How do you plan for retirement?

[HybridSquirrel]

if there's no match, then you can afford to wait a bit to read through the relevant material and make an educated decision. your 401k could be super expensive in the expense department and may not be worth it.

iirc its free through fidelity, they just don't match.

I can always sign up and just not contribute right away too...

 

[IronWing]

The Social Security Admin offers a program to calculate your estimated SS old age benefit. Once you plug in your numbers you can save and update the file each year and play with some inflation/earnings factors.

http://www.ssa.gov/oact/anypia/anypia.html

They also offer an online version but I haven't tried that one.

 

[dullard]

you are 23 and make $50,000? bawler.

Right now, ive got an IRA and need to sign up for my works 401k....except my work doesn't match right now so there is kind of no point. I also have stock options with my company that helps grow my investments a little bit. I don't really understand how their 401k works but I guess ill just sign up for it and figure it out as I go....

Many engineers graduate around 23 and make around $50k. It is a fairly typical result. Note though: the $50k was already mentioned to be false in this thread to protect his personal information.

There is always a point to investing in a 401k. The main point is it defers taxes. Actually, even better it defers income (so that you can qualify for more deductions, a lower tax bracket, and/or government assitance that you might not otherwise qualify for). Also, you can buy and sell when you want (within very reasonable restrictions from Fidelity) without worring about tax complications.

Imagine a single guy making $50k and so far has no itemized deductions and contributes $5k to his IRA.

No 401k:
That guy has a $45k adjusted gross income ($50k - $5k IRA). After his $5.8k standard deduction and $3.65k personal exemption, he is taxed on $35.55k. He is in the 25% tax bracket and pays $5063 in tax.

$10,000 into 401k:
That guy has a $35k adjusted gross income ($50k - $5k IRA - $10k 401k). After his $5.8k standard deduction and $3.65k personal exemption, he is taxed on $25.55k. He is in the 15% tax bracket and pays $3410 in tax.

$16,500 into 401k:
That guy has a $28.5k adjusted gross income ($50k - $5k IRA - $16.5k 401k). After his $5.8k standard deduction and $3.65k personal exemption, he is taxed on $19.05k. He is in the 15% tax bracket and pays $2435 in tax.

When going from no 401k to maxing his 401k, he pays less than half the federal income tax ($2435 vs $5063). Same goes with state tax.

 

[vi edit]

The Social Security Admin offers a program to calculate your estimated SS old age benefit. Once you plug in your numbers you can save and update the file each year and play with some inflation/earnings factors.

http://www.ssa.gov/oact/anypia/anypia.html

They also offer an online version but I haven't tried that one.

I put in my age of 33 and it returned this for my projected income:

http://4.bp.blogspot.com/-3Gkw74t9y4c/Tfbib5G0zlI/AAAAAAAACv4/8YEcUQKfkIc/s1600/obama-laughing1.jpg

 

[highland145]

I put in my age of 33 and it returned this for my projected income:

http://4.bp.blogspot.com/-3Gkw74t9y4c/Tfbib5G0zlI/AAAAAAAACv4/8YEcUQKfkIc/s1600/obama-laughing1.jpg

I got the same thing and I'm 47.

 

[rcpratt]

I put in my age of 33 and it returned this for my projected income:

http://4.bp.blogspot.com/-3Gkw74t9y4c/Tfbib5G0zlI/AAAAAAAACv4/8YEcUQKfkIc/s1600/obama-laughing1.jpg

:biggrin:->->:'(->D:->

 

[KeithTalent]

RRSPs, pension plan, and other investment accounts (I'm at around 13% of pre-tax income right now, plus some matching in the RRSP and pension on top of that which vests 100% as soon as I leave). Looks ok so far, but I really don't do any modelling or anything as I don't expect to live much past 50ish or so. Everything I have will go to those close to me and that's a-ok. :thumbsup:

KT

 

[ultimatebob]

I used to do calculations for retirement, until I realized that they were crap.

Like most people, I was expecting 3% annual salary increases and an 8% annual average return on my investments back in 2003... boy did I call those wrong.

 

[shortylickens]

I vote Democrat.
They will fix all the problems and take care of me no matter what.

 

[HybridSquirrel]

Many engineers graduate around 23 and make around $50k. It is a fairly typical result. Note though: the $50k was already mentioned to be false in this thread to protect his personal information.

There is always a point to investing in a 401k. The main point is it defers taxes. Actually, even better it defers income (so that you can qualify for more deductions, a lower tax bracket, and/or government assitance that you might not otherwise qualify for). Also, you can buy and sell when you want (within very reasonable restrictions from Fidelity) without worring about tax complications.

Imagine a single guy making $50k and so far has no itemized deductions and contributes $5k to his IRA.

*snip*

I guess you're right (about the salary), most of the people ive known through college have graduated (even with engineering degrees) and are making $15 an hour max....including myself.


So, my Roth IRA contributions count as a deduction on my taxes?

 

[vi edit]

I guess you're right (about the salary), most of the people ive known through college have graduated (even with engineering degrees) and are making $15 an hour max....including myself.


So, my Roth IRA contributions count as a deduction on my taxes?

Not a roth. Traditional IRA's do however.

 

[dullard]

I guess you're right (about the salary), most of the people ive known through college have graduated (even with engineering degrees) and are making $15 an hour max....including myself.


So, my Roth IRA contributions count as a deduction on my taxes?

Vi Edit is correct. Your post above mentioned an IRA, so I did the math for an IRA, not a Roth IRA. Roth is probably better in your case. The Roth won't count as a deduction, but your income level is so low that your tax bracket is small. The Roth lets you pay taxes when the rate is small and everything else from there on out is tax free - no matter how much money you gain in your Roth investments.

 

[God Mode]

OD on something when I'm down to my last couple hundred.

 

[gorcorps]

I plan on dying before I need it.

 

[Sonikku]

The healthcare in the country is bad, as are the retirement options as they seem to continue to dry up and evaporate as the powers that be continue to ask employees to give up their bargaining rights and ride the "rock solid" stock market for their retirement. I'm hoping the two end up cancelling each other out, so I can die young due to a lack of healthcare, thus not needing retirement.