Reply to Does everyone on DCUM max out retirement?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]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.[/quote]

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? [/quote]

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. [/quote]

It’s not impossible because I did it. I lived in a crappy rental share in Arlington and drove a crappy car and didn’t take vacations. It’s not possible if you want to drive a nice, new car, and live in a place that’s luxury and go get coffee everything day and out to dinner at fancy restaurants every weekend. [/quote]

OK, at one point I was earning $60k in DC - and I lived in a group house in Columbia Heights where my rent was $700/month. I was paying $1k per month for student loans. I didn't have a car, forget a nice shiny one. Going to visit my parents a couple times a year - a Southwest flight away - ate up a few thousand dollars; my vacation budget. I did go out of town for a couple of weekends, staying in cheap-ish hotels, so I guess maybe that qualifies as a fancy vacation. Living like that it was still impossible to save 30 percent of my salary.

I'm not saying it's not worth trying to save. I'm telling you this is a crazy false dichotomy - either you're saving a third of your pre-tax income, or you must be jetting off to Paris every weekend and driving a Tesla.[/quote]

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