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Author: jkmelady Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76396  
Subject: 401K is not employer matched Date: 5/12/2010 6:05 PM
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My employer dropped the 401K match in 2008. I'm thinking about contributing the max to a Roth IRA ($6000) for this year. Should I also be putting money in the 401K, and can I do both? I'm in the 50+ club, so have 10 - 15 yrs to retirement.
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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67097 of 76396
Subject: Re: 401K is not employer matched Date: 5/12/2010 10:27 PM
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Yes, you may do both.

Fools believe you should save/invest as much as you can manage. If you can afford it max the Roth and the pretax portion of your 401K. Your total 401K contribution limit (sum of pretax and aftertax) is often far higher. Whether or not to max the aftertax portion of the 401K is controversial. It causes no harm, but some believe taxable investments in the long term buy and hold style are a better choice.

But whatever you do, save, save, save. Increase your rate of savings at every opportunity (to build the kind of nestegg you want for retirement).

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Author: reallyalldone Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67098 of 76396
Subject: Re: 401K is not employer matched Date: 5/13/2010 12:17 AM
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Fools believe you should save/invest as much as you can manage.

I don't. I think you should find balance because there's no guarantee you'll make it to retirement.

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Author: 0x6a74 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67099 of 76396
Subject: Re: 401K is not employer matched Date: 5/13/2010 12:30 AM
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Fools believe you should save/invest as much as you can manage.

I don't. I think you should find balance because there's no guarantee you'll make it to retirement.



the classic Grasshopper v Ant argument.


i agree with 'balance' ...but for those of us not naturally savers: "Save as much as you can" IS a balance <g>

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Author: 2gifts Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67100 of 76396
Subject: Re: 401K is not employer matched Date: 5/13/2010 7:18 AM
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Fools believe you should save/invest as much as you can manage.

I don't. I think you should find balance because there's no guarantee you'll make it to retirement.


I agree. In fact, DH and I were just having this conversation yesterday about how we want to be saving for retirement, but we still want to be spending and enjoying life along the way. We want to be able to save for tomorrow, but we don't want to miss something today in case there is no tomorrow. The balance comes in because we also want enough money for tomorrow to do what we want in case there are lots of tomorrows.

I think there is a fine line between maximizing your savings and maximizing your living along the way, but I don't find these to be mutually exclusive. I think a balance can be achieved, and I think it helps to have your own goals clearly identified in your mind so that you know where you want to get and how you want to get there.

But I like to remember that the goal is not to have a lot of savings. The goal is to be able to do what we want throughout our lifetime, and money/savings is the tool that can provide that.

I think some people still confuse the goal and think it is to just have a big pile of money saved, but I find that fruitless. Money gives me security, flexibility, and choices, but it is still a tool that is used to get me to some end goal.

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Author: reallyalldone Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67101 of 76396
Subject: Re: 401K is not employer matched Date: 5/13/2010 7:20 AM
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the classic Grasshopper v Ant argument.

I find this disrespectful. I didn't say save nothing. I said find balance. My father died at 59(I was 25). My sister died at 30(I was 27). I have a Fool friend who died mid-50s. I retired at 49 and consult part-time.

I have saved plenty for retirement(and paid for college and much of the rest of school for 3 kids) but I value time as much as money and I'd rather spend on enjoyable activities than be able to point to some higher number as my net worth. There's also the concept of having enough. More isn't always better.

It's ironic that I've been slammed on the credit card board for never having credit card debt as not "understanding" and here for not being considered a "natural saver" (whatever the heck that is). I max a SEP and haven't passed up a matching penny. I have savings of more than a year's expenses. But, by all means, go for the recs. Heck, live in a box by the river so you can save even more.

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Author: ResNullius Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67103 of 76396
Subject: Re: 401K is not employer matched Date: 5/13/2010 9:07 AM
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I find this disrespectful. I didn't say save nothing. I said find balance. My father died at 59(I was 25). My sister died at 30(I was 27). I have a Fool friend who died mid-50s. I retired at 49 and consult part-time.

I have saved plenty for retirement(and paid for college and much of the rest of school for 3 kids) but I value time as much as money and I'd rather spend on enjoyable activities than be able to point to some higher number as my net worth. There's also the concept of having enough. More isn't always better.


Well said, very well said.

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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67104 of 76396
Subject: Re: 401K is not employer matched Date: 5/13/2010 1:25 PM
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>> i agree with 'balance' ...but for those of us not naturally savers: "Save as much as you can" IS a balance <g> <<

Some people do derive pleasure and satisfaction from aggressively saving and watching the "balance sheet" grow. It's what they value. They get more enjoyment out of saving money than just about anything they could spend it on.

Other people, not so much. They may "enjoy life" in ways that require some amount of discretionary spending. To them, saving does, to some degree, equal deprivation.

For the latter camp, there's no guarantee they'll be around for the tomorrows they are depriving themselves for today, so why not do at least some living for today while you know you're here and you're healthy enough to do it and enjoy it?

These two groups are wired so differently that I doubt either can really understand what makes the other tick.

#29

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Author: 0x6a74 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67105 of 76396
Subject: Re: 401K is not employer matched Date: 5/13/2010 2:43 PM
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the classic Grasshopper v Ant argument.

I find this disrespectful. I didn't say save nothing. I said find balance.



i thought i was agreeing with you.

thought i even said, "balance"





o well

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Author: 0x6a74 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67106 of 76396
Subject: Re: 401K is not employer matched Date: 5/13/2010 2:49 PM
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Other people, not so much. They may "enjoy life" in ways that require some amount of discretionary spending. To them, saving does, to some degree, equal deprivation.

For the latter camp, there's no guarantee they'll be around for the tomorrows they are depriving themselves for today, so why not do at least some living for today while you know you're here and you're healthy enough to do it and enjoy it?

These two groups are wired so differently that I doubt either can really understand what makes the other tick.


mostly true.
( i think i understand the other side ... on other issues i really don't understand the other side )

.. i was a 'Grasshopper' till late 40s ... very very Lucky i was able to accumulate enough for what looks to be secure retirement.

.. so i would highly recommend trying to 'be' the other side in order to gain some balance.


=

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Author: BruceCM Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67107 of 76396
Subject: Re: 401K is not employer matched Date: 5/13/2010 9:19 PM
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As mentioned, you want to contribute to your 401(k)/403(b)/SIMPLE IRA to the extent of the employer's match...then contribute either to a deductible Traditional IRA (if your AGI allows it), but if not, to your Roth IRA.

The next question is how much?

Couple of divergent discussions above....but I recommend saving to the level you require. If you wish to save more and your lifestyle allows this, then save.

Excess savings has multiple good points
1) Choices (timing, location and lifestyle in retirement)
2) Getting discretionary $$ out of your household so you have less that you must support in retirement
3) Mental piece of mind
4. Leaving a Legacy to family or charity
5) Reduce or eliminate need for Long Term Care Insurance

The trade-off is a lower lifestyle while working and not utilizing savings due to premature death

Each person/couple should contemplate their discretionary income to decide what works best for them.

So what is the 'right' amount to save? This is a multiple step, time-value-of-money calculation, not unlike the calculations used by pension plan actuaries. It requires taking into account multiple personal factors and reasonable assumptions (current savings, expected future rate of return, expected inflation rate, retirement age, years in retirement, projected Social Security or Pension benefit(s) and any desired legacy), with the calculation redone each few years to make any needed adjustments. This process is a bit difficult to expalin here, althugh there may be online sites that will offer it....or you can seek the help of a CPA or CFP who is familiar with doing these.


BruceM

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67115 of 76396
Subject: Re: 401K is not employer matched Date: 5/15/2010 1:10 AM
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I don't. I think you should find balance because there's no guarantee you'll make it to retirement.

Sure. To each his own.

But I think the trends are clear. Those who went to work in the post World War II era often worked for companies that believed in lifetime employment and providing pensions for their workers. At age 65, they collected good pensions and Social Security was worth something.

To make up for declines in the buying power of Social Security, the baby boomers (the post Viet Nam generation) also got 401Ks and IRAs to help us fund retirement. But increasingly companies are abandoning their defined benefit pension plans and replacing them with 401K plans or related defined contribution plans. Few of my generation makes it to retirement with full pensions. Pensions from earlier employers got rolled over into IRAs, but you lost the inflation protection that comes from benefits based on years of service multiplied by final average salary.

For the next generation it will be even worse. Social Security may be unavailable, highly taxed or not worth much. Some pensions will still be available, but the number of private industry workers who retain them will be smaller. Employees of public agencies or those with strong unions might do best off but look at General Motors and the UAW. I wouldn't call those pensions secure.

Everyone must decide for themselves. But those who fail to save enough in the next generation may never be able to retire. Presumably they will be working as long as they are able and then end up on welfare. This is sad. We could be looking at another generation of poor farms--that we have not seen for over 50 years.

Go ahead and make your choices. It's all up to you to pull it off. But those who fail to save enough are casting their lot on others. Will children or Uncle Sugar provide for you, or will you starve?

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Author: PSUEngineer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67118 of 76396
Subject: Re: 401K is not employer matched Date: 5/15/2010 9:28 AM
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Go ahead and make your choices. It's all up to you to pull it off. But those who fail to save enough are casting their lot on others. Will children or Uncle Sugar provide for you, or will you starve?

Nothing in rad's post suggested not saving enough. All she said was the goal in life wasn't who has the biggest stack of money when you retire. If you calculate you need $x in retirement, limiting your life experiences so you can aim to have $x + $Y in retirement may not be fulfilling if you don't make it to retirement (note the Y is capitalized to indicate a large excess in the amount you calculated you need in retirement). For many people, spreading a pile of money on the mattress and lying on it isn't as fulfilling as having special family memories.

Your response to balance shows you really have not been paying attention to her posts over the years.

PSU

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Author: reallyalldone Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67120 of 76396
Subject: Re: 401K is not employer matched Date: 5/15/2010 11:57 AM
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Will children or Uncle Sugar provide for you, or will you starve?

None of the above. And my children have been the recipients of a 1-1 match for their Roth contributions since they began working. I have put them on notice that this year I won't be able to tell them whether or not I can match and at what level until later in the year because of changing circumstances.

Saving enough is not the same as save as much as possible. "Save as much as possible" is also an indication to me of a lack of planning. If you don't know where you are going, how will you know when you get there ?

But overall, you really need to find a better target than me. If you really need it, I can show you my income plan for years to come. You might also want to look at my posts since last September.

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67135 of 76396
Subject: Re: 401K is not employer matched Date: 5/17/2010 1:51 AM
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Saving enough is not the same as save as much as possible. "Save as much as possible" is also an indication to me of a lack of planning. If you don't know where you are going, how will you know when you get there ?

OK, I'll buy that. But people who believe they can plan precisely are well justified in being concerned about the reliability of the 4% burn rate. A few reserves reduce stress,

Everyone needs to adopt a savings philosophy that fits their own style. Clearly stats say that Americans do not do that well. Perhaps participants in Fooldom do better than that. But the population at large can easily use "balance" as an arguement not to save. In my view that is a mistake. But again, each must decide what works in his situation.

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