Not fully funding 401k? Why not?

[Anonymous]

Anonymous wrote:If you are not putting the max into your 401k, why not?

We had to move for DH's job and I, therefore, had to change jobs. I haven't yet returned to my previous earning level. We're financially hurting but I refuse to back down from maxing out my 401k. Has anyone else backed down? Does it freak you out?

How much do you and your DH make OP and where do you live? Makes a difference.

[Anonymous]

Anonymous wrote:I think your questions seems a littttttle disingenuous because it seems braggy?

Fully funding a 401K at 24 is pretty exceptional and rare. Being gobsmacked that circumstances could change is naive. Asking why seems obvious: people don't fully fund their 401Ks because they can't, or don't care enough, or don't need to.

Right? I was making $40,000 at 24. I don't really think I could have afforded to put almost half my salary in my 401k LOL!

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here. I'm getting a little flak for this question but that's actually a bit reassuring. We've had times when we had a ton of outgoing expenses (two in daycare) but solid salaries. It was stressful but survivable. Now we're in a situation where it's precarious. I'm in my early 40s. The crap has hit the fan. I don't recall exactly when I started maxing out my 401k but I think it was when I was 24. It's hard for me to pull back. But, perhaps needs must.

I'm 48, a divorced, single mom of three kids ages 8-16, with no child support because I "make too much." (80K take home after taxes) I have NEVER maxed out my 401k because there simply isn't enough left over after basic expenses. I do my best to contribute a small sum to a modest 401k and college funds (that will barely put a dent in their expenses). If you are doing your best, as I know I am, stop stressing and count your blessings. If you've been maxing since 24 you're in a better place than the majority of Americans.

How can you make too much for child support? I'm confused.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I found this excerpt from an article in Business Insider:

"In fact, according to data from Vanguard, just 4% of people earning below $50,000 a year max out their 401(k) at the current limits, and 11% of people who make between $50,000 and $100,000 do. People making over $100,000 are the most likely to max out their 401(k), perhaps unsurprisingly, with 32% making the highest allowable contribution."

Anyone else find these numbers much higher than expected? These numbers seem way too high to me.

Sounds right to me. I bet if you further break it down to higer income over 50% are maxing out who make over 200k. Its the other 50% who are the dumb dumbs.

I don’t max it out to the $18.5k as I am considered a “highly compensated employee” at $120,001 per year and am limited alto 5% of earnings - not even enough to get the full employer match.

Can you explain this -- is this a company rule? Because I've never heard of this.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I found this excerpt from an article in Business Insider:

"In fact, according to data from Vanguard, just 4% of people earning below $50,000 a year max out their 401(k) at the current limits, and 11% of people who make between $50,000 and $100,000 do. People making over $100,000 are the most likely to max out their 401(k), perhaps unsurprisingly, with 32% making the highest allowable contribution."

Anyone else find these numbers much higher than expected? These numbers seem way too high to me.

Sounds right to me. I bet if you further break it down to higer income over 50% are maxing out who make over 200k. Its the other 50% who are the dumb dumbs.

I don’t max it out to the $18.5k as I am considered a “highly compensated employee” at $120,001 per year and am limited alto 5% of earnings - not even enough to get the full employer match.

It's part of the law related to 401Ks. If the lower compensated employees in a business are not contributing to their 401Ks, there are limits as to how much higher compensated employees can put in. This prevents the 401k from being a tool for savings for just the higher end of a company. Op's company needs to find ways to encourage savings amongst their lower paid staff, through education, matching, higher wages or some combination there of.

Can you explain this -- is this a company rule? Because I've never heard of this.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Is it really that inconceivable that not everyone's budgets allow them to max out their 401k every year?

I think a better question would have been to direct that at high income people. Obviously someone making 100k or less might not be able to contribute max, but what baffles me is upper income people making 150k+ not contributing the full amount, or even worse those in the 250k range.

I don’t know why you would be baffled when you don’t know what people’s expenses are. We have two kids in private school, which eats up $50K plus a year. No, public school is not an option. We have a second home I inherited that we are trying to sell because it’s too expensive to maintain with tuition costs and having to pay for college for twins in a few years. So, you are really ignorant and uninformed.

So, the family paying 50K/year for private school and not saving for retirement is calling someone else ignorant and uninformed? There are lots of good reasons why many people cannot maximize retirement savings but this one is laughable. You got yourself into the situation where you cannot use public schools. Your response should have been “poor decision making”.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Is it really that inconceivable that not everyone's budgets allow them to max out their 401k every year?

I think a better question would have been to direct that at high income people. Obviously someone making 100k or less might not be able to contribute max, but what baffles me is upper income people making 150k+ not contributing the full amount, or even worse those in the 250k range.

I don’t know why you would be baffled when you don’t know what people’s expenses are. We have two kids in private school, which eats up $50K plus a year. No, public school is not an option. We have a second home I inherited that we are trying to sell because it’s too expensive to maintain with tuition costs and having to pay for college for twins in a few years. So, you are really ignorant and uninformed.

So, the family paying 50K/year for private school and not saving for retirement is calling someone else ignorant and uninformed? There are lots of good reasons why many people cannot maximize retirement savings but this one is laughable. You got yourself into the situation where you cannot use public schools. Your response should have been “poor decision making”.

+1. LOL. I know right?

[Anonymous]

I don’t fully find right now because am in a new job. Which only matches the amounts paid into the 401k during eligibility. So I’m doing a tiny bit now but when I becone dlibibke later this year I’ll put a lot more than usual in. Works out to the same amount for me but ensures I get the match (which is paid out annually).

Meaning-if I did the minimu to get the match all year they would only match what I put in in the last 6 months of 2018.

But back loading my contributions I get more funds eligible to be matched.

[Anonymous]

Because we are both military and have 20 year retirement pensions right around the corner. Plus, we both maxed out our TSPs for the first 8 or 9 years of our career. We finally sat down and did the math and realized we were going to be stupid rich when we retired at 60. So we reduced our contributions and decided to live a little while we were young, healthy and had kids still in the house. Still don't regret the decision.

[Anonymous]

Anonymous wrote:Because we are both military and have 20 year retirement pensions right around the corner. Plus, we both maxed out our TSPs for the first 8 or 9 years of our career. We finally sat down and did the math and realized we were going to be stupid rich when we retired at 60. So we reduced our contributions and decided to live a little while we were young, healthy and had kids still in the house. Still don't regret the decision.

How rich is stupid rich?

[Anonymous]

Because I lost my job several years ago and have taken much lower-paying work and am making about $30K. Can't afford it now.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Is it really that inconceivable that not everyone's budgets allow them to max out their 401k every year?

I think a better question would have been to direct that at high income people. Obviously someone making 100k or less might not be able to contribute max, but what baffles me is upper income people making 150k+ not contributing the full amount, or even worse those in the 250k range.

FYI, the way tax laws are, if the lower paid people in a company are not contributing a large enough percentage of their income then a group of people deemed "highly compensated" are not allowed to contribute more than 10% of their income, that's fine for people making more than $180K but people in my company who made $120K to $179K were hurt and couldn't max out even if we wanted to. Stinks that the truly highly paid aren't the ones being punished.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I found this excerpt from an article in Business Insider:

"In fact, according to data from Vanguard, just 4% of people earning below $50,000 a year max out their 401(k) at the current limits, and 11% of people who make between $50,000 and $100,000 do. People making over $100,000 are the most likely to max out their 401(k), perhaps unsurprisingly, with 32% making the highest allowable contribution."

Anyone else find these numbers much higher than expected? These numbers seem way too high to me.

Sounds right to me. I bet if you further break it down to higer income over 50% are maxing out who make over 200k. Its the other 50% who are the dumb dumbs.

I don’t max it out to the $18.5k as I am considered a “highly compensated employee” at $120,001 per year and am limited alto 5% of earnings - not even enough to get the full employer match.

It's part of the law related to 401Ks. If the lower compensated employees in a business are not contributing to their 401Ks, there are limits as to how much higher compensated employees can put in. This prevents the 401k from being a tool for savings for just the higher end of a company. Op's company needs to find ways to encourage savings amongst their lower paid staff, through education, matching, higher wages or some combination there of.

Can you explain this -- is this a company rule? Because I've never heard of this.

It's called the Safe Harbor rule. Companies can get around it thru complicated accounting but few choose to do so due to the cost. Typically if you are an HCE and your 401K contributions are capped your employer may have a separate non qualified plan. Basically these plans are deferred comp plans. So as long as your employer is healthy your money will be there when the time comes. If your employer goes under you are in a long line of creditors looking for your $$.

[Anonymous]

Anonymous wrote:I'm just getting my first 401k at 32 (thanks to grad school and postdoc type work that didn't offer them), but my spouse is out of work so I'll be supporting our family with kids on $68k gross until we are a two income household. I definitely won't have $18k to spare, but I'll put in up to the employer match.

'

Out of curiosity, do you think that our investment in grad school will eventually pay off? Do you have any regrets?

[Anonymous]

Anonymous wrote:Double daycare expenses and not wanting to feel intense financial pressure during this temporary phase in life.

Yeah, we broke with it when we had daycare for a baby and 2-yr-old, and spouse in school. Sometimes retirement has to take a break.