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subwaysandwich
Frequent Contributor

first

How should I prepare for retirement? I'm currently 22.
Message 1 of 18
17 REPLIES 17
Mike_C
Administrator Emeritus

Re: first

I am not a financial expert, and I guarantee nothing, but a helpful tip to consider:

 

-If your company has a 401k with match option, you may want to invest at least up to their match point. For example, if they match every dollar up to $6, you may strive to get that match. If you want to invest more or less, that is up to you to decide.

 

And thank you for utilizing this new board. Hope there are other, more helpful posts.

Message 2 of 18
TravellingNomad
Established Contributor

Re: first


@Mike_C wrote:

I am not a financial expert, and I guarantee nothing, but a helpful tip to consider:

 

-If your company has a 401k with match option, you may want to invest at least up to their match point. For example, if they match every dollar up to $6, you may strive to get that match. If you want to invest more or less, that is up to you to decide.

 

And thank you for utilizing this new board. Hope there are other, more helpful posts.


+1

you can signup for a 401k and/or a 547 plans if your employer (for whatever reason) does not have a retirement plan option for you. i pay into these two plans aside from my employer offered retirement.

 

on a side note....thanks myFICO for creating this forum. im sure i will learn a lot in  here as well...

Message 3 of 18
azguy13
Senior Contributor

Re: first


@TravellingNomad wrote:

@Mike_C wrote:

I am not a financial expert, and I guarantee nothing, but a helpful tip to consider:

 

-If your company has a 401k with match option, you may want to invest at least up to their match point. For example, if they match every dollar up to $6, you may strive to get that match. If you want to invest more or less, that is up to you to decide.

 

And thank you for utilizing this new board. Hope there are other, more helpful posts.


+1

you can signup for a 401k and/or a 547 plans if your employer (for whatever reason) does not have a retirement plan option for you. i pay into these two plans aside from my employer offered retirement.

 

on a side note....thanks myFICO for creating this forum. im sure i will learn a lot in  here as well...


I have only done the basics. The biggest thing I have done is max out my 401K each year as well as open Roth IRAs for my wife and I. The day I became vested was the best day I had in awhile, lol

Message 4 of 18
the_jan_b
Established Contributor

Re: first

Before I started working in my current job, I had been trying to figure out how I was going to save for my retirement.  My job at the time was working for a temp agency (they were long-term assignments, but could've also ended at any time); I was making somewhat decent money, but I (like everyone else) had a household to maintain, family to take care of, and there were a bunch of other things happening that wouldn't allow me to take a permanent full-time job.  There weren't any benefits (medical, retirement, or otherwise), and by the time everything was taken care of, I would barely have enough to put gas in my car so that I could get to work.

 

Fast forward to 10 years ago:  I moved to Florida (had been out of work for almost two years prior to my move), took a series of temp agency assignments (again, long-term assignments that could've ended at any time) for about eight months, applied for a position at the military base near where I lived (never expected to get the job, but I did); and as soon as I was eligible (one year later), I signed up for the 401k and pension plans.  I contribute 6% and my company does a 50% match; and now, not only do I have money saved in a retirement account, I have money in a pension plan account.  Also, when I file my taxes, I use part of it (anywhere between $100 - $200; depending on how I feel when I file) to purchase savings bonds.

 

And now I worry a little bit less about retirement than I did when I moved to Florida; and I'm still trying to come up with different ways to save for my retirement...I just wish I didn't have to wait until I was almost 40 before it happened.  But better late than never to start saving for retirement!!

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In the garden since 26 Jun 14...

I am digitaldiva's alter-ego


Message 5 of 18
thom02099
Valued Contributor

Re: first


@Mike_C wrote:

I am not a financial expert, and I guarantee nothing, but a helpful tip to consider:

 

-If your company has a 401k with match option, you may want to invest at least up to their match point. For example, if they match every dollar up to $6, you may strive to get that match. If you want to invest more or less, that is up to you to decide.

 

And thank you for utilizing this new board. Hope there are other, more helpful posts.


Great advice to sign up for a 401(k)! 

For the OP at 22, planning ahead is essential.  You'll be working probably for another 40 years, it's all a matter of looking down that loooooong road and trying to speculate where you may be and where you want to be.  Yes, you can retire earlier with planning.  Or not.  It can be a crapshoot. 

 

Throughout your employment history, whenever possible, invest in that 401(k).  If you change employment, roll it over from one plan to another.  At a young age, it can be advantageous to select aggressive fund selections, and then sit back and let them do what they do.  Some people stress out over daily/weekly/monthly changes.  Don't.  Set it and forget it!  You're in it for the long haul, so don't stress over it!  But DO keep an eye on things and manage it responsibly.  You may need to modfiy fund selections as time progresses, or certain plans/funds may become defunct and you'll need to make a choice in a new fund, or go with a default selection. 

 

DON'T invest everything in the company your work for!  Yes, you can do that, but just not all your allotment.  Diversification is key.  I've been very successful with a combination of domestic stocks and international stocks.  When one is up, the other can be down and vice versa.  But not always.  Again, it's a crapshoot.  It's a gamble.  But if managed wisely it can be extremely beneficial.

 

Also, DON'T rely on Social Security!  We have no idea what it will look like in 10 years, much less 40 years. 

Message 6 of 18
bizzyballa31
New Contributor

Re: first


@thom02099 wrote:

@Mike_C wrote:

I am not a financial expert, and I guarantee nothing, but a helpful tip to consider:

 

-If your company has a 401k with match option, you may want to invest at least up to their match point. For example, if they match every dollar up to $6, you may strive to get that match. If you want to invest more or less, that is up to you to decide.

 

And thank you for utilizing this new board. Hope there are other, more helpful posts.


Great advice to sign up for a 401(k)! 

For the OP at 22, planning ahead is essential.  You'll be working probably for another 40 years, it's all a matter of looking down that loooooong road and trying to speculate where you may be and where you want to be.  Yes, you can retire earlier with planning.  Or not.  It can be a crapshoot. 

 

Throughout your employment history, whenever possible, invest in that 401(k).  If you change employment, roll it over from one plan to another.  At a young age, it can be advantageous to select aggressive fund selections, and then sit back and let them do what they do.  Some people stress out over daily/weekly/monthly changes.  Don't.  Set it and forget it!  You're in it for the long haul, so don't stress over it!  But DO keep an eye on things and manage it responsibly.  You may need to modfiy fund selections as time progresses, or certain plans/funds may become defunct and you'll need to make a choice in a new fund, or go with a default selection. 

 

DON'T invest everything in the company your work for!  Yes, you can do that, but just not all your allotment.  Diversification is key.  I've been very successful with a combination of domestic stocks and international stocks.  When one is up, the other can be down and vice versa.  But not always.  Again, it's a crapshoot.  It's a gamble.  But if managed wisely it can be extremely beneficial.

 

Also, DON'T rely on Social Security!  We have no idea what it will look like in 10 years, much less 40 years. 



There are new regulations in place that will not allow you to maintain more than 35% of your 401k in your company's stock.  This threw me for a loop when the new rules started last year since I rode my company stock from $13-$56 per share.  Now I have been forced to diversify a little earlier than I was planning to.  I didn't plan to diversify until the age of 30 but the gov't made me do it 3 years early.




Message 7 of 18
mongstradamus
Super Contributor

Re: first

for me who isn't that knowledgable in picking stocks or anything like that. I would do this put as much in your 401k as your employer matches, then max out roth ira, then try to max out your 401k if possible. If you can do all that then you can try and invest in other accounts like hsa or 429, then lastly would be an regular taxable account. 



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Message 8 of 18
Revelate
Moderator Emeritus

Re: first


@mongstradamus wrote:

for me who isn't that knowledgable in picking stocks or anything like that. I would do this put as much in your 401k as your employer matches, then max out roth ira, then try to max out your 401k if possible. If you can do all that then you can try and invest in other accounts like hsa or 429, then lastly would be an regular taxable account. 


One thing to note is that 401k contributions are pre-tax: and as such can reduce your tax burden especially living in high tax areas (Cali, sigh).  While I don't disagree with your assertion of using a 401k and a Roth IRA, sometimes it makes sense to put more than the minimum employer match (which should *always* be done at a bare minimum in my opinion) when it comes to a 401k.

 

Likewise if you can't contribute to a Roth due to income limits, push the 401k as far as you can.  

 

I haven't kept up on HSA's but I think they were changed somewhat recently, personally after the 401k and Roth (when I can contribute) I go straight for the taxable brokerage accounts.




        
Message 9 of 18
mongstradamus
Super Contributor

Re: first


@Revelate wrote:

@mongstradamus wrote:

for me who isn't that knowledgable in picking stocks or anything like that. I would do this put as much in your 401k as your employer matches, then max out roth ira, then try to max out your 401k if possible. If you can do all that then you can try and invest in other accounts like hsa or 429, then lastly would be an regular taxable account. 


One thing to note is that 401k contributions are pre-tax: and as such can reduce your tax burden especially living in high tax areas (Cali, sigh).  While I don't disagree with your assertion of using a 401k and a Roth IRA, sometimes it makes sense to put more than the minimum employer match (which should *always* be done at a bare minimum in my opinion) when it comes to a 401k.

 

Likewise if you can't contribute to a Roth due to income limits, push the 401k as far as you can.  

 

I haven't kept up on HSA's but I think they were changed somewhat recently, personally after the 401k and Roth (when I can contribute) I go straight for the taxable brokerage accounts.


The only reason I feel that 401k to match then Roth IRA is because some 401k you may not get best choice of mutual funds or etfs. At least when you with Roth you get to choose what funds you want to be investing in. 

 

I also feel more comfortable with Roth IRA because its easier to withdraw from it.so if you want to play it an bit riskier.you can put some of your emergency fund into Roth IRA,since you can withdraw easier.



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Message 10 of 18
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