Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't have data to back up my claim but if I had to guess I'll say the median 401k balance for a 50 years is around $100k and the average probably around $500k. There is big income disparity between college and non cell grads.

Fidelity found that participants between 50 and 54 had account balances of $199,900 on average, while participants between 55 and 59 had $244,900. This account data is based on 26,700 plans and 24.5 million plan participants as of December 31, 2024.
https://www.investopedia.com/average-401k-balance-50-year-old-8773972#:~:text=Fidelity%20found%20that%20participants%20between,4

Also 401ks underperform the S&P by 25-50%.

That is all so shocking!!! Why wouldn't people put their 401K into a SP500 type fund?!?! You have decades to go, let it grow!

Also, we need so much more financial education in this country. My 25yo already has $50K in a ROTH IRA (been investing in that since they had income and into a SP500 fund) and another $50K+ in their 401K. Now yes, they don't have student loans, but they are smart enough to know "time is your friend" and take advantage of not having $700-1000/month loan payment and just invest as much as you can. They live decently, but not extravagantly and focus on saving and getting the company match

Anonymous wrote:

Anonymous wrote:I don't have data to back up my claim but if I had to guess I'll say the median 401k balance for a 50 years is around $100k and the average probably around $500k. There is big income disparity between college and non cell grads.

Fidelity found that participants between 50 and 54 had account balances of $199,900 on average, while participants between 55 and 59 had $244,900. This account data is based on 26,700 plans and 24.5 million plan participants as of December 31, 2024.
https://www.investopedia.com/average-401k-balance-50-year-old-8773972#:~:text=Fidelity%20found%20that%20participants%20between,4

Also 401ks underperform the S&P by 25-50%.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't have data to back up my claim but if I had to guess I'll say the median 401k balance for a 50 years is around $100k and the average probably around $500k. There is big income disparity between college and non cell grads.

I just looked it up and that was a good guess. From federal reserve survey of consumer finances it’s 115k/313k for the 45-54 age range.

From Fidelity, The average 401(k) balance for individuals in their 50s is around $592,285, with a median balance of $252,850. Some data sources show a range between $199,900 and $592,285 for those in their 50s. Fidelity found that 50-54 year olds had average balances of $199,900, while 55-59 year olds had $244,900.

Anonymous wrote:

Anonymous wrote:Do any of the people freaking out about elder care costs have long term care insurance? Because my DM has it and pays $6,000 a year so that she’ll have $250 a day in care for 5 years straight when she needs to use it. These nightmare elder care cost scenarios would be solved with this type of insurance right?

Well first, the LTC company has to still be fiscally viable when you need them. Many are having issues, as people live longer with more health issues.

In the above example, let's say you purchased it at age 50, and live until 85, with the last 7 years requiring "advanced care". You paid in $210K, but they paid out $465K for those 5 years. Basically for anyone hitting the 2.5year+ mark, the company is loosing money. And you are not even accounting for the costs associated with running the insurance company, that's just the intake from you versus payout to you.

Now $250/day is only $7550/month, but skilled nursing in my parent's place (not DCUM, but not a "cheap area either" is $412/day or $12360/month. So you have to pay the difference along with any medical care/doctor visits/hospital stays/etc. So you are paying another ~$5K/month or $60K/year.

Anonymous wrote:Your best earning years are to come so just keep saving as much as possible. Your kids might need to start off in CC or live at home to go to an in-state school. Prioritize your savings over their college savings.

Anonymous wrote:You are doing great OP. Go to bogleheads forum to learn what to invest your money in. Here is what I would do:

-Keep investing as much as you can in your 401K. This money grown tax free.
-Keep putting money in a Roth IRA if you can.
-Make sure you have an emergency fund. Try to save 6 months of expenses (not salary). Keep in in a High Yield Savings Account (HYSA). This will get you through most emergencies.
-With any raise or windfall add more (keep half of any raise for something fun and save half)
-Set aside $100 paycheck for something fun (a family trip, etc) now that you earn good money.
-Don't overspend on cars. Basic is best for everything.
-Don't spoil the kids out of guilt. Encourage the kids to babysit and dog-walk etc for pocket money.
-Try to work to at least 67 (full retirement age for social security for your age) or 70 (max benefits for social security)

If you do these things you will have a comfortable retirement and future! You will be setting a wonderful example for your kids too!

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:A large part of 401K underperformance which is shocking as up to recently the default was the in cash or money market safe option. The company did not want to do the investing for you. Many people often opened a 401k and did not move the funds so say in cash for many years.

Now companies can default to a target date. My own daughter started work in 2022 and did not pick any choice for her 401K under new rules she got put into Target Date 2065. When she finally realized this in Summer 2024 she was mad she missed the rally in stocks, but turns out her 401K was up a lot. If it was the past it would have been in the money market or something. She reallocated.

But before companies could invest in stocks with default option was a big problem. People would leave it.


Also Target dates and an aging population means a ton of 55-70 year olds still in workforce. Those Target dates have a lot of bonds and international stocks.

Also different target dates have different stock tollerances. The Fidelity 2025 has more US stock than the Vanguard 2025

And age matters. I was at a start up prior to this and a lot of Target date people. We were a very young company. It was all Vanguard 2060-2070 funds. Lets day that was a old Fed place the funds would be Vanguard 2020-2045 funds. Big difference last five years in missing out on Stock Market gains.

hence why we desperately need more basic financial education in this country!!
First, everyone should contribute to a 401K (if they have one) at least up to the company match. Otherwise you are leaving $$ on the table. I've seen people do this at tech companies (ie places where the workforce is educated and one would assume would understand this and they make enough to be able to contribute typically). At our company, over 20% were not contributing, so we made the switch to "employees must opt out" and the automatic was the % to get the full company match. That was a fun January for HR/Payroll when the Jan 15 paychecks were deposited.
And IMO, the default should at least be a "target fund". Those are not perfect, but it's much better than MM fund at age 25.

But in reality, this just shows that most Americans don't work hard to help themselves with this. 10+ years with your 401K in MM when you are in your 20s/30s?!?! Well don't complain when you don't have enough to retire.

401(k)s are not the panacea you make them out to be. Only 25% of companies with under 50 employees offers a 401k. 58% of companies with 100 employees offer 401k. That is 52% of US workers force. Till about 5 years ago 68% of large businesses did not offer 401k.

Many of the plans require vesting to receive employer match. Which is absolutely ridiculous. If you leave your first job for a higher salary you lose your employer contributions. Do this twice and you could lose 10 years of matching funds. This is a retirement instrument not a loyalty test.

The other issue is matching and how much you make. Fannie Mae is very generous with 401k with a 8 percent match and immediate vesting. They also match on bonus. I was working with lots of people making 300K and if they just did 8 percent for match they were putting in 48K a year. You also can join first day at work.

Most people make way less and get way less a match. And some have vesting periods to get match and others waiting periods to join. And some have none.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:A large part of 401K underperformance which is shocking as up to recently the default was the in cash or money market safe option. The company did not want to do the investing for you. Many people often opened a 401k and did not move the funds so say in cash for many years.

Now companies can default to a target date. My own daughter started work in 2022 and did not pick any choice for her 401K under new rules she got put into Target Date 2065. When she finally realized this in Summer 2024 she was mad she missed the rally in stocks, but turns out her 401K was up a lot. If it was the past it would have been in the money market or something. She reallocated.

But before companies could invest in stocks with default option was a big problem. People would leave it.


Also Target dates and an aging population means a ton of 55-70 year olds still in workforce. Those Target dates have a lot of bonds and international stocks.

Also different target dates have different stock tollerances. The Fidelity 2025 has more US stock than the Vanguard 2025

And age matters. I was at a start up prior to this and a lot of Target date people. We were a very young company. It was all Vanguard 2060-2070 funds. Lets day that was a old Fed place the funds would be Vanguard 2020-2045 funds. Big difference last five years in missing out on Stock Market gains.

hence why we desperately need more basic financial education in this country!!
First, everyone should contribute to a 401K (if they have one) at least up to the company match. Otherwise you are leaving $$ on the table. I've seen people do this at tech companies (ie places where the workforce is educated and one would assume would understand this and they make enough to be able to contribute typically). At our company, over 20% were not contributing, so we made the switch to "employees must opt out" and the automatic was the % to get the full company match. That was a fun January for HR/Payroll when the Jan 15 paychecks were deposited.
And IMO, the default should at least be a "target fund". Those are not perfect, but it's much better than MM fund at age 25.

But in reality, this just shows that most Americans don't work hard to help themselves with this. 10+ years with your 401K in MM when you are in your 20s/30s?!?! Well don't complain when you don't have enough to retire.

401(k)s are not the panacea you make them out to be. Only 25% of companies with under 50 employees offers a 401k. 58% of companies with 100 employees offer 401k. That is 52% of US workers force. Till about 5 years ago 68% of large businesses did not offer 401k.

Many of the plans require vesting to receive employer match. Which is absolutely ridiculous. If you leave your first job for a higher salary you lose your employer contributions. Do this twice and you could lose 10 years of matching funds. This is a retirement instrument not a loyalty test.

Anonymous wrote:Do any of the people freaking out about elder care costs have long term care insurance? Because my DM has it and pays $6,000 a year so that she’ll have $250 a day in care for 5 years straight when she needs to use it. These nightmare elder care cost scenarios would be solved with this type of insurance right?