Need some 401k advice

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You can live off SS if you own a place outright and have a smaller tax bill. Honestly man, if you are paying 12 grand in taxes a year and plan to stay there in retirement, I hope you have a BIG 401K. My yearly taxes are about 3,800 on a decent size house in MA. When retirement kicks in, I will be moving to the boonies somewhere with lower taxes and cheaper living. The plan for my 401K is to give me just enough to supplement my SS to live comfortably, but not lavishly.

All I need is 3 hots and a cot, internet and a little booze from time to time. Ammo also of course, but I suppose I can learn to reload.
I'm a Millennial - no way my generation can rely on social security to still be around when we retire. It's not factored into my retirement planning in any way.
 

ASHDUMP

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So if I'm not in the game right now but have 50k I can put in should I? Or should I just start at 0 and start contributing the minimum?
 
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So if I'm not in the game right now but have 50k I can put in should I? Or should I just start at 0 and start contributing the minimum?
You can't contribute $50k at once. 401k has to come out of wages, and the IRA limit is $5500 per year. And unless you're making $250k+ a year, there's no tax benefit to a $50k contribution in one year. But if you have $50k just sitting there, you have a lot of smart options. You should talk to a financial advisor or estate planner. There are a lot of variables to consider.
 
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In God We Trust

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Today, maybe. Not 20 years from now. My SS report says I'll be getting like $2600/month when I retire. I don't believe that for a second.
Yeah. I'm 42 and don't expect there to be much left in the pot when I turn 67. Both my wife and I will have 401k and a small pension so we should be able to get by. If SS happens to kick in, life will be good
 

M1911

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You can't contribute $50k at once. 401k has to come out of wages, and the IRA limit is $5500 per year. But if you have $50k just sitting there, you have a lot of smart options. You should talk to a financial advisor or estate planner. There are a lot of variables to consider.
Exactly. Find a fee-for-service investment adviser (not one who makes money on commissions).

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Today, maybe. Not 20 years from now. My SS report says I'll be getting like $2600/month when I retire. I don't believe that for a second.
My assumption is that Social Security will be bankrupt when I retire in 10 years. If it isn't and I actually get money from SS, that will be a bonus.
 
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I really appreciate all the advice. There are some things i'll answer/address when I get a minute, as well as answer some PMs so thank you again for all the input.
 

drumenigma

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Exactly. Find a fee-for-service investment adviser (not one who makes money on commissions).

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My assumption is that Social Security will be bankrupt when I retire in 10 years. If it isn't and I actually get money from SS, that will be a bonus.
Good advice on seeking a fee based adviser. I would also guess that SS will be pretty much non-existent for me as well. I've already been notified by the SSA in their statements they send out that I will be lucky to get .75 on the dollar down the road.

Everyone should take advantage of 401k's or other investments as early as you can. The rich don't stay rich by putting their money in their mattress, they invest it. Being strictly in a money market or bank account paying nothing for interest right now is the worst possible thing unless you're knocking on deaths door. There are companies looking to recoup costs of money markets since many of them have subsidized yields right now to keep them from going negative so you probably won't see a decent paying money market for a while.
 

Obie1

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So if I'm not in the game right now but have 50k I can put in should I? Or should I just start at 0 and start contributing the minimum?
For that amount of money, I'm not sure that you need an advisor. Contribute the max amount to a Roth IRA, put the rest into a Vanguard S&P 500 index fund (maybe 5K in a money market fund for emergencies). Add the max to the Roth each year. You can easily set all of this up with a call to Vanguard (or most any other investment company). I recommend Vanguard only because of their low fees.
 
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For that amount of money, I'm not sure that you need an advisor. Contribute the max amount to a Roth IRA, put the rest into a Vanguard S&P 500 index fund (maybe 5K in a money market fund for emergencies). Add the max to the Roth each year. You can easily set all of this up with a call to Vanguard (or most any other investment company). I recommend Vanguard only because of their low fees.
+1

Sent from the depths of Hell using TapaTalk
 

thorin

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OK, this thread has motivated me to learn a little more. Can anyone recommend me a good book on the basics of retirement savings and other financial stuff? I have been contributing to my 401k for a while but never really thought about it too much.
 
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Good advise here:


Dude, at age 32 you should be maxing out your 401k contribution. Your investment compounds tax free -- as your investment grows, the IRS doesn't take money out of it. Whether your company matches or not, 401ks are a super great deal.

Your 401k plan undoubtedly allows for multiple different investment options. Take a look at your plan. Chances are they have an S&P 500 index fund. Transfer your investment into that.

For the vast majority of people, your only hope of retiring is to max out your 401k.
 

Obie1

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OK, this thread has motivated me to learn a little more. Can anyone recommend me a good book on the basics of retirement savings and other financial stuff? I have been contributing to my 401k for a while but never really thought about it too much.
There is an endless supply of information. All the major investment houses (eg, Schwab, Vanguard, T Rowe Price, Edward Jones...) have tons of info on their websites. There are thousands of books (one of my favs: http://www.amazon.com/Smartest-Retirement-Book-Youll-Ever/dp/0399536345), hundreds of courses, dozens of periodicals, and a whole crapload of people on gun websites that can help. GL
 
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I always tried to find someone who was successful in planning their retirement. I talked to several average Joe type people who accumulated at a minimum of a Million on an average salary. While I do use a financial adviser for some things, I put a lot of stock in what average people have done to retire comfortably with no pension and not depending on social security. All the successful people I talked to have 1 common trait, they all set goals and ignored ups and downs
 
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- Is it even worth having considering I have no company matching and it's $800 a year? After 30 years I should end up with a whopping 24k plus interest....nothing to right home about.
In 30 years would you rather have $24,000 or nothing?
 
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Bad bad bad advice. Everytime anyone talk about this I would smack him.

I can have many reason how dumb is this. This is your 401k. The money is your assuming you fulfilled the requirement. Why the heck you want to borrow your own money and pay ****ing interest. This is like 0/0. Plus, you have to repay your loan. There is a culprit on borrowing against 401k. If you get layoff or leave the company sponsor 401k, you have to repay the loan in full.

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true, you have to pay back the loan immediately if you leave the company

i'm not a financial planner, but we ran this option by a couple CFPs and they thought it was sound. Always consult a professional...

I agree it's a stupid move only if the borrower is over-leveraged and would not be able to repay the 401(k) loan at will.

FYI, there are a few reasons you should not smack people who take a loan against a 401(k):
- smacking people is dumb
- it's not always a loss, esp if it's short term. our 401(k) allows continued contributions while a loan is taken on it. Also, any drops on the market would become a profit. Timing the market would be ballsy, but the positive potential is there
- the interest paid may be worth the convenience gained from the transaction: the borrowed amount can used for a specific purpose and repaid immediately. It's a way to use an asset for financial lever without paying a steep penalty.

the specific use in this example is as a down payment for a home. assuming there is sufficient equity in a property (we had tons), the home could be sold, mortgage & closing costs paid off, and the 401(k) loan repaid immediately.

this money could give a home buyer the flexibility of not requiring them to sell prior to buying another home. No awkward periods of homelessness.

This also assumes they would be credit approved to carry 2 mortgages and would be selling a ~$150k condo in Worcester (w substantial equity) to buy a $200k compound in N.NH.

I just did a 401(k) loan and a temporary Roth withdrawal to get into our current home. Both were paid back within 40 days. It worked great and kept my investment accounts unscathed
 
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If you are going to borrow money, always borrow someone elses money not your own. If you have an adviser who says its ok to borrow from a 401K find a new one.
 

cbrxx

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Regarding the borrowing against your 401k, the interest is paid back to yourself, so it's not a horrible thing to do if you really need it for something like a house.
Just don't go doing it to blow on a vacation!
 

EddieCoyle

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Regarding the borrowing against your 401k, the interest is paid back to yourself, so it's not a horrible thing to do if you really need it for something like a house.
Just don't go doing it to blow on a vacation!
The problem with this is that if your employment situation changes, or if your employer gets bought out or changes 401K providers, you end up having to pay back the whole loan immediately, or get taxed and pay the penalty.
 

drumenigma

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In 30 years would you rather have $24,000 or nothing?
I'd rather have a whole lot more and figure out a better way to invest that $800 a year.

Side note....what the hell, was I drunk when I posted that? "nothing to right home about" oooi [laugh]
 

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Use 401k if they match. The risk is when you retire that you pay tax based on those future rates. My crystal ball is broken but I only expect our tax burden to increase.

Use roths to contribute post tax with known tax rates. If you are a real cynic, invest in muni bonds, that way the unborn children of those municipalities can foot the bill.

Stay away from life insurance with cash values as they are scams like annuities. If you can, buy rental properties that pay 10%+ per year.

I personally don't contribute to my 401k as it doesnt match so I rolled it into an IRA that I can manage better.
I like to invest in emerging markets with no muni bonds.
 

HTRN

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Use 529s to transfer wealth to kids. Each state has its own an utah was good the lat time I checked. You get over the limit by having multiple ones from many states.
 

rep308

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Use 529s to transfer wealth to kids. Each state has its own an utah was good the lat time I checked. You get over the limit by having multiple ones from many states.
At the risk of going off topic, if you use 529 plans, which are very beneficial, keep EVERY FRIGGING RECEIPT! Colleges will issue you a 1098T which outlines tuition cost, but does not include Room, Board, Books and other stuff covered by the 529 plan. I was audited on a 529 distribution from 3 years prior and it was very difficult and time consuming to get all the receipts.
 

ASHDUMP

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Use 401k if they match. The risk is when you retire that you pay tax based on those future rates. My crystal ball is broken but I only expect our tax burden to increase.

Use roths to contribute post tax with known tax rates. If you are a real cynic, invest in muni bonds, that way the unborn children of those municipalities can foot the bill.

Stay away from life insurance with cash values as they are scams like annuities. If you can, buy rental properties that pay 10%+ per year.

I personally don't contribute to my 401k as it doesnt match so I rolled it into an IRA that I can manage better.
I like to invest in emerging markets with no muni bonds.
I'm getting life insurance next week. I think they wanted me to get into some sort of plan that was an investment with a life benefit. Is that what you are talking about?
 

JoeT

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Use 529s to transfer wealth to kids. Each state has its own an utah was good the lat time I checked. You get over the limit by having multiple ones from many states.
At the risk of going off topic, if you use 529 plans, which are very beneficial, keep EVERY FRIGGING RECEIPT! Colleges will issue you a 1098T which outlines tuition cost, but does not include Room, Board, Books and other stuff covered by the 529 plan. I was audited on a 529 distribution from 3 years prior and it was very difficult and time consuming to get all the receipts.
And then of course there's THIS

http://time.com/money/3676300/529-taxes-obama-state-of-the-union/


so the goal is to make education more affordable for some by making it less affordable for others...
 

ASHDUMP

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WTF

No matter what we do we are ****ed. Shit, I'll just save my money and buy a couple cheap multi families.

The .gov is sooo ****ed right now. No way to pay off 18T
Anyone who thinks the environment for saving for anything (retirement, education, inheritance) will remain the same probably also believes laraza and the illegals will save us from our crushing debt.
 
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I'm getting life insurance next week. I think they wanted me to get into some sort of plan that was an investment with a life benefit. Is that what you are talking about?
Whole life insurance (insurance with a built in investment) is an antiquated concept - that kind of policy hasn't been relevant since the 1970s. Buy a term life policy that will cover your spouse and kid(s), and invest your money separately. The policy will be much cheaper, and you'll get a better return on your investment.
 
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