401K plus pension

[Anonymous]

I have $200,000 in a 401K plus a pension that I am vested into for approximately $6500 per month starting at the age of 58. I am currently 42. Am I super far behind? I feel like I should have way more in my 401K. Making $150,000 a year (but that is new). Started at $55,000 and have gone up over the past 15 years.

[Anonymous]

If the pension is safe, then you're fine. That's worth almost $2M by itself. Max out your 401k going forward and you'll be grand.

[Anonymous]

Max out your 401K- that means put in $24,500 this year and keep at it until you retire.

[Anonymous]

If you max out you should have $1million by the time you are 62.

[Anonymous]

Anonymous wrote:Max out your 401K- that means put in $24,500 this year and keep at it until you retire.

Op - do I still need to do that if I have a pension? Based on COL increases over the next 15 years I think my pension will be closer to $7000 a month.

[Anonymous]

That is a great pension, plus social security? I mean, you don't need to save any more to live, so everything you save now is cherry on top.

I wouldn't do anything more than 401K, if you want to go to max, fine. But nothing else.

[Anonymous]

For a given income, you can either save or spend.

$200,000 is great if you have limited ability to save, because of high expenses (day care, etc.) and/or limited income. Don't suffer now just to save more when you have a good pension.

On the other hand, if you're making $500,000 and spending it on luxury cars and vacation, then $200,000 is way too low: Spend less and save more.

[Anonymous]

I would put the max in the 401k every year and also save/invest in a brokerage account as much as I can. Do you also have a liquid emergency account for a year’s worth of expenses?

What seems like a lot of money now may not be worth as much 30 years from now when you are well into retirement. I would keep saving and investing to be more secure when I retire.

[Anonymous]

Anonymous wrote:I would put the max in the 401k every year and also save/invest in a brokerage account as much as I can. Do you also have a liquid emergency account for a year’s worth of expenses?

What seems like a lot of money now may not be worth as much 30 years from now when you are well into retirement. I would keep saving and investing to be more secure when I retire.

The vast majority of investable assets return far above inflation, so I'm not sure what exactly your point is.

[Anonymous]

Anonymous wrote:I have $200,000 in a 401K plus a pension that I am vested into for approximately $6500 per month starting at the age of 58. I am currently 42. Am I super far behind? I feel like I should have way more in my 401K. Making $150,000 a year (but that is new). Started at $55,000 and have gone up over the past 15 years.

Is $6500 per month from pension a current $$ or a projected $$ at age 58? You will also receive SS benefit when you reach 62. You should receive at lease $3000 per month or more in another 20 years. However, your buying power will be cut by half because of inflation. If I assume your $6500 plus $3000 from SS at age 62, you should have $9,000 per month, but you buying power is equivalent to today $$ of $4500 per month. Now, you have to answer you own question. Can I live with $4500 per month today? If yes, then you don't worry about contribution to your 401K. If it is not, then you need to contribution to you 401K with the appropriate amount.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I have $200,000 in a 401K plus a pension that I am vested into for approximately $6500 per month starting at the age of 58. I am currently 42. Am I super far behind? I feel like I should have way more in my 401K. Making $150,000 a year (but that is new). Started at $55,000 and have gone up over the past 15 years.

Is $6500 per month from pension a current $$ or a projected $$ at age 58? You will also receive SS benefit when you reach 62. You should receive at lease $3000 per month or more in another 20 years. However, your buying power will be cut by half because of inflation. If I assume your $6500 plus $3000 from SS at age 62, you should have $9,000 per month, but you buying power is equivalent to today $$ of $4500 per month. Now, you have to answer you own question. Can I live with $4500 per month today? If yes, then you don't worry about contribution to your 401K. If it is not, then you need to contribution to you 401K with the appropriate amount.

OP - This PP explained it like you are 5 years old, but it doesn't get any better than this. You can't mix today's dollars and then year dollars because you buying power changes too much. Also, pension on paper vs take home pension is different -- for example, i just retired last year after 38 years of govt @ 62. my on paper pension is about 6700/month but take home is much smaller - only about 70-75% of that. as for your q re. 401k, yes, you should def max out. you are behind.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I would put the max in the 401k every year and also save/invest in a brokerage account as much as I can. Do you also have a liquid emergency account for a year’s worth of expenses?

What seems like a lot of money now may not be worth as much 30 years from now when you are well into retirement. I would keep saving and investing to be more secure when I retire.

The vast majority of investable assets return far above inflation, so I'm not sure what exactly your point is.

The point is that there is no way to know what the future holds, so you should keep saving and investing if you want any kind of financial security in retirement.

[Anonymous]

Anonymous wrote:For a given income, you can either save or spend.

$200,000 is great if you have limited ability to save, because of high expenses (day care, etc.) and/or limited income. Don't suffer now just to save more when you have a good pension.

On the other hand, if you're making $500,000 and spending it on luxury cars and vacation, then $200,000 is way too low: Spend less and save more.

This! Also, will you be eligible for your pension and Social Security? Because if yes, then you will be pulling $9-10K at retirement and that is excellent (assuming you maintain a 200K lifestyle or less until then)

[Anonymous]

Anonymous wrote:

Anonymous wrote:For a given income, you can either save or spend.

$200,000 is great if you have limited ability to save, because of high expenses (day care, etc.) and/or limited income. Don't suffer now just to save more when you have a good pension.

On the other hand, if you're making $500,000 and spending it on luxury cars and vacation, then $200,000 is way too low: Spend less and save more.

This! Also, will you be eligible for your pension and Social Security? Because if yes, then you will be pulling $9-10K at retirement and that is excellent (assuming you maintain a 200K lifestyle or less until then)

Op - yes I am eligible for both pension and social security.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I have $200,000 in a 401K plus a pension that I am vested into for approximately $6500 per month starting at the age of 58. I am currently 42. Am I super far behind? I feel like I should have way more in my 401K. Making $150,000 a year (but that is new). Started at $55,000 and have gone up over the past 15 years.

Is $6500 per month from pension a current $$ or a projected $$ at age 58? You will also receive SS benefit when you reach 62. You should receive at lease $3000 per month or more in another 20 years. However, your buying power will be cut by half because of inflation. If I assume your $6500 plus $3000 from SS at age 62, you should have $9,000 per month, but you buying power is equivalent to today $$ of $4500 per month. Now, you have to answer you own question. Can I live with $4500 per month today? If yes, then you don't worry about contribution to your 401K. If it is not, then you need to contribution to you 401K with the appropriate amount.

OP - This PP explained it like you are 5 years old, but it doesn't get any better than this. You can't mix today's dollars and then year dollars because you buying power changes too much. Also, pension on paper vs take home pension is different -- for example, i just retired last year after 38 years of govt @ 62. my on paper pension is about 6700/month but take home is much smaller - only about 70-75% of that. as for your q re. 401k, yes, you should def max out. you are behind.

+1 to both these PPs. People constantly fails to think in terms of future dollars v today’s dollar.

Also is the pension inflation adjusted? If not, that value will erode over time.