🎯 Key Takeaways for quick navigation: 00:00 📊 401(k) Introduction and Importance 01:00 💰 401(k) Statistics 03:08 💼 401(k) Funding Limits and Provisions 05:25 🤝 Employer Contributions and Vesting 07:57 🌟 Types of 401(k) Contributions 19:31 💰 The Importance of Considering Tax Rates in 401(k) Contributions 21:49 🦈 After-Tax 401(k) Contributions: The Apex Predator 24:37 💳 Unique 401(k) Provisions: Loans and Hardship Withdrawals 29:27 🕒 Rule of 55: Early Retirement Bridge 34:15 🌟 Why We Love 401(k)s: Millionaires, Tax Benefits, and ABB Opportunities 39:10 💰 Saving in Your 20s 40:47 📈 Saving in Your 30s 43:29 💼 Saving in Your 40s 48:24 🚀 Saving in Your 50s and 60s Made with HARPA AI
I am from Spain, my friend in Texas referred me to this channel you make a lot of sense but I do not understand anything until she referred me to a financial consultant in USA that help me to craft my portfolio and over a year we have been working together making consistent profit enough to get me a new apartment and care for family.
I’m being guided by Laura Marie Keilman. Look her up online, she’s quite popular in the united states and she’s a certified financial adviser in order to put you through the procedures of achieving your goals. I've been investing with her guide for a year, and have accrued approx. 1.4 million in net-profits this far.
Of course, Look her up on the internet, you will find all you need to know about her. she's quite popular for her services, as she was recently featured on CNN. She can work with anyone irrespective of where you're located.
I'm hoping to retire next year at 55. My goal next year is to be more serious and consistent with my investments I've been investing since I was 22. 2024 is going to be more serous for me investing consistently for the long term. starting to save for a house down payment. I want to invest more than $105k, but I'm not sure on how to mitigate risk.
Safest approach i feel to tackle it is to diversify investments. By spreading investments across different asset classes, like bonds, real estate, and international stocks, they can reduce the impact of a market meltdown. its important to seek the guidance of an expert
"Average" 401k value is a bad metric. The average for a 40yr old may be 108k, but the median is probably closer to 30k. Extremely high earners are actually making it seem better than things really are for the majority.
HELOAN, HELOCs and cash-out refis should ONLY be used as leverage for investing in rental real estate. If you have sufficient equity in your primary residence and you’ve done your due diligence and the numbers work out on a great deal, a HELOC is preferable as you can pay it off when your ARV (After Rehab Value) on the new acquisition is enough to refinance the total debt. Service that debt from the rental revenue and enjoy the residual net cash flow. Then use it again on future acquisitions. This is what I’m doing.
Hey Girl, I got a 200k HELOC from my 580k primary home which I’m still paying mortgage for ($1880). I want to only use 50k for this duplex property’s down payment. The new property is 150k so my monthly would be around $650 plus the HELOC debt of 50K. How or can I even combine these two debts (mortgage and HELOC) together for a more affordable monthly payment??
The only way I was able to scale through all of this without stress was by working with a financial adviser. My adviser *ROCHELLE DUNGCA-SCHREIBER* has always had my back all through the process of property investment and investing in general. You can glance her name up on the internet and verify her yourself. she has years of financial market experience.
Heard many good recommendations about Rochelle Dungca-Schreiber by some YT channels, Seminars and other platforms. Never knew she could be of help in that manner
it's recommended to save at least 15% of your income in a 401k. You can use online calculators to estimate how much you should save based on your age and income. Saving at least 15% of your income in a 401(k) can help ensure that you have enough money to retire comfortably. By saving this much, you can take advantage of compound interest and potentially grow your retirement savings over time. don't think I could retire with less than $3m in income generating investments and i'm not talking 401k, maybe $2m at the very minimum. I plan to work until I'm at least 45.
Having an investment adviser is the best way to go about the stock market right now, especially for near retirees, I've been in touch with a coach for awhile now mostly and I made over $800K within a short time
No. Investment advisors can seldom beat the market unless they're running a Ponzi scheme. Warren Buffett managed that with superior analytical skills, yet most of the math is now available for free. An index fund is the best bet for people who don't want to be involved.
My strategy is to put half my income into the stock market at the start of every month, regardless of what is happening. The second part of the strategy is not to sell for at least 15 - 20 years. Time in the market beats timing the market.
@@fredransterdon Newbies think that the best way to play the stock market is to buy stocks then sell them a day or few months later, than repeat the process. This method of investing usually loses money. The people who buy and hold for long periods are the people who make the most money.
Love the show! I first started contributing to a 401k at age 31 five years beyond when I could have. My co-workers encouraged me and I am so thankful I eventually listened. My account hit 7 figures in 2020 and I also have a pension. I wish there was information like this available 30 years ago when I was doing “stupid.” Doing okay but could be further ahead.
I just hit 40 and I've always tried to save 20%, but I prioritized buying a house and have a big family. I am just now finding my income is high enough to start really saving after all the fixed costs. I wouldn't say as people get older, they are starting to realize they need to save more for Retirment. I think the real reason is just people can afford to save more as they get older
I'd be retiring or working less in 5 years, and I'm curious how others split their pay, how much goes into savings, shopping, or investing; I earn roughly $250K per year but have nothing to show for it.
Had a good run during my first year in the fin-market, I assumed I had a hang on it. However, things changed during the pandemic, and I needed to diversify into safe assets, so I approached a coach who devised a structure that matched my annual goal of 200k
Laura Marie Ray is my portfolio-coach, I found her on Bloomberg where she was featured, I looked up her name on the internet. Fortunately I came across her site and reached out to her, you can verify her yourself.
It’s simple. The younger you start the better of you will be. Say you have a $500 car payment. If instead you invested that from age 25-65, you would have anywhere from $1.7Million to $3.1million around retirement age. But if you start at age 45 to 65, that’s only $300k-$380k at retirement age. You don’t invest for half the time. But you lose 80% to 90% of what you could have had.
Love this show. Keeps me grounded and excited to save/invest. Hitting about 30%+ of my income invested yearly now, and as a mid twenties - you have me very excited for the future! Thanks, Money Guy(s)!
Buying a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard. Hence what are the best stocks to buy now or put on a watchlist? I’ve been trying to grow my portfolio of $260K for sometime now, my major challenge is not knowing the best entry and exit strategies... I would greatly appreciate any suggestions.
The market is volatile at this time, hence i will suggest you get yourself a financial-advisor that can provide you with entry and exit points on the shares/ETF you focus on
@@jetkastrokdova >I agree, that's the more reason I prefer my day to day invt decisions being guided by a invt-coach, seeing that their entire skillset is built around going long and short at the same time both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, coupled with the exclusive information/analysis they have, it's near impossible to not out-perform, been using a invt-coach for over 2years+ and I've netted over 2.8million
@@margaritasbunny .Thats true, I've been getting assisted by a FA for almost a year now, I started out with less than $200K and I'm just $19,000 short of half a million in profit.
@@Gracej34 that's huge!.please who is the expert guiding you? i have lost so much as a beginner investing into stock without a proper guidiance of an expert.
@@bobbyrussel-ob9oj My tutor who has helped me navigate the murky waters of the Fin-Mkt is ROSEMARIE AGATHA ALLORA she has devoted section and leave attention to safeguards that I have been keeping an eye out for. You can locate information about the genius online, on the off chance that you're interested. I made no regrets about substantially adhering to her exchange strategy.
I'm so happy I made productive decisions about my finances that changed my life forever,hoping to retire next year... Investment should always be on any creative man's heart for success in life.
With the assistance of Fergus waylen , I was able to diversify my $401k portfolio across multiple markets, earning over $980k in net profit from high dividend yielding stocks, ETFs, and bonds in just a few short months.
That's right, Fergus Waylen is the only one I can leave my investment with and think less about it, he's my money maker. I just received $24,300 profit off my investment last month. I just sit down and earn profits every weekend.
@@mscolli3 Yep. It basically is. Take a FIRE strategy that was designed for a 21 year old to retire at 40 and apply it (with slight modifications) to a 45 year old so they can retire in their 60s.
Get in touch with good financial person, do some research to find that person, and start pounding the max amount you can in vehicles like they’ve mentioned her on this show, they in my opinion would be good guys to help you out too!
With Roth IRA, the money you are contributing has already been taxed. At any time for any reason, you can withdraw your contributions tax-free and penalty-free. Additionally, any earnings on investments can also be withdrawn tax-free and penalty-free, Not sure how much to contribute, I'm still at a crossroads deciding if to liquidate my $338k stock portfolio.
For the average person, the strategies are fairly demanding. In actuality, most professionals who have the necessary abilities and knowledge to complete such occupations do so successfully.
Not completely tax free/penalty free. If you withdraw too young and/or before 5 years from your 1st contribution, your earnings will still be taxed (since they haven't qualified) & you can still face early withdrawal penalty fees
@@moonlit85your information is incorrect. I've been a financial advisor for 15 years. A traditional IRA is subject to income tax, a Roth is not. The 10% penalty applies to any tax qualified account, any withdrawals prior to age 59.5 will incur a penalty.
well said! Turning 54 in 3 days. Nearing $1 million in the 401k. Would have reached that last year but market dipped. I just stuck to the plan and kept adding shares for less and now the market is starting to creep back up again. Will see that magic million soon i hope...Army of dollars, strength in numbers!
I absolutely love Brian's commitment to his plan to gain more clients through educating the population to become the type of people who need a financial adviser. I feel this way for two reasons. The first being his transparency and honesty surrounding his business model and plan. The second being his excitement and disappointment in the general population when they do good or bad. Bo is a fantastic role model himself and don't intend for this to undermine his importance to the plan and channel.
My retirement strategy can be written on a post-it note: 10% goal (advice from Carter Admin years) contributed into a low-fee sp500 index mutual fund (Buffett advice?), and often I failed to meet my own goals. Still, I am ahead of many of my friends/family. Great video, but it reminds us how many people didn't understand the importance of using TIME.
I’m closing in on my retirement and I’d like to move from Minnesota to a warmer climate, but the prices on homes are stupidly ridiculous and Mortgage prices has been skyrocketing on a roll(currently over 7%) do I just invest my spare cash into stock and wait for a housing crash or should I go ahead to buy a home anyways.
Indeed, the recent market downturn serves as evidence that a vast majority of individuals lacked a sufficient understanding of the underlying financial dynamics at play.
I'd move to where you want to go, get an apartment and keep saving for that house. You may want to change states in a year or so and it will be easy from an apartment. When you find an area you love, you will be already established in that area and will see firsthand the best home deals for sale. My opinion that I did.
Great video Gentleman! Can you guys make a video on 457b’s and pensions for government employees (state and federal). There isn’t many out there on RU-vid that go into depth
I agree. Military here and need something on it. They have mentioned how you can calculate it as part of your plan but I need the in depth. Probably taking the know your number course soon.
As someone 7 years into a pension, YES PLEASE. I have one that replaces about 60% of my salary at 30 years with my contribution at 10% pretax. We’re right at the cutoff for Roth IRA. Just decided to start funding Roth 457b instead after this video. Hopefully that’s the right move.
I started buying some more stocks at the beginning of the year, but nothing big. Why am I treating this so harshly? I still want to be the first person in my polygamous family to make a million dollars despite the fact that others in my field make six figures per person. I am well aware of the costs associated with working more to get more money.
If the market has taught me anything, it's that it usually makes a comeback, but I can't seem to concentrate on the long term, especially because important things like my retirement and my reserve are having a disastrous impact on inflation. I need a solution and a data trajectory that I can trust as soon as it is practicable.
To anyone reading this chain of comments, this is a scam, do not contact this woman. This thread of replies gets put on many finance related RU-vid videos and is meant to look organic.
The thing our family in the “messy middle” is struggling with is the lack of any pay increase which your including as a 1% increase in this video. I’m making the same dollar amount I was in 2019. It’s not a situation that I can just move to a different employer to resolve. I have a very specific licenses healthcare career and other companies are paying the same or less, it’s absolutely industry wide dictated by the payer source insurance. I’m currently 37 and contribute 20% with a 3% additional from my employer but it’s getting rough!
Hey guys, asian guy here. Thanks for the common sense grounded wealth info. Too many extreme infos are out there that are too difficult to adhere to or too radical or risky to attempt. Your info is one of the more easy to follow, and not live on a one tomato and banana per day lifestyle.
The Canadian equivalent of the 401K allows you to pull a certain amount for first time home buyers and repay it over 15 years. For my specific situation, taking only enough to reduce the default mortgage insurance balanced out the opportunity cost of taking out the funds. The amount saved per month on the mortgage payment went directly to the RRSP repayment.
Interesting. Do you pay it back with interest? In the U.S. a first time home buyer can also pull up to $10,000 from an IRA (individual retirement account) without the 10% penalty but still subjected to taxes.
@Linda Le no taxes, they allow each spouse to pull up to $35k tax free. There are penalties if you don't repay after the 15 year limit but it's so easy to hit that target.
It is gone, we lived through the zenith of our time. These bourgeoisie individuals in tandem with the corrupt govt. will take down this country like what happened to Rome. My condolences to anyone approaching retirement, you may have concerns over whether your pension pot will stretch to cover the rising cost of living, bad regulatory policies, bad energy policies and insane fiscal policies
I'm 54 and my hubby and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, we are finding it impossible to replace it. We can get by, but cant seem to get ahead. My condolences to anyone retiring in this crisis, 30years nonstop just for a crooked system to take all you worked for
@@ellaaysun6181I highly recommend considering my advisor, Joffrey Adam Smith, as your investment advisor. With his extensive knowledge and experience in the financial industry, he is on par with other institutional investors. Notably, Joffrey was a protege and former employee of Warren Buffet, one of the most successful investors in history. His insights and expertise can help navigate market fluctuations and optimize your investment strategy. Trust Joffrey Adam Smith to guide you towards profitable investment opportunities and achieve your financial goals.
@@ohmakure4716I know Joffrey Adam Smith. I found him on a El Mercurio interview where he was featured and reached out to him afterwards. over $174,000 profit was made last year on my portfolio, more so because his strategy cuts across the major financial markets which I found out generates more profits.
Not just the retirees. You might as well want to empathize with the younger generation. We still have the most part of our lives to life in this sh*thole
Wait Bo is excited about show! Ha! Im a veteran financial mutant now thanks to you guys! Keep rocking and riffing guys! I have a 4 pronged attack now: Traditional I put 6% and company matches 8% with 100% match (I know Im lucky I work for a very large company: note it was 6% for first 3 years and than i got an extra 2% once I made the 3 year mark so a 2% vestment at 3 years tenure), Roth I put 13%, HSA I put 13%, (company puts $1000 in HSA at beginning of year) and started a Robinhood Brokerage and as a hedge I invest mostly in Cyrpto. Got my wife doing Robinhood and she does mostly dividend investing. I had no idea employers can match on Roth now: wow very cool! People listen to the money guys, these guys are the best!
My first opportunity where I had a job that allowed me to invest in a 401k was at the age of 28...that late start coupled with making hardly anything makes catching up at 40 feel impossible.
Stay the course! I didn't have a 401k til age 29 and could only do the match while I paid off student loans. Discovered this show at age 39 and it lit a fire under me. It's been 2 years and I'm finally started to see a difference.
I think it would paint a better picture if you broke it down by smaller age groups i.e. 20-25, 26-30 etc. There’s a big difference between a 30 year old and a 39 year old!
Would definitely agree also I appreciate median amounts by ages and average amount by ages in 401ks many times hyper savers can skew the average significantly ...
I completely agree with you on the 401k loans with 1 caveat: if you’re paying off high interest rate credit cards it might be better than letting it be invested in the market. Now, you have to be disciplined to not get in credit card debt again. Also, some plans won’t let you contribute while you have a loan and in that case, it is a lose situation.
True but I think in this case if that is the only option to safely consolidate, because you should probably arguably go the home equity route before you tap your 401k….this changes depending on how far along you are in your journey to retirement. A max loan of $50k within your first 5 years of saving is way more detrimental than a 60 year old pulling out 2% of their portfolio to pay off debt
I'd disagree with this, if you can't pay your 401k loan in time they make you do a lumpsum withdrawal or garner wages. If you can't pay your HELOC, you lose your house.
I've taken a few loans from my 401k but made it a point to 1. Only take as much as was needed, 2. Spend it only on things that were needed or other investments, 3. Pay it back as soon as I was able to.
@@classics-wz1bz oh, I completely agree. I’m just saying that is the only time I might consider it. I did it for a down payment on a house but I was lucky enough to be employed the whole time and could still contribute to it.
@@classics-wz1bz I think if you’re going to open up the analysis to additional inputs like failure to pay, you should also consider 2 other risks. If you are 27 and about 5 years in and have about $100k and take a max loan of say $50k…just do the analysis ok how much you would lose in compounding interest on the last 2 years of your working life vs the cost of a foreclosure on your home. Also, even if you don’t default on your mortgage, it’s still a losing proposition. You would lose way less money paying interest on a variable rate heloc for 10 years than not having your dollars deployed in your 401k for the payback period of the heloc.
I'm 32 now, and while I meet the recommended savings total, I've fallen short on the savings % of gross income because as I've gotten raises I've put that money into a down payment on a house and everything that comes along with homeownership. Thankfully, I didn't have to borrow from my retirement to make a down payment (like you mentioned in the video), but it certainly has been a deliberate decision to invest in a home rather than increase my 401k/Roth contributions. I know you guys talk a lot about retirement savings, but knowing I'll have a roof over my head when I do finally retire can't be overstated. I don't look at my primary residence as an investment, instead I look at it as a way to reduce my post-retirement income needs (since I won't have a mortgage/rent).
That’s actually how I’ve done as well. Put $40,000 into my house out of my taxable brokerage account, and I plan on having no mortgage ( $1200 mortgage ) when I retire, so that reduces my income needs by $14,400 a year
This exactly. One thing that I wish these guys would do a show on is expenses and how expenses decrease as you age. Of course it goes directly against what they get paid to do, but it's silly to think a 40 year old who has to feed 4 kids and a mortgage is going to get to retirement and have more or similar expenses when they no longer have a mortgage, only have 2 mouths to feed, and no longer have to worry about the flat 7.65% OASDI tax on their retirement income. Everyone talks about how you need 2M to retire and all this fear mongering to get folks to stash so much in their retirement accts but spending will surely decrease as you age. You may do more fun trips but it does not linearly increase over time as 99% retirement planning models will predict.
@@classics-wz1bz I mean I agree but my retirement right now looks like it’ll end up around 3 million dollars. I have a $400,000 house and a $50,000 truck. The rest of it can go to my wife and my children
@@classics-wz1bz Some spending will decrease with age, but some costs , go up. Healthcare can be very expensive, particularly for those who want to retire early but are not yet eligible for medicare.
401k loans aren't inherently evil, but you need to be responsible with them. I took one out July 2019 to payoff some credit card debt I was drowning in. I did a 2 year loan and paid it off 6 months early. I saved hundreds of dollars in interest and my credit shot up immediately which allowed me to buy a house and a car before I paid it off with very low rates. It was one of the best financial decisions I ever made. And thanks to the 2020 downturn I didn't miss out on much return
I did the same thing, BUT! I lost my job and had to take the balance of the loan as a distribution. Had I not lost my job, it would have been better than not investing and paying off stupid debt. That's the only risk.
Prob got a 5-600+ car payment lol. Imagine making the mistake of racking up credit card debt and then praising yourself on the internet for borrowing against your future. Clown world.
I am 53 years old and consider myself to be a high earner. My job provides me the option to contribute the employer contributions to my Roth 401k. Should I do that or should I continue to direct that to my Traditional 401k ahead of retirement?
You're doing well for yourself but it is better to seek help from a professional. I am sure that an expert with experience provides more edge than a RU-vidr.
As a high income earner can you easily afford to contribute max of $22,500 to your traditional 401(k) and towards retirement? What is your Federal Tax Bracket and percentage of company match? I f you don't know all this then its best you consult with an advisor.
I wasn't getting the full employer match when I started working. The reason is that I knew nothing about investing and 401Ks back then. If I knew about investing when I started making some money back in college, I'd be in a much, much better position right now.
I’m 22 and I’ve got about 6k-7k dollars in a Roth. I have worked decent jobs but now I’m trying to go into more specific IT jobs to get better pay my next position I am trying to get is network administrator and I hope to move into network engineer after. End goal is either cloud engineer or my own network company which I just thought about today. Hope this all works out because I love everything I have been learning I am everything tech.
It always amazes me the number of people who don't participate, even partially, in their employers' 401K. Many years ago I started a job and in very short period of time I discovered how many employees, mostly women, didn't participate. I started having what I called "sit downs" with individual employees to explain that they were missing out on free money. Finally, my employer started offering lunch 'n learns, wherein an expert would come in and offer a class in investments. The participation in the 401K sky rocketed.
Lets go! 28 and im already higher than the average 30year old! I love 401k. I was able to use it to buy my house. Once you get into 401k you regret not putting 10%+ sooner. Got my 19 year old brother putting 16% with an employer 8%match on top of that!
I contribute the max 401k, HSA, Roth IRA for myself, my wife, and our son. I am running out of ways to save (pre-tax basis) for retirement. My financial advisor is pretty good and has helped me takr advantage of the pandemic boom, but I am seeing very very very little growth.
401k is something I"ve really started to focus on as I'm getting older. When you're in the higher tax brackets it's a great way to get the most for your money and if a place has a good match or contribution program it can really make up for wages. My company doesn't match, they do a contribution with the quarterly bonus. It's pretty great, there are people who have been here 20+ years with a half million dollars without ever contributing their own money. We've really gotta start looking at that benefit when looking for a job, you might end up making a lot more in the long run with a good retirement plan
Half of my coworkers don’t even have a 401k plan and they’re the age range from 35 to 47. Some even laugh at me like I don’t need that. All good they can cry when they’re a lot older
Wonderful. Yes, here in Illinois not only do I stay in the 22% bracket by going pretax vs the 24% level, but I also DO NOT pay the 5% state income tax that I must pay to put money in my Roth 401K as it must be taxed as ordinary income before I can deposit it. Whatmore, Illinois DOES NOT tax 401K, IRA, Pension, or SS income so I DON"T pay the state tax on the withdrawals either. That is a huge tax savings and I plan to use that to my advantage in early retirement between 55 and SS while making Roth conversions happen. I still get a tax hit for after taxes when the pre-tax and catchup limits are met but it is still worth it after pre-tax is done for the year. The numbers are always daunting with balances. Stay the course it really has paid off well above those averages. Do the boring paycheck by paycheck work and the money will be there. 53 with lots of lessons learned. -Just my 2 cents.
@@timprussell Maybe. I do have pension income so I will always be in at least the current 22% bracket. If you're going to be lower, then I would go for the Roth but for me it doesn't work.
Great conservative content guys. What a person makes in working years can be vastly different in retirement. Let's say a "last job" household income is $300-K per year and the plan is to retire with $100-k per year with 3% annual increases which would only be 33% of pre-retirement wages. A $100k per year is reasonable in retirement considering tax burden is far less on $100k, savings stops, auto expenses go to 1 car, you own a business that continues to produce income after retirement or is sold, you continue to live in your existing home which also has equity and can be down sized, and the amount of available SS funds available. A lot to consider. Getting a good fiduciary is key to understanding realistic retirement goals. I am ontrack for a networth of $1.3 M by age 57 and out with projected returns of 6% after retirement. Let's go!!
I was advised to diversify my portfolio among several assets such as stocks and bonds since this can protect my portfolio for retirement. I'm seeking to invest $200K across markets but don't know where to start.
Remember that investing in the stock market carries risks, and it’s important to do your own research and consult with a financial advisor before making any investment decisions.
With the help of an investing advisor, I diversified my $400K portfolio across markets, and I was able to earn over $900k in net profit from high dividend yielding equities, ETFs, and bonds.
My consultant is *Sharon Louise Count* She has since provide entry and exit points on the securities I focus on. You can look her up online if you care for supervision.
Rule of 55 - you can take distribution from a 401k only if the plan allows it. Some (most) managers do not allow distributions before RMD age. If you want money, you must take ALL of it, from that you keep some and put the remainder into a rollover IRA. That remaining money now must follow the usual urules - can't with draw until 59.5.
I am over in Ireland, I put 13% into a retirement account and have a 7% match from my employer for 20% of my income. I put another 2.5% into a mutual fund. I’m catching up because I didn’t start until I was 33 and I am 41 now with about 79k for retirement. A lot to do to get back on track.
I moved overseas and left a roll over IRA account in the USA with less than 40K. It is almost 90K today and I haven't put a dime in it since I left 15 years ago. You will get there.
Keep contributing to 401k as well as IRA as much as you can regardless of your age. You still have 20 plus years until you are over 60 years. The money in those accounts will keep growing.
Even though the 457 plan is not as common as a 401k, it would be very interesting to see that stat for those of us that fund the 457. We dont get a match and it takes a good budget and diligence to get those 401k numbers!
401k balance doesn't really give a complete picture of retirement savings. I.e. it may be understated. Most people have changed jobs several times by the time they hit their late 20s. Which means different 401k custodians. With the old 401k you either leave it alone (which I imagine most people do since it requires no extra work), roll it into an IRA, or roll it into the new 401k. Unless people do option 3, the avg balance will seem artificially low, since this data is not going to be aggregated by SSN across different custodians.
I won't lie, I don't sweat paying taxes. I view it as a necessary way to fund services and national defense that we all benefit from, be it directly or indirectly. I think optimizing taxes is fine and I do it myself, but I never cry when the tax bill comes due.
I grew up in a dangerous country until my 14th birthday that I moved to the US. I happily pay my taxes as exchange for the freedom to just walking outside without the fear of getting killed just for my phone.
@@bluetoast8584 personally I would suggest focusing on those things you benefit from rather than bemoan the things you disagree with. And of course vote for those things you care about. On the issue of trans people specifically if you are in the US I wonder how many tax dollars are currently going to their healthcare. Since we don’t have a national healthcare service and Medicaid is pitiful, I suspect it negligible.
Thanks for the info regarding whether to do Roth or pretax 401k. That was really helpful now that my job allows Roth 401k contributions. Being in California, making just 45k of taxable income puts you in the 30% marginal tax rate adding in federal. If you make over 90k, you have a 33% marginal tax rate. Mathematically, the pretax will always be better at those incomes due to tax savings, unless you expect to be in the 50% tax bracket when you retire. Peace of mind knowing that you'll have less in retirement might make the Roth a better choice for some though.
@@classics-wz1bz Yes, I understand the difference, but it's the marginal tax rate that is important when looking at the tax benefit of the 401k. At a 33% marginal tax rate, I'm saving $3333 if I contribute $9999 to my 401k. Using that same $9999 after tax to my Roth, leaves me with just $6666. All growth being equal, that initial 401k contribution will always worth 50% more than the Roth. That's why you'd need your tax bracket to be 50% when you retire to make the 401k worth less. Some people would rather not have to worry about taxes later because it's an unknown.
My employer is part of the Arizona State Retirement System. We automatically have 12.29% taken out for the pension, and my employer matches that contribution. Best benefit of this job!
I'm in that gray area so I put it before tax so I can drop that tax rate now. The $1 I save now is more useful for my needs than future$1. It's sad because I use the tax savings now to pay property tax since I'm too house poor to have savings.😢
I love your videos, but on longer videos such as this one time stamps would be a great thing to add. I kept wondering when the title of the video was going to be addressed.
I like the Roth. Another intangible thing in favor of the Roth is the feeling that you own it. Not the tax authorities. You can do with it what you want,including just keeping it lying around instead of the forced withdrawals (and big tax hits) of the tax bomb. Why save 12% in taxes up front when if you succeed you likely will be paying 24% in tax when you withdraw ("distributions""RMD"s) (also possible State tax) (I assume that the latest legal changes eliminated the RMD requirement for Roth 401/457 making it similar to the Roth IRA) the Roth deferred comp was not available to me when I worked but I was able to retire with a pension
Thanks for the video. Just 1 stupid point of clarification. The employers match is NOT a 100% rate of return as you both said. It’s just a doubling of your contribution amount. In other words, if an investor has $400k in their 401k and the investor makes $100k/yr and there’s a dollar for dollar match up to $4,000. In this scenario, the investor isn’t necessarily going to get a 100% rate of return if they invest $4,000. Instead, they will invest $4,000 and their employer will invest $4,000. Their return could still be negative or positive, but it probably won’t grow to $800k- which is what a 100% rate of return would allude to.
Thanks guys for your continuous helpful content! Understanding the Average and Mean values are important, would you ever consider showing your audience visually what 401k balances are by age? Maybe a bar graph or area chart showing percentiles? It would be really helpful to see how myself and others match up with others (i.e. 50 year old with 401k balance @ 500k = 75th percentile). Again, thanks!
You know the worst part about this….. these are averages, the mean would be a better representation of the gen population, which will be lower. The averages have outliers that skew the numbers.
I will struggle to hit having saved my annual income by 30 (in one year) because my income has 3x since starting my first real job at 23. I now have 20% going to retirement plus a 5% match but don’t want to go higher than that so I can effectively save for a house.
Would love a breakdown on low income professionals (rural lawyers/doctors/veterinarians) thats have punishing debt to income ratios and the delay before actually having any income
Good video but should note Weather you can retire or not is based off the amount of expenses you have in retirement and how much retirement savings (pension 401k ect) not a multiplier of what you made when you worked.
I like to think of my company's match as insurance against a market downturn. I'm not losing my money, it's the money that my employer put in that goes first.
I am a Gen-Xer who only got serious about 401k in my late 30s. I've been following the Ramsey plan by eliminating all debt, including my mortgage, to reduce my monthly expenses by the time I hit my retirement date. I'm fortunate that I'm in an IT job that's enjoyable, so working until a later age is not a problem for me. Plus, my retirement plan is contingent upon my wife and I pooling our resources instead of relying on a single income stream .
I actually believe the stock market is a better and easier way to grow money than the 401(k). But it's not really by picking individual stocks, because it is an effort in futility, particularly at an uncertain time such as this. I have lost more than $140k, but my portfolio is still significant, about $320k, but I'm not confident about picking stocks anymore. Are there really no other options for me to gain from the stock market?
I'm sorry about that. It's really hard to beat the market as an ordinary investor. You don't have access to information that professionals have. So it's just better if you invest with a professional who knows how things work better.
Picking stocks is a risky thing to do, particularly for non-professionals. I learnt that in 2020, when I lost almost everything. But I switched to using a financial advisor, who has better knowledge of the market than I do, and I've been returning at least $38k every month. Just too bad I didn't learn the lesson early on.
I'm not one to give investment advice, because I believe everybody's situation is unique. However, I work with Sharon Louise Count, and all I can say is that she's really good at what she does.
@@ericmendels Thank you for this information. I kinda have an existing portfolio I want to transfer, and I want to build a portfolio for my wife. Do you suppose she offers that service?
Pre-ordered! I’m looking at buying a home. Is it worth it worth it to buy the points to reduce my interest rate? Or is that money better spent in the down payment?
My employer offers a 3% match for the first 10 years that increases to 6% after 10 years. They also have a 3% non-contributory addition that everyone gets annually. For those lucky enough to earn more that the Social Security maximum, they add an additional 3%. They treat us right as far as retirement goes. We also have pre-tax and Roth.
A question I've had on this statistic that I've never seen clearly answered anywhere. Are these statistics reflecting the literal average and median balances "per account", or the cumulative total per person across multiple accounts? When someone changes employers and they have an accumulated 401k balance of a certain size, they often have the option of leaving that account where it is. They can also leverage a rollover IRA when they change employers to consolidate their retirement savings and provide greater investment flexibility than what's offered by the typical employer plan. That's the approach I've taken, leveraging a Vanguard IRA when I've changed employers. I presume rolling from the old employer's 401k plan into the new employer's plan at each company change is actually something the minority of folks do, and typically wouldn't be preferred to the IRA rollover option.
All studies especially from financial planning channels and sites go off of per account. There is no incentive to do cumulative total per person across multiple accounts. The financial planners and investment firms have incentive for people to save. That’s how they make money. Nothing wrong. Accordingly, if you combine them others are too. I have one 401k from previous employer 350k. Current employer around the same with combined 401k and Roth 401k. I also have IRA and Roth IRA and HSA. Those are smaller though. People should figure in their future income on pensions and or SS. Some use a multiplier factor of 15 to 20. 15 is more conservative. 3k per month SS x 12 x 15 = 540k. If one has 450k in a 401k at 4% withdrawal that’s 18,400 per year on top of the 36k in SS. If home is paid off then pretty easy to live off of that amount.
The data they are referencing is from Fidelity, and only takes into account 401ks which Fidelity manages. So yes, it is potentially leaving out a lot of retirement assets, as people can have multiple 401ks, IRAs, and other accounts for retirement.
The "average" they are using is the "mean", not the more accurate and useful "median". So the numbers are inflated because they include billionaire's balances.
They keep saying that they wish the savings rate was higher in each decade, but on any other show, they advocate maxing out a roth IRA. What if the remaining balance of that 25% is going towards that? Maybe they should have a show where it combines totals of what people have in 401k/IRA/HSA at each decade. That way people can feel a little brighter about their future.
My company does 100% match up to 6%. I do thr full match and then an additional 2% Roth that is not matched. These guys are amazing, they explain it for people to easily digest
@Ezraxmonster I'm currently 34, when I was 20 I was basically the same. At that age just get the match and don't go into debt and your fine. It'll be harder depending on your salary. I recommend a good budget also at that age and stick to it.
Great show, but there was one flaw. The savings targets need to be based on multiples of expenses rather than multiples of gross income. Gross income needs to adjust for salaries, cost of living, retirement savings, non-retirement savings saved from take home pay. All of those actually need to be subtracted from gross income before you can get a valid multiple needed by age. Say you live in a very high cost area, you will need a larger multiple of gross income in retirement. You may also live in a high tax state, so you don't even see 40% of your gross income while someone living in a no income tax state gets to keep 100% of their income, your formula says the same target percentage for both, which is absurd. Finally, if I save 50% of my gross income, say 30% in 401(K) and 20% savings from take home, then I really shouldn't be given a target based on gross income. You also need to account for whether the retirement savings are Pre-Tax or Roth, perhaps by applying a multiple to the Roth savings, based on the expected tax rate for the saver in retirement. Basically, the target should be based on the expected expenses for the saver in today's money, taking into consideration the cost of living in the location where the saver wishes to retire.
The 401k loan is a bad idea, but I got super lucky with mine. I decided to take a loan to pay off a debt that popped up and decided to invest the remainder into tesla. This was just before covid, while the market was high. Ended up making bank on tesla, repaid the 401k loan in lump sum when the market was at the bottom, and still had enough profit leftover to have a down payment for my first house which I bought later at the bottom of interest rates. I had stupid luck.
It always confuses me, too. I unsubscribed the other month because of the highlights spam. I just tune in every so often when I remember to search them now.
Yeah - I don't understand what they're doing. I think they should make the full live show episodes available after the live airing, and stop using it as a "full episode" 2 weeks later...just let us see the content right after it is generated!!
Where can I get more info regarding how to prioritize funding pre-tax 401k vs Roth 401k contributions? My plan has one and I want to make sure I am allocating correctly!
In the last few years I have finally been able to save 25-35%. Thanks to inflation, this year though I had to prioritize paying off a HELOC loan and anything else that floated up to higher than a 6% interest rate. I could probably take more in the market, but with additional risk. So, paying off debt seem more useful. Still adding to my pension as well as at least 15% of gross income into my 457b.
You shouldn't even put a dime more than the max matching amount in your company's 401K if you have any loans above 3%. Start with the highest interest loans like credit cards and work your way down. The only one you shouldn't pay off immediately is your mortgage if the rates are low. Once all the higher interest loans are gone, you can max your 401K.
I'm screwed. I was a single dirt poor mom taking care of two kids, one who had severe medical problems. I was locked at home. No income until I hit 40. I'm screwed.
