Why max out 401k?

[Anonymous]

OP here. Thanks everybody. I gained more knowledge and and perspective through your replies. I will probably start maxing out or increase my saving %, since I feel I am a bit behind and am really uncertain about where we will be after thinking more about it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I am in my mid-40 and currently save 10% of my salary towards 401k. My salary is 120k and have ~500k so far. I know these are small numbers compared to what most people post on this board but not bad realistically!

When I run a retirement calculator, it seems like I am on track for retirement and, including SS, I will have around 9k in monthly income. That sounds good to me. I don’t know how accurate the calculator I used is but, supposed it is, if I am on track, why would I want to max out my retirement savings? to have more money when I am old?

I have 2 children, but somehow the thought of a bigger inheritance to them doesn’t feel like a great motivation. I would rather enjoy my time with them now than passing them on money after I am dead! My husband also has his own fund with approximately the same balance and contribution.

Curious the numbers you used to get to 9k income. If you retire at 62, you'll get maybe 2500 in SS pretax. To get to 9k monthly, (and this is still pretax), you would need to have 2.6m in your 401k to get the remainder (6500) from four 401k. You aren't getting to 2.6 in 20 years if you are currently at 500k.

Compound interest would get her almost exactly to 2.6M in 20 years.

Exactly. don't know why people were questioning this.

Math is hard. They probably aren't factoring in future contributions, matches and raises.

And you are not factoring in inflation and market corrections. Losers have been staggering in the last 2 years. Go ask a retiree.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I am in my mid-40 and currently save 10% of my salary towards 401k. My salary is 120k and have ~500k so far. I know these are small numbers compared to what most people post on this board but not bad realistically!

When I run a retirement calculator, it seems like I am on track for retirement and, including SS, I will have around 9k in monthly income. That sounds good to me. I don’t know how accurate the calculator I used is but, supposed it is, if I am on track, why would I want to max out my retirement savings? to have more money when I am old?

I have 2 children, but somehow the thought of a bigger inheritance to them doesn’t feel like a great motivation. I would rather enjoy my time with them now than passing them on money after I am dead! My husband also has his own fund with approximately the same balance and contribution.

Curious the numbers you used to get to 9k income. If you retire at 62, you'll get maybe 2500 in SS pretax. To get to 9k monthly, (and this is still pretax), you would need to have 2.6m in your 401k to get the remainder (6500) from four 401k. You aren't getting to 2.6 in 20 years if you are currently at 500k.

Compound interest would get her almost exactly to 2.6M in 20 years.

Exactly. don't know why people were questioning this.

Math is hard. They probably aren't factoring in future contributions, matches and raises.

And you are not factoring in inflation and market corrections. Losers have been staggering in the last 2 years. Go ask a retiree.

You do not factor these in. They happen. Market comes back. Losses have not been staggering as you put it. Market is still up on 2016. Gain is what is lost. All normal.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I am in my mid-40 and currently save 10% of my salary towards 401k. My salary is 120k and have ~500k so far. I know these are small numbers compared to what most people post on this board but not bad realistically!

When I run a retirement calculator, it seems like I am on track for retirement and, including SS, I will have around 9k in monthly income. That sounds good to me. I don’t know how accurate the calculator I used is but, supposed it is, if I am on track, why would I want to max out my retirement savings? to have more money when I am old?

I have 2 children, but somehow the thought of a bigger inheritance to them doesn’t feel like a great motivation. I would rather enjoy my time with them now than passing them on money after I am dead! My husband also has his own fund with approximately the same balance and contribution.

Curious the numbers you used to get to 9k income. If you retire at 62, you'll get maybe 2500 in SS pretax. To get to 9k monthly, (and this is still pretax), you would need to have 2.6m in your 401k to get the remainder (6500) from four 401k. You aren't getting to 2.6 in 20 years if you are currently at 500k.

Compound interest would get her almost exactly to 2.6M in 20 years.

Exactly. don't know why people were questioning this.

Math is hard. They probably aren't factoring in future contributions, matches and raises.

And you are not factoring in inflation and market corrections. Losers have been staggering in the last 2 years. Go ask a retiree.

That has zero to do with the question of how does $500k + 10% of income + company match + 20 years compounded interest get someone to
$2.6M. Also, most people use 6% as the average rate over time and that takes into account market corrections.

You are correct that what people cannot do is treat $2.6M in future dollars as equal to $2.6M in today’s dollars due to inflation (I was the poster that previously pointed that out). But that had nothing to do with the actual math involved in determining what $500K will equal in the future based on a certain set of assumptions.

[Anonymous]

I think one thing people don’t understand is how expensive elder care is. My parents with dementia have in home care. Two people during day since they are disabled and one person at night. It costs thirty thousand dollars a month.

[Anonymous]

Anonymous wrote:I think one thing people don’t understand is how expensive elder care is. My parents with dementia have in home care. Two people during day since they are disabled and one person at night. It costs thirty thousand dollars a month.

That is factored in by the pile of pills in my medicine cabinet. Assuming 3 years of such case, I'd much rather leave my kid ~$1m in inheritance than live a life where I don't recognize my loved ones.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I am in my mid-40 and currently save 10% of my salary towards 401k. My salary is 120k and have ~500k so far. I know these are small numbers compared to what most people post on this board but not bad realistically!

When I run a retirement calculator, it seems like I am on track for retirement and, including SS, I will have around 9k in monthly income. That sounds good to me. I don’t know how accurate the calculator I used is but, supposed it is, if I am on track, why would I want to max out my retirement savings? to have more money when I am old?

I have 2 children, but somehow the thought of a bigger inheritance to them doesn’t feel like a great motivation. I would rather enjoy my time with them now than passing them on money after I am dead! My husband also has his own fund with approximately the same balance and contribution.

Curious the numbers you used to get to 9k income. If you retire at 62, you'll get maybe 2500 in SS pretax. To get to 9k monthly, (and this is still pretax), you would need to have 2.6m in your 401k to get the remainder (6500) from four 401k. You aren't getting to 2.6 in 20 years if you are currently at 500k.

Compound interest would get her almost exactly to 2.6M in 20 years.

Exactly. don't know why people were questioning this.

Math is hard. They probably aren't factoring in future contributions, matches and raises.

And you are not factoring in inflation and market corrections. Losers have been staggering in the last 2 years. Go ask a retiree.

You do not factor these in. They happen. Market comes back. Losses have not been staggering as you put it. Market is still up on 2016. Gain is what is lost. All normal.

Lololol! Ok young buck.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I am in my mid-40 and currently save 10% of my salary towards 401k. My salary is 120k and have ~500k so far. I know these are small numbers compared to what most people post on this board but not bad realistically!

When I run a retirement calculator, it seems like I am on track for retirement and, including SS, I will have around 9k in monthly income. That sounds good to me. I don’t know how accurate the calculator I used is but, supposed it is, if I am on track, why would I want to max out my retirement savings? to have more money when I am old?

I have 2 children, but somehow the thought of a bigger inheritance to them doesn’t feel like a great motivation. I would rather enjoy my time with them now than passing them on money after I am dead! My husband also has his own fund with approximately the same balance and contribution.

Curious the numbers you used to get to 9k income. If you retire at 62, you'll get maybe 2500 in SS pretax. To get to 9k monthly, (and this is still pretax), you would need to have 2.6m in your 401k to get the remainder (6500) from four 401k. You aren't getting to 2.6 in 20 years if you are currently at 500k.

Compound interest would get her almost exactly to 2.6M in 20 years.

Exactly. don't know why people were questioning this.

Math is hard. They probably aren't factoring in future contributions, matches and raises.

And you are not factoring in inflation and market corrections. Losers have been staggering in the last 2 years. Go ask a retiree.

That has zero to do with the question of how does $500k + 10% of income + company match + 20 years compounded interest get someone to
$2.6M. Also, most people use 6% as the average rate over time and that takes into account market corrections.

You are correct that what people cannot do is treat $2.6M in future dollars as equal to $2.6M in today’s dollars due to inflation (I was the poster that previously pointed that out). But that had nothing to do with the actual math involved in determining what $500K will equal in the future based on a certain set of assumptions.

6% is VERY generous.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think one thing people don’t understand is how expensive elder care is. My parents with dementia have in home care. Two people during day since they are disabled and one person at night. It costs thirty thousand dollars a month.

That is factored in by the pile of pills in my medicine cabinet. Assuming 3 years of such case, I'd much rather leave my kid ~$1m in inheritance than live a life where I don't recognize my loved ones.

DP: The problem with that is that you think that when you are capable, but you gradually lose capacity and often won't think the same way. My dad also always had this "plan B" (with the goal posts of what would count as an 'unliveable life' steadily shifting) and now in his 80s we (thankfully in my view) don't hear about it as much. My mom also in her 80s who always had a DNR had a health scare where she almost needed resuscitation and it caused her to rethink her living will as she realized that she could have been left for dead and she didn't want to be. The will to live can be strong and dementia often comes on slowly. Very few elderly people opt to take their own lives (though many do opt to not have lifesaving measures under different conditions).

[Anonymous]

I max retirement savings in part because I worry about being laid off in my 50s or early 60s and not getting another job at similar salary. So I am trying to front-load my savings. That said, I can do that and still spend the money I want to on my kids (sports, lessons, camps), so it isn't a sacrifice. We have just one car but I'd rather have more retirement savings than two cars.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I am in my mid-40 and currently save 10% of my salary towards 401k. My salary is 120k and have ~500k so far. I know these are small numbers compared to what most people post on this board but not bad realistically!

When I run a retirement calculator, it seems like I am on track for retirement and, including SS, I will have around 9k in monthly income. That sounds good to me. I don’t know how accurate the calculator I used is but, supposed it is, if I am on track, why would I want to max out my retirement savings? to have more money when I am old?

I have 2 children, but somehow the thought of a bigger inheritance to them doesn’t feel like a great motivation. I would rather enjoy my time with them now than passing them on money after I am dead! My husband also has his own fund with approximately the same balance and contribution.

Curious the numbers you used to get to 9k income. If you retire at 62, you'll get maybe 2500 in SS pretax. To get to 9k monthly, (and this is still pretax), you would need to have 2.6m in your 401k to get the remainder (6500) from four 401k. You aren't getting to 2.6 in 20 years if you are currently at 500k.

Compound interest would get her almost exactly to 2.6M in 20 years.

Exactly. don't know why people were questioning this.

Math is hard. They probably aren't factoring in future contributions, matches and raises.

And you are not factoring in inflation and market corrections. Losers have been staggering in the last 2 years. Go ask a retiree.

That has zero to do with the question of how does $500k + 10% of income + company match + 20 years compounded interest get someone to
$2.6M. Also, most people use 6% as the average rate over time and that takes into account market corrections.

You are correct that what people cannot do is treat $2.6M in future dollars as equal to $2.6M in today’s dollars due to inflation (I was the poster that previously pointed that out). But that had nothing to do with the actual math involved in determining what $500K will equal in the future based on a certain set of assumptions.

6% is VERY generous.

It is well below the average for the last century and the standard for most retirement calculators (sometimes, it's considered a more conservative standard).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I am in my mid-40 and currently save 10% of my salary towards 401k. My salary is 120k and have ~500k so far. I know these are small numbers compared to what most people post on this board but not bad realistically!

When I run a retirement calculator, it seems like I am on track for retirement and, including SS, I will have around 9k in monthly income. That sounds good to me. I don’t know how accurate the calculator I used is but, supposed it is, if I am on track, why would I want to max out my retirement savings? to have more money when I am old?

I have 2 children, but somehow the thought of a bigger inheritance to them doesn’t feel like a great motivation. I would rather enjoy my time with them now than passing them on money after I am dead! My husband also has his own fund with approximately the same balance and contribution.

Curious the numbers you used to get to 9k income. If you retire at 62, you'll get maybe 2500 in SS pretax. To get to 9k monthly, (and this is still pretax), you would need to have 2.6m in your 401k to get the remainder (6500) from four 401k. You aren't getting to 2.6 in 20 years if you are currently at 500k.

Compound interest would get her almost exactly to 2.6M in 20 years.

Exactly. don't know why people were questioning this.

Math is hard. They probably aren't factoring in future contributions, matches and raises.

And you are not factoring in inflation and market corrections. Losers have been staggering in the last 2 years. Go ask a retiree.

That has zero to do with the question of how does $500k + 10% of income + company match + 20 years compounded interest get someone to
$2.6M. Also, most people use 6% as the average rate over time and that takes into account market corrections.

You are correct that what people cannot do is treat $2.6M in future dollars as equal to $2.6M in today’s dollars due to inflation (I was the poster that previously pointed that out). But that had nothing to do with the actual math involved in determining what $500K will equal in the future based on a certain set of assumptions.

Using historical numbers for future projections I'd at least be on the conservative side. 3-4%. These funds are sector weighted.. ever hear of the S&P Financials? from 2006-2020 the total return on that sector was 0%. The markets will not produce 6% "on average" pull up any tech stock from the last two years there are plenty that will never return to those levels. If the OP just looks at the 500K (leave aside the contributions for the moment) at 4% for 20 years she would have 1.1M.. add the contributions its a long way from 2.6M

[Anonymous]

Anonymous wrote:I think one thing people don’t understand is how expensive elder care is. My parents with dementia have in home care. Two people during day since they are disabled and one person at night. It costs thirty thousand dollars a month.

Why is she not in the nursing home? I know someone who pays $4000/month for same at nursing home; she would not open the door to her caregivers so to make care reasonable relatives got her a nursing home

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I am in my mid-40 and currently save 10% of my salary towards 401k. My salary is 120k and have ~500k so far. I know these are small numbers compared to what most people post on this board but not bad realistically!

When I run a retirement calculator, it seems like I am on track for retirement and, including SS, I will have around 9k in monthly income. That sounds good to me. I don’t know how accurate the calculator I used is but, supposed it is, if I am on track, why would I want to max out my retirement savings? to have more money when I am old?

I have 2 children, but somehow the thought of a bigger inheritance to them doesn’t feel like a great motivation. I would rather enjoy my time with them now than passing them on money after I am dead! My husband also has his own fund with approximately the same balance and contribution.

Curious the numbers you used to get to 9k income. If you retire at 62, you'll get maybe 2500 in SS pretax. To get to 9k monthly, (and this is still pretax), you would need to have 2.6m in your 401k to get the remainder (6500) from four 401k. You aren't getting to 2.6 in 20 years if you are currently at 500k.

Compound interest would get her almost exactly to 2.6M in 20 years.

Exactly. don't know why people were questioning this.

Math is hard. They probably aren't factoring in future contributions, matches and raises.

And you are not factoring in inflation and market corrections. Losers have been staggering in the last 2 years. Go ask a retiree.

That has zero to do with the question of how does $500k + 10% of income + company match + 20 years compounded interest get someone to
$2.6M. Also, most people use 6% as the average rate over time and that takes into account market corrections.

You are correct that what people cannot do is treat $2.6M in future dollars as equal to $2.6M in today’s dollars due to inflation (I was the poster that previously pointed that out). But that had nothing to do with the actual math involved in determining what $500K will equal in the future based on a certain set of assumptions.

The 6% average growth already factors in inflation.

[Anonymous]

Anonymous wrote:I don't know why you are maxing out. I'd do up to the match and enjoy the rest. I can also live nicely on $4k a month. Not sure why you need twice that.

dumb comment, dumb logic

checks out