Current Events > "Make sure you're always maxing your retirement accounts!"

(+) Yeah! (+)

IRA max per year: $6500
401k max per year: $22500
Total: $29,000

Who the fuck can afford to do this? Thats $2416 a month.

Yeah, it's tough. Certainly the common American can't afford it.

I dont know if Im dumb for this but I prefer prioritizing my life now rather than my retirement. Thats like 30+ years from now and who knows if Ill even live that long.

When people say to max out your 401k they rarely mean to actually hit the limit, that is straight up not possible for most people. They mean to make sure you are maximizing the employer match.

I get very close to matching but im still off by a few hundred a month

I was only able to max out both a little after breaking six figures

Yeah maxing 401(k) is tough but if you can, you should

Time is more important then the amount you invest tbf. So the earlier you start the less you're need to invest.

Which for many sadly isn't possible. At least for the IRAs. And consistent 401k investing isn't really possible until you settle down into a good career.

Itachi157 posted...

I dont know if Im dumb for this but I prefer prioritizing my life now rather than my retirement. Thats like 30+ years from now and who knows if Ill even live that long.

Just do what I plan to and die in a plane crash at 50 and make my family millions.

The billionaires who post here sure seem to think its possible

littlebro07 posted...

IRA max per year: $6500
401k max per year: $22500
Total: $29,000

Who the fuck can afford to do this? Thats $2416 a month.

Thats around what I put in PER YEAR making 43k+ and it feels like nothing. At this pace Ill probably end up with no more than 200k or so which by then wont be much.

They want you to invest like that because it makes THEM money.
Your 401k props up stocks that the rich can sell today and make money off of. But you can't do that.

It is a racket. Now you kinda have no other option for retirement but mark these words
It is a racket

Wife and i both have decent pension plans and i max out my sons education savings plan each year. Havent quite maximized RRSP and TFSA contributions yet.

Friends,

My dad had a million dollars in the bank. He died and that money went to his two sons.

I told my financial planner, my dad made money the HARD way, how do you think he did it? My financial planner said " he worked two jobs ? "

I said "NOPE, He saved it."

I see many I cant.. I cant ....I cant. its all about priorities.

I am now 60... Retired. But I have zero income, I take nothing from my retirement accounts. I sponge off my wife. ( she is great ).

I wasted alot of money in my younger years on Beer. every weekend, for years.. decades. I have nothing to show for it, but a fat belly.

Look at every element of your life, make a budget, what you are spending your money on. I see so many people buying stuff on " sale" then pay with a credit card, that has 12% interest, and they carry a balance. If you have to buy stuff on sale, with a credit card, it was not REALLY on sale.

You CAN do it, but you have to work hard at it. saving is work. its pennies, nickels, and dimes.

I plan on retiring young at 42 to the grave

drclaeys posted...

I am now 60... Retired.

60 and on gfaqs.

impressive tbh

I made a plan to max out my IRA, but then student loans came out the woodwork. I'll be paying those off for the next 5 years RIP.

I'm close to just saying fuck it and go all in on real estate.

drclaeys posted...

Friends,

My dad had a million dollars in the bank. He died and that money went to his two sons.

I told my financial planner, my dad made money the HARD way, how do you think he did it? My financial planner said " he worked two jobs ? "

I said "NOPE, He saved it."

I see many I cant.. I cant ....I cant. its all about priorities.

I am now 60... Retired. But I have zero income, I take nothing from my retirement accounts. I sponge off my wife. ( she is great ).

I wasted alot of money in my younger years on Beer. every weekend, for years.. decades. I have nothing to show for it, but a fat belly.

Look at every element of your life, make a budget, what you are spending your money on. I see so many people buying stuff on " sale" then pay with a credit card, that has 12% interest, and they carry a balance. If you have to buy stuff on sale, with a credit card, it was not REALLY on sale.

You CAN do it, but you have to work hard at it. saving is work. its pennies, nickels, and dimes.

I can't tell if this is making fun of the typical bootstraps people or a serious post

At least do everything in your power to fully exploit your employer match. It is free tax-advantaged money.

Historically an investment in the S&P500 or total market index doubles every 7.2 years. So in a couple decades you'll have 8x your money.

DarthAragorn posted...

I can't tell if this is making fun of the typical bootstraps people or a serious post

Hes been saying this shit for years. If its not serious, its a pretty elaborate joke.

DarthAragorn posted...

I can't tell if this is making fun of the typical bootstraps people or a serious post

I honestly just assumed it was a copypasta. If not, then yikes.

Make sure you save enough where they can bleed you dry either through late life cancer or elderly living facilities.

Valege posted...

Make sure you save enough where they can bleed you dry either through late life cancer or elderly living facilities.

Damn dude.

I mean, youre not wrong but

Damn.

Yeah my job matches half of my contributions up to 6%. Currently putting in 3, will bump it up to the full 6 when I get my raise next month.

But I honestly think focusing on paying our mortgage off is a more worthwhile investment. Got lucky and bought a nice big house (3200sqft, 4 bed 2.5 bath with 2 non-conforming bedrooms in the basement) back in 2019 for 257k.

Even if I just make the minimum payments and never refinance, itd be paid off when Im 57.

It really depends on the interest rate on your mortgage. If it's less than 4%, a high yield savings account, treasury, i-bond, or money market fund are currently beating that.
And of course over time a S&P 500 ETF or mutual fund will destroy the 4% return (if you have the risk tolerance).

There is almost no chance paying your mortgage off earlier is a better investment than the free tax-free money from the remaining 3% of your employee match (and its compounding over time).

IronTusk posted...

It really depends on the interest rate on your mortgage. If it's less than 4%, a high yield savings account, treasury, i-bond, or money market fund are currently beating that.
And of course over time a S&P 500 ETF or mutual fund will destroy the 4% return (if you have the risk tolerance).

There is almost no chance paying your mortgage off earlier is a better investment than the free tax-free money from the remaining 3% of your employee match (and its compounding over time).

Oh yeah Ill still bump it up to 6% for the full match, I meant paying off the mortgage early instead of making investments outside the 401k. Interest on the mortgage is 4.75% which wasnt great in 2019 but people would kill for now. We got a zero down no PMI mortgage and the higher rate was the catch

idk I might also open an IRA and throw a couple hundred bucks in a month

Good stuff.

Once you have an emergency fund covering 6+ months of expenses and the full employer match on your 401K (some people love HSAs too), I'd recommend investing in the total market in a Roth IRA as close as you can get to the cap. I think you'll still do better than early mortgage payoff, especially because of the Roth's tax advantage on cashout.

Read this:

https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp

While it's no predictor of future performance, over long periods of time, the S&P 500 in low cost index averages over 10% annual return.
That's more than twice the return of your mortgage debt being paid off early.
But that upside of course comes with additional risk of the market taking a dump in the short term. And technically you're not supposed to access your retirement funds until 59.5 years old, though there are ways around that.

People complaining about the stock market being a ponzi scheme aren't totally off base, but it's a lie we are ALL playing into because of capitalism, including the rich and powerful. The stock market is a machine for money generation. Might as well take advantage of the thing even if it sucks. It's never been easier to open a brokerage or retirement account and people still don't do it.

haha, retirement.

I'll die at work or in the car on the way there.

another consideration:

littlebro07 posted...

IRA max per year: $6500
401k max per year: $22500
Total: $29,000

what if you just put this in a bank instead of a 401K?
"oh no didn't get the MATCHING!"

no you didn't but in 4 years you would have $116,000 in cash that you could use to start a business, get a bigger loan, down payment on house etc

infact before houses went crazy that kinda money could just buy a house and you could sold for 3X

and it would be cash you could use today not wait till you are old or dead

the rich may love the narrative of you NOT doing this because that is competition.

you storing your money away in 401K helps them in multiple ways.
not saying don't do that just understand the reality

WingsOfGood posted...

another consideration:

I think some moderation is in order. I don't think it's worth maxing the 401k but by skipping on employer matching you are definitely leaving money on the table. I personally put in enough to get the max employer match but nothing more.

Most people cant realistically do that. I max my Roth IRA and contribute 10 or 12% to my 401K, but that would amount to about $10,722.48 at most with my salary.

Time is the main factor though. The first company I worked for didnt have a 401K when I joined them, and after they had one, they told us we couldnt keep 100% of it if we didnt stay with them for 7 years, which I knew I wouldnt. So I didnt even start retirement savings until I was 31.

Between 401K, Roth IRA, and a company match stock plan, I have about $117K, but I may have to cut into that and potentially pay half of it to the government due to a decade old fuckup on their part I didnt know about.