Does everyone on DCUM max out retirement?

[Anonymous]

OP, we're in the same boat. We're around $20k a year. I try not to worry too much about it, but it's one of our goals (to do the max limit). Our oldest is starting about to start kindergarten, so I'm hoping to bump it up a little then. But of course we are also a bit behind on 529s, so our "extra" cash just won't go that far. We are also around HHI $180k.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I don’t max out. Retirement is for blue collar workers. I don’t plan to retire. Rich people don’t retire, they continue work.
I save money for things that I need but not for retirement.

This is interesting. I'm not a blue collar worker and I can't wait until I have enough money to retire. I'm 47 and hoping to be done by 57. But you point made me think of a few people. So there are financial advisors on TV like Suzy Orman or more locally Ric Edelman on WMAL on the weekends...why the hell don't they retire. Same with Mike Collins who is a estate planning attorney on WMAL on the weekends that does free seminars. He's older than dirt and probably have more money that all of us. Why doesn't he retire. I see all sort of old ass people in my office building, etc. I don't understand why they are still working. Why don't rich people retire?

Exactly. Warren Buffett is 88 yo and he is still working. Our president is 72 and still working. Many members of congress are over 70 and don’t want to retire.
The poor and the middle class are the ones who are obsessed about retiring from work.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don’t max out. Retirement is for blue collar workers. I don’t plan to retire. Rich people don’t retire, they continue work.
I save money for things that I need but not for retirement.

This is interesting. I'm not a blue collar worker and I can't wait until I have enough money to retire. I'm 47 and hoping to be done by 57. But you point made me think of a few people. So there are financial advisors on TV like Suzy Orman or more locally Ric Edelman on WMAL on the weekends...why the hell don't they retire. Same with Mike Collins who is a estate planning attorney on WMAL on the weekends that does free seminars. He's older than dirt and probably have more money that all of us. Why doesn't he retire. I see all sort of old ass people in my office building, etc. I don't understand why they are still working. Why don't rich people retire?

Exactly. Warren Buffett is 88 yo and he is still working. Our president is 72 and still working. Many members of congress are over 70 and don’t want to retire.
The poor and the middle class are the ones who are obsessed about retiring from work.

Most people will never lay on their deathbeds wishing they had worked more. But for the few most elite blue collar workers, that’s not necessarily true.

I’m a lawyer and I wish I could work twice the hours I do a day. I’d love to do far more pro bono, more impact litigation, more of everything.

[Anonymous]

Anonymous wrote:I have been maxing out since I was 21 in 1999 making only $26,000. I have only worked for nonprofits so I do not have a crazy high income. I also had 70k in college debt at the time-unheard of them. I am 41. Maxing out is the best financial decision I have ever made. I also paid for my kids’ childcare costs. There is no excuse for not maxing out. I stopped eating meat for years (expensive). Think of it as you can’t afford not to max out. Over years it makes a huge difference.

When people say that they are "maxing out," do they really mean that they are contributing the maximum amount allowed by the IRS, or do they mean that they are contributing the maximum to get their company match? For example, the PP above said they were maxing out in 1999 on a $26k salary. IRS limit at the time was $10k. Were they really contributing 38% of pay and living on the remaining $16k gross?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I don’t max out. Retirement is for blue collar workers. I don’t plan to retire. Rich people don’t retire, they continue work.
I save money for things that I need but not for retirement.

I know a few people with this mindset and find it delusional. There’s a decent chance your health will fail or there will be some sort of change in your industry. Also, a 401k is an opportunity to invest $19k pretax. It’s one of the few tax breaks that rich working people still receive. I really wouldn’t want to count on continuing to work in old age.

Not sure why this is delusional. I’m building wealth to become rich and live well. That’s my goal, not some sort of retirement.
Retirement minded people are saving money so they can quit and stop working.
By the way, changes or health issues can happen anytime even when you are young. It’s more devastating when you are younger because your family depends on you. I’m more concerned about it today rather than later in life.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I have been maxing out since I was 21 in 1999 making only $26,000. I have only worked for nonprofits so I do not have a crazy high income. I also had 70k in college debt at the time-unheard of them. I am 41. Maxing out is the best financial decision I have ever made. I also paid for my kids’ childcare costs. There is no excuse for not maxing out. I stopped eating meat for years (expensive). Think of it as you can’t afford not to max out. Over years it makes a huge difference.

When people say that they are "maxing out," do they really mean that they are contributing the maximum amount allowed by the IRS, or do they mean that they are contributing the maximum to get their company match? For example, the PP above said they were maxing out in 1999 on a $26k salary. IRS limit at the time was $10k. Were they really contributing 38% of pay and living on the remaining $16k gross?

I wonder too. I’ve pointed out before that as a young person making 40 or 50k starting out, it’s unlikely to impossible to live on whatever your net would be after the true IRS max. People will say that they’re not trying hard enough. I believe you should do what you can starting young and people need to get off their high horse about this. Hopefully in retirement you’ll be living in a lower cost of living area with a paid off house so no one “needs” their pre-retirement salary or 3 million in the bank. How does literally 90% of the rest of the country live? They figure it out.

[Anonymous]

Lots of people obviously don’t know what we mean by “maxing out.” Chronic problem on DCUM and probably why OP is so baffled by all the people claiming to contribute the statutory maximum for a married couple.

[Anonymous]

I do, but recently, mostly to leave the kids something. I'm a fed so I will be fine with no morgage and the fed medical insurance.

[Anonymous]

I max out as my wife does not work. But to be honest even maxing out does not do that much if you are a single income household unless you are over 50 and do catch up keep it 100 percent equities and have a company with a good match.

18K at a 3 percent match is peanuts

24K at a company with a 8 percent match grows quick.

Now all equities since 2009 even faster.

I only started maxing out in 2007 as before that could not afford and had a lower income. My first job only made 19K a year and put 6 percent in and company had a 3 percent match. I only put $1,700 in that year.

Today I put 24K in and company has an 8 percent match. If you do catch up 50-65 it really helps. And My wife does not work, if two people did catch up 50-65 even if you goofed off it would be a ton.

My firm does the match on the catch up, my old firm did not. If you get a firm that matches on catch up it is great.

For example I have been in my plan 2.5 years exactly and started at zero. I am at 130K today. It took me many many many years to get to 130K in my first plan.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I have been maxing out since I was 21 in 1999 making only $26,000. I have only worked for nonprofits so I do not have a crazy high income. I also had 70k in college debt at the time-unheard of them. I am 41. Maxing out is the best financial decision I have ever made. I also paid for my kids’ childcare costs. There is no excuse for not maxing out. I stopped eating meat for years (expensive). Think of it as you can’t afford not to max out. Over years it makes a huge difference.

When people say that they are "maxing out," do they really mean that they are contributing the maximum amount allowed by the IRS, or do they mean that they are contributing the maximum to get their company match? For example, the PP above said they were maxing out in 1999 on a $26k salary. IRS limit at the time was $10k. Were they really contributing 38% of pay and living on the remaining $16k gross?

I wonder too. I’ve pointed out before that as a young person making 40 or 50k starting out, it’s unlikely to impossible to live on whatever your net would be after the true IRS max. People will say that they’re not trying hard enough. I believe you should do what you can starting young and people need to get off their high horse about this. Hopefully in retirement you’ll be living in a lower cost of living area with a paid off house so no one “needs” their pre-retirement salary or 3 million in the bank. How does literally 90% of the rest of the country live? They figure it out.

Hopefully the first poster comes back to the thread. They also said they had student loan debt at the time. They could have been living at home at the time, but even then, paying student loan and commuting costs on 16k gross means there probably would have been no other saving going on. That just seems off.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don’t max out. Retirement is for blue collar workers. I don’t plan to retire. Rich people don’t retire, they continue work.
I save money for things that I need but not for retirement.

This is interesting. I'm not a blue collar worker and I can't wait until I have enough money to retire. I'm 47 and hoping to be done by 57. But you point made me think of a few people. So there are financial advisors on TV like Suzy Orman or more locally Ric Edelman on WMAL on the weekends...why the hell don't they retire. Same with Mike Collins who is a estate planning attorney on WMAL on the weekends that does free seminars. He's older than dirt and probably have more money that all of us. Why doesn't he retire. I see all sort of old ass people in my office building, etc. I don't understand why they are still working. Why don't rich people retire?

Exactly. Warren Buffett is 88 yo and he is still working. Our president is 72 and still working. Many members of congress are over 70 and don’t want to retire.
The poor and the middle class are the ones who are obsessed about retiring from work.

Ahhh....Buffett, Trump, and most all members of congress are loaded with $$$. They work because they WANT TO not because they HAVE TO. There are no financial hooks in their backs. It is very different when once can work for fun, keep busy, or stay mentally and physically alert, than to keep food on the table be able to take care of one's health.

[Anonymous]

BTW the match out limits were much much lower years ago.

In 1986 the max was $7,000 as recently as 2002 was only $11,000. In 2019 it is $19,000.

So when folks say they always did max well if they graduated college in 1986 the match was only $7,000. And remember tax rates much much higher way back. In 1985 top federal tax rate was 50 percent.


https://dqydj.com/historical-401k-contribution-limit/

[Anonymous]

Anonymous wrote:BTW the match out limits were much much lower years ago.

In 1986 the max was $7,000 as recently as 2002 was only $11,000. In 2019 it is $19,000.

So when folks say they always did max well if they graduated college in 1986 the match was only $7,000. And remember tax rates much much higher way back. In 1985 top federal tax rate was 50 percent.


https://dqydj.com/historical-401k-contribution-limit/

True, but salaries were much lower too. The limit was $7,627 when I graduated from college. There was no way I was going to hit that on my $19,000 salary. I was a ten percenter until about the mid to late 1990's, but I'm in the $2 million club now.

[Anonymous]

Anonymous wrote:I don’t max out. Retirement is for blue collar workers. I don’t plan to retire. Rich people don’t retire, they continue work.
I save money for things that I need but not for retirement.

We save plenty because we have a high HHI and it helps minimize the tax bill. With that said, share the same sentiment as you with regard to retirement and work. We are planning to work as long as we can, most likely part-time through consulting or own business.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We don’t. We can’t right now with child care costs.

Same.

On the other side of this now, but when the kids were all in daycare we only contributed to the employer match (for me it was 4%), and then the same for probably another year or until our savings were back in good shape and incomes started to rise a little bit.

Don't sweat it. The whole point of all that money is to take care of your family, either now or later, and that's what you're doing with it.