If you come from the future and the best investment vehicle you can think of is a 401k, you don’t deserve to be a time traveler.
Maybe there’s a framework of rules that the time traveler must adhere to (or risk being disintegrated by the time police).
For example, specific knowledge of the future is off-limits, but it’s OK to give basic advice as long as it’s already general knowledge for the time period you’re traveling to. Make sound investments, eat right, exercise, don’t smoke, etc.
Wear sunscreen
Sunscreen good. No sunscreen bad. Rest of advice, based on years of Jedi experience, I dispense… now.
So first they nerf our AI and now they gotta nerf our future self time travlers?
Maybe it’s not the best, but it’s the correct one. Clearly future self knows something we don’t
In before future self just forgot to check and is just trying to make the best use of it
My headcannon is that he’s already come back several times with amazing investments and it turns out it goes bad every time. He just ended up going for something more reasonable/healthy cause nothing else worked.
Really hoping for your sake you mean headcanon.
I’d argue heavily that you should consider a Roth IRA instead. You pay the taxes now, instead of later, which saves you an insane amount of money in the end.
Um… that’s not quite right. Here’s the thing, if you earn $100k and invest it in pre-tax (401k) or post-tax (Roth), and you pay the same tax rate throughout, then with both investment strategies you will end up with EXACTLY the same amount of money. The only benefit of a Roth is if you assume you have a higher tax rate in the future when you want to pull it out. If your tax rate is the same both now and in the future, then Roth and 401k are equivalent investment vehicles. If you don’t believe me, do the math yourself.
Slightly more detail. The reason this is true is that return on your investment and the tax are both percentages of your base investment and the math doesn’t care which order you multiply one versus the other. So let’s say you make a 500% return on your investment and the tax rate is 30%
$100k * (0.7 tax rate) * (5 ROI) = $350k Tax first Roth
$100k * (5 ROI) * (0.7 tax rate) = $350k Tax after 401k
So the take-aways are:
401k wins if you have company matching. ALWAYS invest at least up to company matching because that’s free money.
Roth wins if your tax rate in the future is higher than now. (this is not necessarily a good bet because your tax rate will probably be lower once you’re retired.)
The only situation that your tax burden would go up for the everyone is if you transitioned from active income to passive income sources. IE working a trade then opening your own construction business.
You are totally right.
One possible consideration though, is if you are maxing out your tax sheltered investment accounts (say your 401k, HSA, IRA, college funds, etc) you can effectively put more money into a Roth IRA. That’s just because you’re paying taxes with regular money outside the IRA limit and THEN investing up to that limit. But with a traditional IRA, you can invest up to the IRA limit today, but the future taxes will be paid with money that went into the IRA.
Though if you are to that point if maxing everything out, you’ll probably be fine either way.
Also, from what I have read, there are income limits to contribute to a ROTH IRA. So, you would have to be making a moderate income but still have plenty left over to invest (so very low cost of living).
IRAs (ROTH or regular) are meant for people who don’t have an employer sponsored retirement plan.
There is also a ROTH 401k. Same tax benefits, but with higher limits and all of the 401k benefits.
In general, a 401k, 403b, or other employer sponsored retirement plan is going to be a better deal than an IRA. With a401k, your employer is paying for your account; with an IRA, you are paying for the plan out of your returns (via fees, lower interest, etc.). Also, it is common for employer sponsored plans to match part of the money you put in.
You can also have both a 401k and IRA to double dip on investment limits, but only if you are in a particular income bracket (you cannot contribute to an IRA if you have a high income and you are not likely to be able to max out a 401k if you have a low income).
Maybe “buy weyland yutani stock” is timetraveler insider trading
If you can alter the future it might make sense. Say I tell you to invest in whatever comes after NPTs. Maybe your investment will alter the course of what happened. However I seriously doubt that 10% of your income in an index fund will alter much. Also, there is a problem with getting money too early. You go back and give young you lottery numbers, they make bank and die of an O.D. a decade later.
A Roth 401k or Roth IRA is much better than a regular 401k
If you can contribute to them.
Lol 10-15% of our income? I’m sorry… But who can afford that? We’re getting so fucked right now by greed in this country…
My power bill was $500 last month for a two bedroom apartment. This is because I live in a city with the highest energy rates in the nation, all because the company and our local governments are absolutely lousy with corruption. They have posted obscene record profits for the last half a decade while everyone in the city suffers.
My rent was also 21% higher this year than it was in 2020. My landlord bought this place a decade ago at a bankruptsy auction, but like, fuck me right? Gatta keep those rates up when the rest of the city goes up.
I also haven’t saved money since around 2019, since I went four years with a 0% raise due to the company I work for struggling. We were bought out by another company with tons of money, but they decided we were overpaid, since they live in a cheaper city.
My story is not unique. My story is not special. I hear a similar one from people every week. Retirement is a luxury most post-boomers will never experience, no matter how hard we work.
So you’re supposed to do 50-30-20 Meaning 50% on needs 30% on wants 20% investing
You might be thinking “Ericbomb, how does one keep their needs below 50%, when the median rent in the US is $2,000, and median household income after taxes/withholdings is near 40k?”
Wonderful question!
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Australia has a Superannuation Guarantee. It’s currently at 11% and will go to 12%. Employers get fined if they don’t pay it to their workers.
Conservatives in Canada are trying to cut it. Conservatives in the USA are attacking social security. Conservatives are vultures. Never vote for conservatives.
Conservatives here are the worst at picking and choosing. They’ll happily borrow America’s racism, anti-socialism, hypercapitalism, nationalism, mysoginy, gun culture and mass surveillance… but holy crap do they make noise when you put a pumpkin on your front lawn in October.
What’s wrong with pumpkins? As an atheist who enjoys festivities and decorations, pumpkins are my go-to this time of year. I get pretty ones from the produce section and cook them at the holiday they were being decorations for. It’s fun and it works for Halloween, thanksgiving and solstice.
I’ve never owned a gun in my life. The day I go to buy one is the day I start planning for my “retirement.”
I’m still doing the 401k thing and trying to save on the side, but just like homeownership, retirement is for “other people,” not me :/
I work in heavy industry. One day I am going to get back medical tests results that I don’t like. The next week there is going to be an accident at a job site and my family gets a few million.
Unless of course the insurance company uses GPT-9 to read your entire post history online and finds this comment.
In that case they deserve to win because that would be utterly insane. We are talking like +30 years from now and if they have the ability to find one comment on one social media site and prove in the court of law that I wrote it…well fine.
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If you have perfect knowledge of the future and know which stocks will do well, why bother with trying to diversify your portfolio to try to mirror the market?
So, as it turns out there are a few big reasons.
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it’s a cosmic felony
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causing improbable events creates a new timeline which increases entropy in all probable realities, which can have some drastic (and usually negative) effects.
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most time travel agencies (which is what most people can afford) use technology that doesn’t actually allow for free will, that’s why it’s mostly sold for vacations.
- you can alter/push some decisions, but for most people it’s not gonna be successful stocks.
- older technology was advanced calculation in a realistic simulation. Most people just wanted an old memory or to get closure. Some people just try a different meal or movie choice, the experience is all that matters.
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time mercenaries. We’re actually not sure who these guys are, but we also don’t wanna know either. Some say they’re who cause spontaneous combustion and embarrassing deaths.
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most forms of actual time travel leave the user stranded, with chronic or terminal illness (and sometimes amnesia), and in some cases fading/poofing out of existence when certain thresholds are crossed.
- On top of that, new timelines of you typically aren’t experienced by you. It’s a different you. So that was nice of you.
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time spiders. You don’t want to know.
time spiders. You don’t want to know.
They’re really more crab-like than spider-like. If you bring a net back home from vacation, you can snag a few. They’re delicious steamed with butter.
Don’t eat too many; their chroniton level is through the roof.
How long do you cook them?
Very informative, thanks
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Who knows if you really want to have much much wealth in the future.
Maybe he would have made the deal of his life the next week if his future me wouldn’t have intervened; but 30 years later everybody that ever had more than a million gets killed by the revolutionary movement that swapped across the world after society almost collapsed due to greed.
But he managed to reach a time machine, and now he calculated that if he saves a maximum of 15% he will only ever reach 975000 bucks and therefore survive the revolution
Maybe they’re really risk-adverse and don’t trust they haven’t fucked everything with the butterfly effect just by being there.
Maybe the butterfly effect is greater than we possibly can imagine?
In some 401k plans you can invest in specific stocks or at least specificsector funds.
Old self is greedy and wants young self to reduce the fun of their prime years by locking away money so they can sit on a big ol’ retirement fund in their older years. Of course, that’s assuming that past performance guarantees future results and that the conditions of the 401k will remain the same. What’s to say politicians don’t start applying extra taxes on 401k withdrawals? What’s to say they won’t increase the retirement age?
A lot of people can’t spare 10-15% of their income and I’m not so sure the advice is not just a ploy by 401k fund managers to squeeze out extra fees. Maybe it’s just a silly little comic and I’m taking it too seriously.
Young Johnny should ask old Johnny why they don’t simply buy a sports almanac
Because Marty will just steal it. Duh.
Well. I assume this guy is actually from the future. So in theory wouldn’t he know that in the future 401k’s have not been taxed into irrelevance? I feel like if he’s coming from the future with this advice it’s because he feels it’s still good advice in his future.
And then one day you wake up and you are that “old” person. Then you realize you’re screwed: the health problems that aren’t a big deal if they’re treated are debilitating because you can’t afford treatment. Those issues you assumed are going to kill you don’t, and instead you linger for decades with a garbage quality of life.
The worst part is you aren’t even that old: mentally you’re still pretty much the same person you were in your 30s, just trapped in a body that’s slowly falling apart and needs constant maintenance.
Yes, you need to strike a balance – but not doing what you can to financially plan for old age is fucking stupid.
Shit ya’ll are making me rethink leaving the state.
and then those health problems turn out to be so expensive that the cost far exceeds what you can afford through your 401k anyway. I’m not saying no planning should be done, I’m saying that your planning should lean more favorably toward the present than the far future. For many, 10-15% of income is so much of a sacrifice that I’m willing to bet the payoff wouldn’t be worth it in most cases.
Agree a lot can’t spare it. Getting to 15% is pretty tough. You can do the math though and see that even 10% will likely make it tough to maintain your current lifestyle with inflation accounted for in the absence of active cash flow. Don’t forget when you have more leisure time you are more likely to find things to spend on and also reserves for health issues / other surprises is important too. Sorry to sound like a dad / investment advisor, but I don’t think it’s a ploy so much as the terrifying reality that most of us are under prepared for.
People need to start living well below their means, not right at them. Anyone whos lifestyle becomes tough to maintain from putting away just 10% of their income and lives from paycheck to paycheck needs to re-evaluate their living and financial conditions. Either learn to live with less/spend less or go somewhere with cheaper cost of living.
Its not that hard if you never go into debt, don’t pay rent, and live minimally. Which I do admit most people are either unwilling or unable to do those things given their life circumstances and responsibilities. God help the ones that signed up for 30 years of mortgage payments at 15% interest tfor that 500,000$ poorly constructed 2 story 1 bath suburbanite home or an ever increasing 1500$ rent each month to some landlord.
“just live for free”
Unironically, yes. When you have some land and a semi-livable vehicle to sleep in and everything else is paid for you only need money for the barest of essentials in life. nonperishable food, heating fuel, plenty of water, some gas for the car, clothes, household supplies, and a good efund in case something ever happens. You have to give up a lot of modern convinence to live that way but being free to not have to work 24/7/365 just to survive is great. Sorry that the idea of such an option upsets you or sounds unrealistic.
“Just own land and a vehicle outright” I am very happy for your privilege, but this is absolutely unrealistic.
You can find a parcel of land in a rural area fairly easily for only a couple thousand dollars, maybe 10-15 k if you want some real acreage. A cheap ass used van from the early 2000s is 3000-7000 depending on how good a deal you get. Most people can get a loan for an extremely cheap van, move into it for a few months and pay themselves the 800-1500 in rent (if not more now), and have it paid off fully after a few months of work, then start saving towards a bigger nicer van or that parcel of land. Not everyone is so fortunate to do so as they have a family and kids or other responsibilities that make this path a non-option but its not privilege its proper planning and a ton of lifestyle compromises. I worked hard and saved up for everything Ive ever had and saw an unusual lifestyle option that works for me, I guess that makes me privileged?
saw an unusual lifestyle option that works for me, I guess that makes me privileged?
Yep that’s what that word means.
This is dependent on where you live. I live in a rural area and the cheapest plot of rural land is $325,000 and that’s 0.75 acres.
People really seem to hate seeing others succeed. Congratulations on your financial stability, sounds like you’re in a good spot. I’m working on getting my finances in order and repairing from when I lived above my means.
…I’m not so sure the advice is not just a ploy by 401k fund managers to squeeze out extra fees.
Invest in an index fund and the fees are almost non-existant. Invest in several index funds (Large / mid / small cap & emerging markets) so that you don’t have all your eggs in one basket.
I’ll be honest.
I don’t bother with a 401k because I don’t believe I’ll be able to benefit from it.
As in, I will either be dead long before I can touch it without penalty, or society will be so unrecognizable that it won’t make a difference either because of extreme inflation or societal collapse/restructure due to exterior factors such as climate change.
If this ends up biting me in the ass, rest assured I’ll go back and tell all the commentors who say you’ll be sorry and give them their brief dopamine hit from being right. Until then, I guess we’ll see.
You can withdraw from 401ks early if you use e.g. a Roth Ladder. If nothing else, withdrawing with a penalty is still a viable option if you’ve been investing properly and have an excess of money.
As for betting against the earth, if you’re that blackpilled you can make flexible investments by putting money into a Roth IRA, whose principal (not growth) can be withdrawn at any time without penalty. You can’t put the money back into the Roth IRA later, however. If your company offers a 401k match you should always always always invest the minimum amount to get the full match, idc how depressed you are.
Must be nice to have a job that does 401k matching. I had one for about a year, then boom, laid off. Back to part time work that doesn’t match. 🤷♂️
I don’t have a match but I still save in my pretax retirement account. If you don’t have any available to you through your employer, please look into a Traditional or Roth IRA.
The matching is meaningless nowadays. At most, some companies will match 1/2% for each 1% up to them giving you like 3%.
There is something to be said about not leaving money on the table, but it’s not too different from reaching out to TDAmeritrade and setting up an IRA.
As a more general PSA: Even without matching, 401ks are still usually (but not always) superior to IRAs. The pros/cons work out differently by individual, so I’ll summarize the major differences (This comparison applies to “traditional”, non-ROTH accounts[1]):
- 401ks obviously require a job that offers them. Sometimes, IRAs are better by virtue of being the only option!
- Only 401k savings are protected from creditors (i.e.: bankruptcy) under the ERISA act. That’s a big deal when making long-term financial plans!
- IRAs have a substantially lower maximum annual limit for deductible contributions (For young unmarried individuals in 2023: $6,500 vs. $22,500). If you want to contribute more than $6,500 every year, you’re going to need a 401k.
- The IRA deductible contribution limit is even lower if you’re earning >$73,000 in annual income. In fact, those earning >$83,000, can’t deduct any IRA contributions at all[2].
- Only 401ks are paid before federal tax withholding. In other words; with an IRA, you’re paying the cost of letting the government borrow more of your income between annual tax returns relative to a 401k.
- Under a 401k, your employer chooses the institution. This lack of choice generally translates into a worse investor experience (e.g.: higher fees, fewer options, worse support). IRAs are obviously superior in this regard![3]
- You can combine a 401k and an IRA to bypass (Roth) contribution limits via the so-called “Mega-Backdoor Roth” (… you can’t make this shit up). This is great if you have so much income that you’ve already maxed out your main 401k’s contributions and still want to make even more (Roth-only) retirement contributions. If you’re already this rich, you should probably be learning about this from your accountant and not the internet…
tl;dr: If you make more than $70,000ish or just want to save really aggressively, 401ks are usually superior. IRAs are mostly useful if you don’t have the option of a 401k or prefer an IRA’s flexibility over a 401k’s higher contribution limit.
What’s a Roth retirement account? It’s a type of IRA/401k where contributions are not tax-deductible. Why would anyone want to give up those sweet tax deductions, though? Because in exchange your future retired self doesn’t have to deal with paying taxes when they take that money back out[4]. This is good for two groups of people: those with low taxable income (<$40,000) & those with excessively high spare income (see “Mega-Backdoor Roth” above). Another side-benefit is that you can withdraw your Roth contributions early with fewer penalties compared to a traditional retirement account (though I personally don’t think it’s a good idea to opt for a Roth for the “just in case” factor [5]) ↩︎
People who earn less than this can actually make deductible contributions to both an IRA and a 401k, but that’s only useful if you’re already hitting the $22,500 401k contribution limit… which is kind of hard to manage even near the upper cutoff of $83,000! ↩︎
It’s worth mentioning, however, that inactive 401ks (i.e.: 401ks from employers who no longer pay you) can also be freely transferred to any institution of your choosing via a “rollover” 401k account. ↩︎
FYI: with normal retirement accounts, they’re actually “tax deferred” rather than “tax free”. Basically, you still eventually get taxed when you take money out. Despite this, saving with a traditional retirement account is almost always worth it because putting in 20+% more money per dollar earned is a massive difference growth-wise. ↩︎
What’s my beef with using a Roth account as a hybrid retirement/rainy-day account? Well… it’s just not good enough at it to justify the opportunity cost of going Roth vs. Traditional. Keep in mind that usually only your original contributions can be taken out early – any growth is hands-off (before you retire) unless you pay a big penalty. At that point, it’s generally smarter to put your rainy-day savings into a high-interest savings account where you’ll have full liquidity and immediate access to the accumulated interest. If you’re really worried that you’ll need more money than that… consider that you could just declare bankruptcy if things go so hopelessly ass-up that digging out becomes impossible – your 401k is protected! ↩︎
Damn… well that’s getting saved for if I ever have spare money again
One of the (exceedingly few!) nice things about personal finance is that the less money you have, the less complicated the advice gets. If all you’ve got is enough to get by, all you really need to know is this:
- Keep the checking account in the black
- Whenever possible, completely pay down credit cards
- Satisfy minimum payment requirements on other loans
- Bills
With a little luck, you can actually manage a surprising range of financial gymnastics using nothing more than credit cards. Credit cards enable you to avoid payday loans, enable you to weather short-term hardships, (potentially) help you access more affordable home/auto loans, and even (potentially) pay you in the form of cashback rewards/promos in exchange for nothing more than occasionally putting up a non-revolving balance. Don’t get me wrong – credit cards are dangerous… but so is fire. Don’t play with fire, but don’t fear it either. Knowledge is power here.
Beyond that… good luck and godspeed on your life financial journey. If you ever need further guidance, I advise exploring this Bogleheads article. Of course, you can also feel free to PM me anytime if you have questions… though, full disclosure: I’m just a confident nerd on the internet with literally no credentials whatsoever – let alone finance credentials!
I have heard that some people like to have part of their income in a ROTH account as a mega purchase account. The reasoning goes: if you are planning to make a very large one time withdrawal (for example, to make a down payment on a second home), taking that money out of a traditional 401k will be taxed as income and may put you in a high tax bracket, while if you are paying with ROTH money, you already paid taxes, at whatever your tax rate was while working.
You will pay tax on the growth, but not on the initial deposit. But that’s just because you would be taxed twice.
Actually, there’s a carveout for first-time homebuyers that applies to Roth IRA distributions, assuming the account is more than 5 years old. Their example actually holds true even if the applicability of the strategy is a lot more narrow than the commentor first expressed.
That’s a very good point! Compared to using an investment account, using a Roth IRA to save for a down payment can potentially save you 15ish% in capital gains taxes. Much like the 401k vs. IRA distinction, however, there are tradeoffs:
Roth IRAs and traditional IRAs both share from the same $6,500 annual contribution limit “pool”. This effectively means that you’re sacrificing the opportunity to use a traditional IRA for retirement savings whilst using a Roth IRA to save for a down-payment. If you’re already saving under a 401k plan, this is basically a non-issue… but it’s actually a complete showstopper if an IRA is your only available retirement savings option.This bullet is not actually true, as pointed out elsewhere by @droans@lemmy.world. For clarity: contributions to a Roth IRA do not affect the limits associated with traditional IRAs and vice versa. You can contribute to a traditional IRA and that won’t limit your ability to use this strategy.- The main upside of using a Roth IRA to save for a down-payment is that you get to avoid paying capital gains taxes on profits generated by the IRA. This is because, unlike investment accounts, any gains produced from Roth retirement accounts are tax-exempt. It’s effectively a ~15% discount on your payment![1]
- The catch is that Roth IRAs are retirement accounts. You’re not normally allowed to take the gains out early like this. The only reason the strategy works at all is because there’s a special exception for this. In order to qualify, you must be a first-time home buyer and you must have had the Roth IRA account open for at minimum 5 years. You only get one chance to do this and you need to start laying the groundwork at least 5 years in advance!
- Another catch is that – if you get cold feet about buying a home – you basically lock yourself out of using that Roth growth money until you retire (unless you pay a hefty fee).[2]
tl;dr: If you’re a first-time home buyer
and you have spare IRA headroom that you weren’t otherwise planning on usingand you have a healthy enough emergency fund that you can handle the risk(?) of accidentally saving more than intended for retirement, then there’s a Roth IRA out there waiting with your name on it.
This assumes that your gross yearly income is already > $40,000. If for whatever reason the sum total of your income is less than $40,000 during the year that you plan to buy your home (including the gains from the fund that you’re about to cash in!), then you’ll actually already be exempt from paying any capital gains tax. For non-retirees this is a pretty rare situation (unless you’ve been hiding something from the IRS…), but it prooobably happens? If this situation applies to you (and you don’t mind getting audited), then you’re basically free and clear to load up an investment account with as much money as you please and still reap those tax-free returns when the time comes – no IRA shenanigans necessary. ↩︎
This is actually a pretty interesting tradeoff, because it’s an upside for some and a downside for others. Take a hypothetical person with a $5,000 budget to split between retirement and saving for a down payment, for example: If they need to back out of buying a home, it’s actually perfect that their down payment savings are locked into their IRA – they were already planning on locking that money in and they still get to reap nice tax benefits in retirement. On the other hand, if that same person was financially counting on escaping from a bad rent situation… now they’re going to come up short of where they had previously expected to be in terms of cash-on-hand. ↩︎
Haha nice post i agree 100% just sharing that those without employment can still save to retire.
I’ve never had someone “Haha” in response to a tax code explainer before… but I’ll take it
One potential advantage to IRAs is that you have a much broader choice of investments. To be fair though, the investment choices have been decent in the 401ks I’ve had.
401ks are still usually (but not always) superior to IRAs.
Not usually, just very rarely.
Unless you declare bankruptcy or have high income, your first step is to fund your match but then max out HSA and IRA first. Once those are hit, then you should fund your 401(k).
401(k)s have fewer choices and come with fees. Pretty much all IRA accounts will allow you to choose any investment and have no fees.
The IRA deductible contribution limit is even lower if you’re earning >$73,000 in annual income. In fact, those earning >$83,000, can’t deduct any IRA contributions at all
Roth IRAs have a soft cap at $129K/$204K with the hard cap at $144K/$214K. This is also your MAGI, not your salary. Only Traditional has that lower limit. You can also use the non-deductible Traditional IRA for a backdoor Roth if you’re over the limit.
Not usually, just very rarely. […] 401(k)s have fewer choices and come with fees. Pretty much all IRA accounts will allow you to choose any investment and have no fees.
FWIW, I do bring this up in my main post – it’s just that I’m drawing on my own personal experiences and… in my experience I’ve always been able to get the options I want without extra fees. In retrospect, that’s probably just because of two things:
- I’m not a particularly choosy investor so the relative lack of salience gives me a blindspot when considering the investor experience.
- I no longer qualify for deductible IRA contributions so I naturally think about them less than I probably should when giving advice to other people.
In any case, I accept your argument and apologize for the oversight.
Roth IRAs have a soft cap at $129K/$204K with the hard cap at $144K/$214K. This is also your MAGI, not your salary. Only Traditional has that lower limit. You can also use the non-deductible Traditional IRA for a backdoor Roth if you’re over the limit.
Err… you can’t deduct contributions to Roth IRAs, period. Moreover, I specifically say beforehand that I’m not talking about Roth accounts in the main bullet points: “This comparison applies to “traditional”, non-ROTH accounts”. Forgive me for saying so, but I also felt no need at the time to explain MAGI for the purposes of this comparison – that’s probably on me as a careless layman, so thanks for putting that out there.
EDIT: Credit where it’s due, I did mess up talking about the Roth IRA limit in a different part of the thread (here). The error is now corrected and the person responsible has been sacked.
Eh, it would be nice to get a larger match (and I did have that influence me in a job decision once) but I gladly make sure I always get the 4% match I have available at my current place. That’s hundreds of dollars a month straight into my tax advantaged investments.
I have to put 5% in to get that 4%. And I find it damn near impossible to leave that money on the table. So one side benefit is that even in a “fix my fucked up finances” situation like I am in now, that is still almost 10% of my yearly salary keeping retirement growing at some level.
Even if you don’t want to save for retirement (which you should), ALWAYS go for the match. You’ll still end up ahead if you withdraw the funds and pay the tax on it.
Place I worked at matched 1:1 up to 9%. It happens.
What exactly is 401k?
As a Warhammer fan, I’m telling you it is wild.
It’s even further than 40k when the T’AU empire have saved the world obviously
blasphemy, though the mechs are cool.
when the T’AU empire have
savedbrainwashed and enslaved the world obviouslyFTFY
Says the guy certainly working for a dead emperor hmmm
Well, Imotekh is indeed technically dead, but another kind of dead… more like… undead?
So if you have a 401(k) you agree to have part of your paycheck go to a fund and your employer matches however much you put in up to a certain percent. It helps get around some taxes when you eventually pull the money out for retirement.
Originally it was supposed to be a supplement for pensions but pensions meant less profits because they need to be fully funded, so over the years big corporations pushed 401(k)s as an alternative to pensions because they can just push that responsibility onto us.
A defined benefit pension puts market risks on the company. A 401k puts the market risk on the individual.
The employer matching is definitely not always a thing
Personally I’m way happier with a 401(k) than a pension. Risk is more distributed with a pension, yes, and many people don’t have the knowledge or resolve to properly manage their own retirement funds. But pensions are a royal PITA, way more complicated (and expensive) to manage than a 401k. So if I had to choose between money coming out of my paycheck to go into a complicated expensive pension fund that may or may not be around in a few decades, OR a 401k that I have complete control over and can take with me when I leave the company, I’ll take the 401k every day of the week.
It’s like an RRSP.
A 401K is a USA tax deferred investment account intended for use after age 59.5.
It’s name comes from the section of the tax code that discusses it.
He should have come back with winning lottery ticket numbers and sports outcomes
That happened in the previous loop. This time-traveller ruined his life with hookers and blow, so instead of giving his younger self quick riches, he gave solid financial advice instead.
Fair
Yeah, future him is a fucking moron.
You’ll be able to get one game, maybe a few in different sports, in the same day if you’re lucky. Outcomes will become different soon though…
this thread calls out to all the real adults on Lemmy lol. actually learning so much.
It turns out if you save that 10% instead of giving it to the church you might not be destitute when you retire. Or you can buy the church for assistance and see how that goes.
What company let’s you put a full 15% into a 401k? I mean… sign me up.
Generally you can put in as much as you want but they only provide matching for some percentage. Usually like 1-5%. There is a total contribution limit but that won’t affect most people.
You can put in a max of 22,500 per year. The employer contribution can be higher.
The company limits it to a percentage of your paycheck. Where I work it used to be 10% so I was never mathematically capable of maxing the full irs limit, but they moved that to 30% recently.
You can put however much you want in. Max is like 22k a year. You’re probably thinking match, ya basically no company will match 15%.
That’d be too close to a pension fund or something reasonable. We can’t have that. The boomers said those were bad, raegonomics are good. Fuck pensions and unions.
Unions, blegh.
I was forced into a union at my job, and it’s horrible. We get tons of time off, full benefits, protection from our employers when they try to violate the contract or do something illegal, and great pay. I’m currently set to retire at 55 years old, with over $10,000 a month income between my pension and 457b.
I mean, what the hell is my $100 a month in union dues doing for me!?
That was me 16 years ago. I was so used to “work hard play hard” that I butted off with the union. They sent goons to intimidate me in the toilet, telling me to stop trying to beat records. I hated unions for years after that. Now, I see why they can be good, necessary even but I’m still kinda scared of them.
I feel like you didn’t read the whole of their comment.
Yeah, I was commenting on how I used to think that the benefits of unions weren’t worth the trouble. Now I know better. Still scared of goons, but I know better.
You can put in however much you want, the company only matches up to a certain low percent though. Typically less than 5%. I personally put 17% of my income into my 401k since I didn’t do anything for about a decade that I should’ve been doing 10% and now I’m trying to catch up, company only matches 3%
The limits on 401k contributions are federally regulated and are set as a nominal amount.
Employers often have employees select a percentage of their income to contribute, and for very high income earners, 15% might be over the federal limit. Also, employers can match employee 401k contributions. That is usually a percentage match of annual salary up to a given limit (e.g. 2% of salary up to $3000).
Any company that pays you less than $150,000.
The company I work for just moved up to 30% of your paycheck. But they don’t really match. They say they do, but the max they will match is $750 per year.
“Come on, you couldn’t have brought a Grays Sports Almanac from the future or something?”
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just invest that 15% in stocks that pay dividends instead
Great, which stocks specifically (that will make more money than just putting the money into an index fund that tracks the S&P500)?
specifically ones that pay dividends. funds don’t usually pay dividends to investors
No, no.
Which specific stocks. Name company names.
it seems like you know the ones
I do not.
SPECIFIC stocks. (We can drop the act - we both know you have no idea).
lol what a noob to trading you are. GME obviously
Good day sir.
