I maxed out my 401k when I worked full time (about 350k/yr). Now that I work very part time and only make about 50k/yr, I save maybe 12k in my 401k. Since I am in medicine, I hope to work full time again in a few years so I can ramp up my retirement savings. I’m almost 40.

Anonymous wrote:BTW the Max in 401K is VERY HARD to DO and 19K is not the Max

For example the employee compensation limit for calculating contributions is $280,000 so if you make less than 280k you cant max out.

Employers can contribute, too, but there's a $56,000 limit on combined employer and employee contributions ($62,000 if eligible for a catch-up contribution).

If you make 280K and are over 50 you can contribute 24k. But kicker is firms can match up to 280K.

Some DC area firms do a 8% match which is generous. So if over 50 get the 24K plus $22,400 match. That is $46,400 a year in the 401k. If a 10 percent match is $52,400.

Folks will say firms like this never pay a pension. But some folks are putting $4,000 a week a month in the 401K plan.

Dirty secret it is folks who work at firms like this earning 280K or higher that are really the ones with the huge 401ks. There is no way to get it that big that quick otherwise

I understand what you are getting at, but your post is very confusing. When people refer to the "max," they are talking about the $19,000 employee contribution limit, plus an additional $6,000 "catch-up" contribution if you are 50 or over. You don't have to make $280,000 to do that.

BTW the Max in 401K is VERY HARD to DO and 19K is not the Max

For example the employee compensation limit for calculating contributions is $280,000 so if you make less than 280k you cant max out.

Employers can contribute, too, but there's a $56,000 limit on combined employer and employee contributions ($62,000 if eligible for a catch-up contribution).

If you make 280K and are over 50 you can contribute 24k. But kicker is firms can match up to 280K.

Some DC area firms do a 8% match which is generous. So if over 50 get the 24K plus $22,400 match. That is $46,400 a year in the 401k. If a 10 percent match is $52,400.

Folks will say firms like this never pay a pension. But some folks are putting $4,000 a week a month in the 401K plan.

Dirty secret it is folks who work at firms like this earning 280K or higher that are really the ones with the huge 401ks. There is no way to get it that big that quick otherwise

I'm a fed, with two kids and my wife stays at home. Our HHS is $160K, and no, I don't max out. I save 5% of my salary, and get the 5% max...plus I am accumulating my pension.

Anonymous wrote:

Anonymous wrote:Not everyone has the same priorities. My cousin is all carpe diem and buys new everything, high end clothes and every new apple product for everyone in their family.

I make the same as they do, but with an entirely different financial philosophy.

Sometimes it’s just choices. Other times it’s income.

For
Some it’s also an understanding of taxes. When you’re income is high enough that you are not eligible for a refund (not getting a refund is a whole bother topic) it makes more sense to max your 401k then to pay the Feds a lot in taxes. Pay yourself first.

Personal finance should be a required class for ever high school senior. I know I would have benefitted from it.

NP. Yes, Sometimes it’s just choices. Other times it’s income. Other times it's financial education. It was a combo for me.

Other times it's options: OP, I have access to both a 403b and 45 and am allowed to max both out ($19k each). DH has access to a TDA and either a 401k or 457, and he can max the TDA and the other account out (22% of his income for the TDA, $19K for the other). Other people don't have access to any pre-tax retirement account through their work, so they put $6k to an IRA. And some have access to SEP IRAs or Solo 401k and can put a lot more away.

And other times it's expenses: We've only recently started maxing out two of our pretax retirement accounts. We were saving for a house for years (decades, in my case -- we are in NYC), paying off student loans, and paying for daycare. Once those expenses eased up, we were able to put more away. We are not maxing everything out but we have these options. We still have afterschool care and summer camp, house repairs and maintenance, 529s, and occasional vacations and restaurants. We don't get family help and haven't had any windfalls (we had to support DH's dad at one point), so we have to budget in order to cover all the categories.

I think it's very rare to max out 401ks or their equivalents year in and out. This board skews wealthy and financially savvy. Feel good that you're able to put $28k away!

Anonymous wrote:

Anonymous wrote:For folks who grew up in major cities who were lower income like myself it was actually easy to save right out of school.

I graduated with no student loans, I stayed home for college so already had my piece of junk college car and when I started my job out of colleges expenses did not go up at all.

I was not on my Mom's insurance but single insurance with cheapest plan even today is cheap at work.

My biggest monthly bill was my bar tab at that time. Pretty much was my biggest monthly bill till I was 34!

BTW only rich kids get student loans. Us poor kids just got govt aid for local shitty school and lived at home for college.

So in the example above, you were living on 1k a month before you did any cash savings?

to
I was living on around $400 a month. I did not save any money other than to buy things, but I did the 401k always. Never ever skimped on that and I never borrowed money. I always kept rent very cheap. First at home $200 a month my Mom raised it up to once I was working, then a dumpy apt with roomate I paid $350 a month, then I moved back home for two years, $200 a month, then I bought at absolute bottom of market a foreclosed coop apartment with no parking spot dirt cheap and that cost me $749 a month total, and I got back $200 a month on my taxes. I later rented the place for $900 a month and moved to a smaller $700 a month apt. With my $200 profit from rental and $200 write off my effective rent was $300 a month. When married I moved back to coop till we bought house. Meaning from 21 to 38 my highest housing cost was $550 a month. My wife was amazed as when we married in a coop heat, property taxes, water, gas all in maint. It was like living free. The key is to keep housing costs extremely cheap and never borrow money. Other trick I used is I had a classic car I fixed my self, 30 year old car. My insurance on that car was $49 bucks a year. Since I took train to work it was legit. My wife looked at my non-drinking bills as she rented and had a car loan and was surprised.

Today everyone wants a leased car, student loans and a nice apartment, those fixed expenses are killers. And when I say want student loans I mean it. A few kids at work parents saved for the state tuition and assumed lived at home, instead they took that 12k a year and went away borrowed. No one had to go away to school.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:White collar employees planning on working forever are in for a rude awakening. A layoff or firing after 47 or so is probably the end for your career, and especially if you're used to making a lot of money. Plan for the worst; hope for the best.

True true true. For myself, my husband, many cousins, friends, neighbors. People don't easily talk about this but dig a little deeper and you will see. We went from 300k to $200k and now both looking - DH is 50 and I am 46. Yeah.

Many professionals have skills, qualifications and networks that will allow them to work independently post retirement. Thinking here of MDs, dentists, accountants, lawyers, consultants etc etc. In my family, even the blue collar guy who rose through the ranks of a union, does part-time consulting now at 72.

MDs, dentists, accountants all have hard, tech skills and are licensed by the State. There will always be work for such if they choose to work.
The ones who need to worry are the ones with "soft skills" who are pure managers, business dev, marketing, PR, etc types. When they get shi$canned at 48, they usually don't find the same job with equivalent compensation.

Anonymous wrote:

Anonymous wrote:White collar employees planning on working forever are in for a rude awakening. A layoff or firing after 47 or so is probably the end for your career, and especially if you're used to making a lot of money. Plan for the worst; hope for the best.

True true true. For myself, my husband, many cousins, friends, neighbors. People don't easily talk about this but dig a little deeper and you will see. We went from 300k to $200k and now both looking - DH is 50 and I am 46. Yeah.

This exactly. Grew up in a family were person after person was laid off in their 50s, never to be re employed at the same level/salary that they were employed at earlier. And these were people in the STEM fields that DCUM covets so much. For me that's what lit the fire to start investing for retirement in full as soon as I graduated law school -- to the IRS max not just whatever an employer match may be. I've seen too many people say - they'll catch up on retirement -- after the kids are out of daycare; or after their college is funded; or after the kids are out of the house; or after they've graduated college -- only to be in their 50s when their kids graduate and as they turn their attention to their own retirement savings, there is a recession or they're laid off 2 years later never to land the same salary again. And this isn't just an engineering phenomenon, I've seen it in law, in finance, basically in any field besides medicine since practices value older/experienced MDs. I say plan as if you WILL be pushed out in your 50s. That way if you are and you can only land a 100k or 140k job after being at a 200 or 250k salary earlier -- you'll just have to use that 100k or 140k or whatever to live and not have to worry about retirement savings bc what you had previously put into your retirement savings for the first 25-30 years of your career will continue to grow.

And to the person say -- no white collar person retires. There's a difference between not retiring and not PLANNING to retire. If you want to work until you're 90 because you love your job so much, who am I to say you shouldn't. But plan as if you'll be pushed out in your 50s because unless you are self employed, there is no guarantee that your employer is keeping you for an additional 4 decades.

And to the person saying -- oh it's easy, everyone can consult. Let's not paint a rosier picture than reality. For every one person who goes out to consult and raises their HHI from 250k to 500k and kicks themselves for not having gone independent 2 decades earlier, there are at least 10 people who are consulting and bringing in 1 or 2 projects a year at a 75-100k HHI -- when they were previously making 150k+ -- oh and now they're buying their own benefits. For these people, it is SO much easier if their consulting work just has to cover their living expenses because their retirement principal was invested over the prior 25-30 years.

Anonymous wrote:I really wonder about this too, especially with the advice not to save in 529s before fully maxing out retirement...

I think that advice would be better states as "don't save for college until you've adequately provided for your own retirement." For a two earner household, maxing out retirement at $50k per year plus matching for 30-40 years is going to put you north of $10 million. I think you would be safe throttling back a little on that and putting a little bit of dough in your kids' college fund.

The advice is really intended for people who are in their forties and fifties and throwing everything they've got at their kids' education. Then their kids finish school and move out, and the parents find that they haven't prepared at all for what should be coming next and instead have to work another ten or twenty years.

Anonymous wrote:I really wonder about this too, especially with the advice not to save in 529s before fully maxing out retirement space...so don't save any in a 529 until after putting 50k annually (plus matches) aside for retirement? Really?

kids can borrow to pay for school, you can't borrow to pay for retirement.

I really wonder about this too, especially with the advice not to save in 529s before fully maxing out retirement space...so don't save any in a 529 until after putting 50k annually (plus matches) aside for retirement? Really?

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:White collar employees planning on working forever are in for a rude awakening. A layoff or firing after 47 or so is probably the end for your career, and especially if you're used to making a lot of money. Plan for the worst; hope for the best.

True true true. For myself, my husband, many cousins, friends, neighbors. People don't easily talk about this but dig a little deeper and you will see. We went from 300k to $200k and now both looking - DH is 50 and I am 46. Yeah.

Many professionals have skills, qualifications and networks that will allow them to work independently post retirement. Thinking here of MDs, dentists, accountants, lawyers, consultants etc etc. In my family, even the blue collar guy who rose through the ranks of a union, does part-time consulting now at 72.

Sure they may be able to do some work on the side but I wouldn’t expect for their earnings to be the same as during their peak earning years. Maybe some supplemental income. If they can be so successful on their own they don’t need to ever save for retirement, then why don’t they go out on their own now?!

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:White collar employees planning on working forever are in for a rude awakening. A layoff or firing after 47 or so is probably the end for your career, and especially if you're used to making a lot of money. Plan for the worst; hope for the best.

True true true. For myself, my husband, many cousins, friends, neighbors. People don't easily talk about this but dig a little deeper and you will see. We went from 300k to $200k and now both looking - DH is 50 and I am 46. Yeah.

I think the impact of this is vastly underestimated on this board but I suspect a lot of that has to do with these boards skewing younger. Go to a place like Bogleheads and there are plenty of stories of folks being underemployed in their 50s or forced into early retirement because they can't find another job.

+1. I think it’s crazy that folks on here are assuming they are so special and unique that they don’t need to be concerned with retirement. There are plenty of high powered lawyers who have ended up with a much earlier retirement than expected. I know of one close family member who ended up filing BANKRUPTCY. I understand someone in the medical profession like a doctor assuming they will work much longer than the average professional. But lawyers, policy makers, sales, etc? Just because you make 500-750k now does not mean you won’t ever need to retire.

There is also another important reason to save for retirement - it’s usually protected from legal actions.

Anonymous wrote:We’re at around $28,000/year combined and trying to do more but just can’t. HHI is around $180K. It seems like everyone on this forum is maxing out and we are still catching up, but not quite. We try but it seems like something always gets in the way - medical emergency, home repairs, job transition. We do have an investment property that will generate income in retirement and has around $300k in equity now, so that counts, but I feel anxious about not maxing out when it seems the smartest thing to do.

Yes, it seems like that. I especially don't appreciate the people who write in, saying that they are maxing out their retirement, and they're doing all these other things but does DCUM think they're doing enough? I hate those people.

FWIW, when we were younger, there were other things that came first before maxing out retirement contributions. But now that we're older I think we're okay but we're not where I'd like to be.

Anonymous wrote:For folks who grew up in major cities who were lower income like myself it was actually easy to save right out of school.

I graduated with no student loans, I stayed home for college so already had my piece of junk college car and when I started my job out of colleges expenses did not go up at all.

I was not on my Mom's insurance but single insurance with cheapest plan even today is cheap at work.

My biggest monthly bill was my bar tab at that time. Pretty much was my biggest monthly bill till I was 34!

BTW only rich kids get student loans. Us poor kids just got govt aid for local shitty school and lived at home for college.

So in the example above, you were living on 1k a month before you did any cash savings?