Reply to Does everyone on DCUM max out retirement?

Forum Index » Money and Finances

Reply to "Does everyone on DCUM max out retirement?"

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[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]
I’m really curious about your scenario. Can you break this down further? What was your annual salary at the time and what was the 401k limit? What did all your expenses look like?

If someone makes 50k a year now, I think it would be really really tough to contribute 18k. Once you take the 18k, health premiums and taxes you have what, 25k? Then let’s say you find a room in Arlington for $700 a month. Add a $100 for utilities. Now you’re at around 15k. If you have a car there is insurance, gas, parking costs. Or you could metro everywhere. Both could be say be $200 a month. Now we’re at 13k or $1,083 per month to live on. And you haven’t contributed anything to an emergency fund or even cash long-term savings. And hopefully you don’t have student loans.

I think the above is why most people don’t view it realistic to max out the full amount right out of college. Now if you live at home, stay on your parents insurance till 26, and they fully paid for your college, then I agree with you. It would be a lifestyle choice at that point to not max out. But most of us didn’t have our school fully paid for, living at home after school wasn’t an option, and Obamacare didn’t exist when we graduated. Other than free insurance, I think loans and no free housing are still applicable to young people today. [/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics