Good evening! Current employer matches my 401k contributions at 6%

LuckyDusty
LuckyDusty

Good evening! Current employer matches my 401k contributions at 6%. Currently putting in 10%. Any reason not to lower it back to 6%? I just started doing this, and I'm noticing a huge decrease in each paycheck (about $500-$700), and could really use that money right now. Do I stick it out as long as I can, or go back to 6%?

StonedTime
StonedTime

Your 401k is going to be worth pennies after the upcoming market crash

eGremlin
eGremlin

@LuckyDusty
The management fees on your 401k are much higher than getting your own index funds and filling your personal IRA (or ROTH).

Only ever contribute to max out your employer contribution because it is free money and then just add to your own retirement fund.
Or, just take that 4% difference and do something else with it.

401k management companies take a commission on money managed and then still have to pay the fund companies as well.
It is a series of Benefits Brokers>Mutual Fund Sales>Mutual fund managers which comes out to incredibly high fees when you could do that yourself with very little research.

BinaryMan
BinaryMan

Only do the match. Markets aren't going to tank hard enough to lose that matching money.

FastChef
FastChef

@LuckyDusty
you must start your own business and free yourself from wageslavery

PurpleCharger
PurpleCharger

@StonedTime
market crash meme
0 analysis
Go end yourself you doomsday fgt

CodeBuns
CodeBuns

@LuckyDusty
Do want to live a happy, enjoyable, fulfilling retirement, or do you want to live a sad, scared, pathetic retirement? The more you save, the better your life will be down the road. It's really that simple.

@StonedTime
Fuck off kid.

@BinaryMan
Fuck off kid.

@FastChef
Fuck off kid.

@eGremlin
Maybe, but not necessarily. Many 401ks have excellent fund choices including low-cost index funds. Your correct that the match (6%) is a no brainer. Where to put his additional savings all depends on the details of the 401k plan, which OP hasn't shared with us.

New_Cliche
New_Cliche

@CodeBuns
you can't be saved it's too late for you
abandon thread

whereismyname
whereismyname

@CodeBuns

kill yourself

Fried_Sushi
Fried_Sushi

@LuckyDusty
If you really need the money, then you should reduce your 401K contribution.

But be sure you understand the difference between "need" and "want."

Crazy_Nice
Crazy_Nice

@New_Cliche
@whereismyname
Ah, the YOLO 420 crowd has arrived.

I hope you enjoy eating catfood and government cheese while being sexually abused in a derelict retirement home.

Meanwhile, I'll be on my boat off the shore of Belize with a club bunny on each arm.

And I'll be laughing at you.

Just kidding ... I won't ever think about you. Neither will anyone else.

Evil_kitten
Evil_kitten

@CodeBuns
There is no way a 401k could ever be competitive with going to any brokerage and just flat out buying SPY or whatever other bluechips.

The reason being is that there is an account manager of his benefits program, and that benefits company was promised a kickback on sales from the mutual fund group.
Beyond that, the mutual fund group takes a management fee, even if it is an index.

That is at least three costs with picking the index fund option (if it is offered) that doesn't exist normally. For convenience, the cost may be nearly negligible, but I am inclined to say that paying two salesman and an account manager will definitely eat into long term gains.

haveahappyday
haveahappyday

@Crazy_Nice

projecting this hard

iluvmen
iluvmen

@Evil_kitten
Your company must suck. Mine offers VIIIX with one fifth the expense ratio.

Snarelure
Snarelure

@Evil_kitten
I respect your cynicism and I wish that more people understood the ways that their 401k can be run better. However, you are wrong in assuming that every company runs their programs in a predatory manner.

@haveahappyday
Truth hurts, huh? You suddenly lost all your swagger, faggot.

ZeroReborn
ZeroReborn

@LuckyDusty
I'd dial down to 6%, myself. Unless you're just flush with cash, the extra 4% of your income would be nice in order to have food on the table regularly. If 10% of your paycheck is $5-700, I can only imagine that means you'd be sitting on an extra $2-300.

Don't get me wrong, investing as much as you can afford to invest is important, but don't forget that you've still got to eat, pay for your living arrangements, utilities, and whatever other things you need in your daily life. Being rich doesn't mean much if you don't live long enough to spend it, and all that.

CodeBuns
CodeBuns

@CodeBuns
Do want to live a happy, enjoyable, fulfilling retirement, or do you want to live a sad, scared, pathetic retirement? The more you save, the better your life will be down the road. It's really that simple.

Finish high school, it's the only path to a happy, enjoyable, fulfilling adulthood!
Now get a college degree, it's the only path to a happy, enjoyable, fulfilling adulthood!
Get a wagecuck job, it's the only path to a happy, enjoyable, fulfilling adulthood!
Save all your money for retirement, you'll be happy then!

Hehehehe, these memes. OP spend your money while you're still young enough to fucking enjoy it. I'm in my 20's, self made and will likely never work a job in my life.

Knowing what I know now about the value of time and enjoying youth, I can assure you spending your money while you can actually, truly, enjoy it is the best return you'll ever realize on that $. Good luck.

Bidwell
Bidwell

@CodeBuns
I can assure you spending your money while you can actually, truly, enjoy it
You YOLO SWAG faggots seem to think that saving for retirement and enjoying your current life are mutually exclusive. Maybe it's because your income is so low, or because your life is so shitty you can't imagine it lasting into retirement. Or maybe you're just too stupid to grasp the concept.

Either way, you really shouldn't be posting on a board dedicated to business and finance. You're in the wrong place, kid.

Inmate
Inmate

@LuckyDusty
noticing less on each paycheque
4%
500-700
each paycheque is roughly 12500
Are you paid monthly? Just curious

TreeEater
TreeEater

@Crazy_Nice
I'll be on my boat off the shore of Belize with a club bunny on each arm
when is this again? After you work for 40 years and retire on your well balanced 401k portfolio? You're not gonna want to fuck anything when you're 60+ y/o dumbass. Enjoy the "slowlane" path to retirement, if you even make it that far.

[spoiler] you get laid off early and die of old age first
[/spoiler doesnt work on /biz]

keep visiting Veeky Forums and talking down starting your own business faggot

Sharpcharm
Sharpcharm

@TreeEater
the government forces you to work 40 years before they let you stop working

Evilember
Evilember

@Sharpcharm
no the government doesn't force that, you can start your own successful business and retire early

SniperWish
SniperWish

@CodeBuns
WAGIE COPE!!

These sad wagies.

StrangeWizard
StrangeWizard

@Evilember
Or you can retire early by making sensible frugal decisions and making use of the tax advantages of 401k accounts.

Lunatick
Lunatick

@Bidwell

Back to your cubicle wagecuck.

Poker_Star
Poker_Star

@SniperWish
@Lunatick
Um, I'm actually a business owner. I have a 401k, an IRA, and a SEP-IRA.

Since when does saving for retirement have anything to do with how you make your money? You NEETS need to step up your game....

FastChef
FastChef

@Poker_Star
Youre a slowlane faggot.

JunkTop
JunkTop

@Lunatick
Back to /r9k/ with your shit tier troleing.

Nojokur
Nojokur

@FastChef
Then why am I so rich?

Booteefool
Booteefool

@StonedTime
And assuming he's in his 20s or 30s it'll surpass current levels before he retires.

And if it doesn't and it's the end of the world as we know it then he'll have a bit more trouble than worthless savings.

Fuck you're dumb

Lord_Tryzalot
Lord_Tryzalot

@Nojokur
If you're that rich it's not your 401k that gets you a boat and club bunnies.

SomethingNew
SomethingNew

@Evil_kitten
He doesn't understand that a 401k, even if it just made inflation, would btfo out of any other long term investment's real returns simply because of tax preferences.
Tax is theft. Avoid taxes to not be robbed. Not being robbed > earning. Also what @Snarelure
said. Good companies don't run their 401k like shit and if they do you should quit, roll your 401k into an IRA, and then control it yourself like a boss.

hairygrape
hairygrape

@Lord_Tryzalot
it's not your 401k that gets you a boat and club bunnies
The boat comes from the withdrawals, and bunnies take the deposits. If you know what I mean. Shwing!

Sharpcharm
Sharpcharm

@LuckyDusty
Go back to 6$%. You should be putting the rest on a Vanguard account, where fees are likely lower and you have more control over it.

SniperGod
SniperGod

@Sharpcharm
15% capital gains tax
lower fees

Ignoramus
Ignoramus

@Evil_kitten
Good 401k's have institutional-tier index funds that beat the expense ratios of funds available to retail investors and the employer cover administrative fees

Lunatick
Lunatick

@SniperGod
vanguard 401k

Methnerd
Methnerd

@Lunatick
I know you meant well, but when giving advice it's important to get the facts straight. An individual cannot open their own 401k.* Not at Vanguard, not anywhere. A 401k is a employer-sponsored plan, meaning it must be established by an employer for its employees.

What you meant to say is a Vanguard IRA (or Roth IRA.

*Exceptions exist for self-employed individuals, who can open individual 401ks and deposit self-employment earnings. OP is not self-employed.

Need_TLC
Need_TLC

401k YTD
+7.9%

I do love my plan, my TSM fund has a 0.03% expense ratio.

TalkBomber
TalkBomber

I have mine up to 9% OP, and will have it at 18% by next year. I personally think 401k beats IRA and investing in the market until you have roughly 300-400k in there. The reason is because you don't pay taxes on the money until it is withdrawn. Currently, the money that goes into the 401k for me is taxed at 25%, so I'm getting to keep that portion ($250 on every $1,000) and it earns interest for 35 years until I start withdrawing.

Don't believe me? Attached is the literal math showing that a 401k beats an IRA.

I personally would never invest in an IRA. The IRA offers you 25% savings on your earnings, as ssaved taxes, but the penalty is reduced liquidity. If you have literally so much money and nothing to do with it, sure put it in an IRA, but locking up your money until 60 is not something I'd advise.

@eGremlin
Vanguard doesn't charge fees on holding my 401k unless I quit my job, in which case it turns in $25/year

eGremlin
eGremlin

@TalkBomber

Also, here are the formulas I used

401k: Future value = Present value *(interest rate^time) * (1-taxes) = 1000 * (1.05^ time) * .85
IRA: Future value = Present value * (interest rate ^ time)

IRA starts lower because it's after-tax, whereas 401k is pre-tax. The .85 is actually understating the value, as the first 10k withdrawn per year is not taxed in a 401k, so add back in like 150 bucks to the 401k column but fuck it

PurpleCharger
PurpleCharger

@TalkBomber
They are both pre-tax plans are they not? Unless you are talking about the savings limits, then why would a 401k do better than a traditional IRA?

Ignoramus
Ignoramus

@eGremlin
@PurpleCharger
oh you were talking about Roth IRAs then? Or are you making non-deductible contributions to a traditional?

Typically at work, pre-tax savings only looks better in certain situations (these are just static projections) but the after-tax in, tax-free growth, and tax-free out usually look better for people. You can make pre-tax savings look better if you take the tax savings and also invest that money.

takes2long
takes2long

@PurpleCharger
@Ignoramus

Sorry I'm tired, the IRA is indeed roth IRA. Your second paragraph doesn't make sense though, I did project tax free growth on the roth, and tax-savings being invested on the 401k.

Evilember
Evilember

@LuckyDusty
Well I actually am an advisor for retirement accounts.

So do find out what fees are getting pushed on to you. Who is the administrator? If it's a record keeping fee not much to it, ducks but oh well. Percent of account under management? Unless it's under 1% and it's within your risk tolerance and your balance is under 200k-250k then keep doing 10%.

But I always tell my clients, only go above the match if you have your debt under control. By that I mean nothing over 8% interest that keeps going over from month to month. If it does get rid of it. It's a credit card that you pay off before the interest is calculated then whatever. If it's under 8% then make sure manageable and it's "good" debt, then make sure you write off the interest and make only the minimum payments.

Once that's done, make sure you have a safety net. Something to fall back on if you lost your job. It should be able to pay ALL your monthly expenses for at least three months. Three because that should be enough time for you to get a new job. Try to not build up more than six months because that's where the sweet spot starts to end. At six months it makes more sense to make it work for you (bond or CD ladders, IRA, brokerage account, land, whatever floats your boat). But just make sure it's a safety net you're comfortable with. It should allow you to sleep at night

Once that's said and done. Then yes, do above the match. Aim for the 18k 402(g) limit. Get the catch up if you're over fifty. Then max out your IRA if your income allows it, to get the write off or to do Roth. Or if you prefer make after tax contributions and just do back door Roth conversions. But at this point you're probably in the six figure salary.

tl;dr if no bad debt and have emergency fund, then yes, contribute above match

Illusionz
Illusionz

@Evilember
Why would you recommend somebody at a lower income to max a 401k AND a traditional IRA instead of just doing a roth?

Do you use projection software like naviplan, emoney? advisor vision? anything?

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