion]

Put in too little and you live a life of a pauper for 20-40 years after you retire. That is, if you can ever retire. And if you don't retire, why put any into a 401k (beyond the company match of course)?

Put in too much and you waste your youth.

A general rule-of-thumb is that you need to have ~17% of your salary saved/invested each year. If you save 17% for 40 years, get raises that match inflation, get a historically average rate of return on your investments, and withdraw at the commonly recommended rate to have your retirement savings last then you'll retire with EXACTLY the same income as you had when you were working. That is the perfect balance to me. You have a smooth transition from work to retirement with no change in lifestyle needed. No wasted youth and no poverty in retirement.

Of course, that 17% will be dropped by other factors. If your company puts in 5%, then you only need to put in 12%. Also, in addition to a 5% company match if social security is around and pays 5%, then you only need to put in 7%. And that savings doesn't need to be only in the 401k. Emergency savings and house mortgage principal count as well, so you can drop the 401k contribution even further. But, note that emergency savings and housing usually don't return as much as stocks, so don't drop much below 7%.

Other factors also affect the amount. A large inheritance means you can invest less. A few years of not saving (lost a job, or over-spent at some point) means you need to invest more.

I'm also at 18% in my 401k right now but I change it frequently.

17% sounds like overkill to me unless you are trying to catch up from behind.

 

[IndyColtsFan]

I put in 5% and my company puts in a whopping 14% between the match and a generous 10% contribution they give every employee, so I've got 19% going in currently. I'm going to start increasing that percentage since I got a late start but that 19% is allowing me to play catch-up pretty quickly.

 

[edro]

17% sounds like overkill to me unless you are trying to catch up from behind.

Depends on when you retire, what you do when you retire, what other income you have when you retire, etc.

17% isn't much if you have no other income or investments and you retire at 60.

 

[HydroSqueegee]

5% + 3% match = 8%. its really not enough. but i have expenses.

 

[blipblop]

Legal max every year

 

[JTsyo]

me 10%, company 3%, wife 6% (should really have her up it), her company 3% plus my pension. We should be OK for retirement especially when the house is paid off and the kids are grown.

 

[Saint Nick]

I don't put in any... whoops

 

[Sho'Nuff]

I put in 8%, because that is what allows me to invest the whole year through. If I put in more I would cap out before the end of the year.

You are a fool if your company matches and you do not contribute enough to get the whole match. I.e., if your company matches 50% of your contribution or a max of 5% of your income, you would be silly not to contribute 10% of your gross income to your 401k. Why? Because where else are you going to see an immediate, guaranteed, 50% return on investment?

 

[crownjules]

None. My company doesn't match, so I just stick money into a Roth IRA.

 

[Genx87]

23% until I need the money.

 

[RearAdmiral]

I put in 5% and my company puts in a whopping 14% between the match and a generous 10% contribution they give every employee, so I've got 19% going in currently. I'm going to start increasing that percentage since I got a late start but that 19% is allowing me to play catch-up pretty quickly.

Where can I send my resume?

 

[sze5003]

I put in 4% it automatically goes up 2% each year but I have too many student loans and bills to pay I don't spend any money on myself.

My company matches 4% and contributes 10% usually two times or so a year.

 

[IronWing]

25% + 5% match = 30% but the percentages are from base salary only. The last few years I've had a bunch of overtime. Without the overtime I couldn't afford to put in 25%. Also, I spent a long time in school so started late.

I don't really expect to see much growth in the US stock market for a decade or more as the baby boomers unwind their positions to fund their retirements. Kind of sucks, returns are lousy so you have to save more but saving more seems pointless because returns are so lousy.

 

[vi edit]

18% + 5% match + $1200 bonus match at end of each year. I hope to retire somewhat early and want that fund as plump as I can get it before I'm 55.

 

[IronWing]

I put in 5% and my company puts in a whopping 14% between the match and a generous 10% contribution they give every employee, so I've got 19% going in currently. I'm going to start increasing that percentage since I got a late start but that 19% is allowing me to play catch-up pretty quickly.

Cool, that's even better than one of my former employers that would match 5% with 10%.

 

[poopaskoopa]

6(me) + 10(them)%

 

[AgaBoogaBoo]

I only put in what is needed to get the company match - that said, I don't spend everything I earn and prefer the liquidity and freedom that comes with money outside of a retirement account. The downside is that if I should ever need to go through bankruptcy, they will get all of that. I believe the money in retirement accounts is shielded from bankruptcy.

The liquidity and freedom benefits me, because I know that I can be more opportunistic, which sits well with my personality and attitude. If I see investments that are selling cheap, no matter what the asset class or vehicle, I can move into it - that could be real estate, stocks, bonds, a business partnership, a home for myself, or anything else.

 

[Krazy4Real]

I put in 7% right now.

 

[xanis]

I do 3% plus 3% employer match for 6% total. It's not a whole lot, but better than nothing I suppose.

 

[Red Storm]

Legal max every year

There's a legal max?