Am I putting enough money into my 401k plan?

[Triforceofcourage]

I am 24 years old and am putting in $288/month away for my retirement into my 401k.
Should I be trying to put more in?

Tri

 

[Feldenak]

Go up to your company match. After that if you need/want to save more do it on your own (Roth,other invesment accounts, high yield savings, etc...)

 

[Tifababy]

Definitely put up to your companies match, but it would probably be a good idea to invest more (either in your 401k or other investment accounts as Feldenak said).

It'll be tough to retire before age 65 when you're putting under $3500/yr into retirement. When you're young is the time to invest (time is on your side). My dad always told me "pay yourself first" meaning that you should invest in your future (retirement) before you pay all your bills (but obviously still pay your bills).

I'm 27 and I put just over $700/mo into my 401k and I also max our my ROTH each year.

 

[K1052]

Originally posted by: Feldenak
Go up to your company match. After that if you need/want to save more do it on your own (Roth,other invesment accounts, high yield savings, etc...)

Yep.

I wouldn't want to put anymore in my 401K (limited investment options) because I have more control of my investments outside the work plan.

Remember to diversify. Stocks, bonds, real estate, cash reserves, even physical precious metals for the more cautious of us.

 

[LeadMagnet]

Originally posted by: Triforceofcourage
I am 24 years old and am putting in $288/month away for my retirement into my 401k.
Should I be trying to put more in?

Tri

You should always try to max it out - if possible hit that $15,500 barrier - then max out a ROTH IRA

 

[radioouman]

I think that only you can decide how much to contribute.
You need to look at how you are investing your money, and what return you can get over the long term. Then you need to calculate how much money you will have by the time you want to retire, or the time you'll be allowed to pull money out of your retirement savings.

Obviously there will be inflation between now and then, but a rule of thumb for a MINIMUM is that the amount that you are living on now will get you by when you retire IF you are not making a house payment.
So for example, if you take home $3000 per month now and have a $1200 house payment, then by the time you retire you'll need to have your house paid off and have $3000 of income available per month.

Excel has plenty of financial functions built in to calculate future value, etc. I'd start there.

 

[alrocky]

As a rule of thumb you want to save at least 10% of your income toward retirement. The IRS limit is $15,000 this year and $15,500 next year. IRA's are $4000. If possible max out both. The typical advice if you can't max both, is to contribute into your 401(k) up to the company match, then max the IRA, then more into the 401(k). You generally want to defer taxes on income as long as possible so max the 401(k) before opening opening a taxable account. Of course if your 401(k) has a poor selection of mutual funds and or has high expenses you may reconsider that and open a taxable account instead.

What are your investing options in your 401(k)? List of available mutual funds and the like?

 

[Triforceofcourage]

Originally posted by: alrocky
As a rule of thumb you want to save at least 10% of your income toward retirement. The IRS limit is $15,000 this year and $15,500 next year. IRA's are $4000. If possible max out both. The typical advice if you can't max both, is to contribute into your 401(k) up to the company match, then max the IRA, then more into the 401(k). You generally want to defer taxes on income as long as possible so max the 401(k) before opening opening a taxable account. Of course if your 401(k) has a poor selection of mutual funds and or has high expenses you may reconsider that and open a taxable account instead.

What are your investing options in your 401(k)? List of available mutual funds and the like?

I am currently investing in a S&P500 index fund through my 401k plan but I don't like it because the expenses seem high. It has a front load of 5% and an expense ratio of .45%. This seems kind of high to me so I am reluctant to put more in passed the company match.

 

[bennylong]

5% load??? You should complain because your plan is ripping you off. I have been maxing out my 401k the past 5 years and now I don't have to save a single dime and still have enough to retire when I'm 65. But with a 5% load, I wouldn't max out in your 401k plan.

 

[LS20]

5%? uh... thats wayy bull... there goes any potential gains. hell , might as well put it in CD with no fees.

index funds shouldnt be any more than 2%. i had 1.3% through transamerica when they still had it...

 

[Scarpozzi]

My company throws 10% of what I make into a pension for me....and I only put about $50 a month into my 401k because they only match like $30 a month on that... Pretty limited for now, but I'm only 26. I plan on increasing all of this once I finish grad school and start making better money.

It's important to put what you can in early because it's harder to make up for lost interest on the tail end of your retirement funds. You need to building what you can via 401k or IRAs.

 

[AMDZen]

I'd say its too much, I put a lot less in and I'm doing fine. If things work out, I'll still be a millionaire when I retire.

Unless you make so much that almost 300 a month is nothing to you, 300 extra a month would make a big difference for me

 

[ebaycj]

ROTH 401K FTW..

WAAAY better than regular, even with a large company match.

 

[alrocky]

Originally posted by: Triforceofcourage
I am currently investing in a S&P500 index fund through my 401k plan but I don't like it because the expenses seem high. It has a front load of 5% and an expense ratio of .45%. This seems kind of high to me so I am reluctant to put more in passed the company match.

Yikes! A 5% front load and E.R. of 0.45% is terrible. For comparision: Vanguard's S&P 500 (VFINX) has a E.R. of 0.18% and my TSP C Fund has a E.R. of only 0.05%.

There any no load options for you? What mutual fund companies are available in your 401(k)? Have you contributed $4000 for this year's IRA?

 

[Triforceofcourage]

Originally posted by: alrocky

Originally posted by: Triforceofcourage
I am currently investing in a S&P500 index fund through my 401k plan but I don't like it because the expenses seem high. It has a front load of 5% and an expense ratio of .45%. This seems kind of high to me so I am reluctant to put more in passed the company match.

Yikes! A 5% front load and E.R. of 0.45% is terrible. For comparision: Vanguard's S&P 500 (VFINX) has a E.R. of 0.18% and my TSP C Fund has a E.R. of only 0.05%.

There any no load options for you? What mutual fund companies are available in your 401(k)? Have you contributed $4000 for this year's IRA?

They all seem to have the 5% front load and the expense ratio's are at .45% or higher. I haven't contributed anything yet to an IRA account. Maybe that is a good route to take?

 

[alrocky]

That's too bad... Because of the costs of your 401(k), it looks like you should only contribute up to the company match. Maxing out this year's IRA @ $4000 is a good idea. You might want to wait until January 2007 and drop $8000 for both 2006 and 2007. Mutual fund companies to consider are: Vanguard, Fidelity and T. Rowe Price. And you may wish to get a ROTH IRA instead of a traditional IRA.