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Author: imsaving Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 25234  
Subject: 401K savings Date: 12/25/2004 11:12 AM
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I woud like to get everyone's thoughts:

I'm a cronic saver our 401k's and have been for for the last 4 years.
We are 34 years old and have 84,000 in 401K savings.

My question is, do you think this is a good start??? What do you FOOL's currently have.

Thanks
imsaving
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Author: Fuskie Big funky green star, 20000 posts Top Favorite Fools Old School Fool Ticker Guide SC1 Red Winner of the 2010 Rule Breakers Challenge Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18290 of 25234
Subject: Re: 401K savings Date: 12/25/2004 3:33 PM
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I think this is an excellent start. It does not really matter so much what others have but how well you are doing with what you have. If you feel up to it, let us know how your current savings are positioned and your budget and expenditures. We can help you figure out ways to increase your savings even more without sacrificing your quality of life.

Fuskie
Who wishes you a happy holiday today...

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Author: MEG Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18292 of 25234
Subject: Re: 401K savings Date: 12/26/2004 8:16 AM
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You are off to a great start.
Learn the rule of 72 and you'll see your money will double quickly.
http://www.ruleof72.net/

As far as a 401k goes, only put in what your compamy will match.
Use the Roth IRAs for the rest of your retirement contribution and to make it easy, have it taken out directly from your check or bank accout.
Just watch for Fees in the Roth accounts.. some Funds are starting to sell shares to pay maintenance fees. A bad idea.

MEG


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Author: imsaving Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18294 of 25234
Subject: Re: 401K savings Date: 12/26/2004 11:06 AM
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Thanks for the post...


On our budget side of things we really don't budget much. My wife and I are a somewhat frugal couple that live well below our means.

We've been able to save over $22,000 dollars in our 401k's and $20,000 in a savings account this past year. YES, IN KNMOW; I put in after tax money into my 401K. However, my belief has always been that the more money in one spot will grow faster and highr over time,, THOUGHTS?

Our goal with our savings is to pay down our current mortgage ($115,000 house; we owe $38,000) and save to move into a nice subdivision for our kids. OF COURSE, without all the high status baggage!

I just started a ROTH IRA this year and have been putting away $200.00 a month.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18295 of 25234
Subject: Re: 401K savings Date: 12/26/2004 9:08 PM
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My question is, do you think this is a good start???

It is a good start and you are well ahead of most your age. It is useless to compare to other FOOLs. A wide variety of ages and incomes makes comparisons difficult.

Debra

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Author: nelkem Two stars, 250 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18297 of 25234
Subject: Re: 401K savings Date: 12/27/2004 8:33 AM
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I've thought the same thing for a while - so here goes:

We're 37 and have the following:

- My rollover IRA - $170K (had 401k 100% for 1st 6% matching at previous pleace). Mix of Fidelity mutual funds (95%) and individual stocks (5%)
- Wifes's rollover IRA - $8K (lots of ATVI)
- My IRA (Kaufmann Fund) - $9K
- Current 401k - $5K (25% match for 1st 6%) - contributing 8% (really good REIT fund in there - but diversied over 6 funds from ML).

Also - ben able to stash $9K in my son's 529 plan (since he was born in 2000) - putting in about $100 per month - but stopped when unemployed last year - just started it up again (tax deduction in NY).

Have a large mortgage on a home we bought in 2000 as well.....tax deduction (refinanced twice and now its a 20 year - orig 30 year - plus $100 extra a month on priciple).

Doesn't it make sense to keep adding to your 401K as it reduces your taxes - i.e. reduce your gross income.......?

I have credit card debt too - which is really bad - but transfered a decent amount to a 0% deal - working on paying it off quickly.....


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Author: imsaving Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18299 of 25234
Subject: Re: 401K savings Date: 12/27/2004 2:53 PM
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NELKIM:

Sounds like at 37 you have a great start like myself. I like to meet people that like to talk about their fininces. It clearly shows that they don't have anything to hide.

Question: How long have you been saving to get that much so fast? (I would like to be in your shoes at 37)

Also: May I ask what your income level has been? I'm just curious. I like to learn from other folks and share my succeesses as well.

thanks

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Author: Fuskie Big funky green star, 20000 posts Top Favorite Fools Old School Fool Ticker Guide SC1 Red Winner of the 2010 Rule Breakers Challenge Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18305 of 25234
Subject: Re: 401K savings Date: 12/28/2004 10:43 AM
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On our budget side of things we really don't budget much. My wife and I are a somewhat frugal couple that live well below our means.

Being frugal should make it easier to identify your core expenses and make a budget. Budgets mean planning, and planning leads to Foolish financial management. Never underestimate the power of a budget.

We've been able to save over $22,000 dollars in our 401k's and $20,000 in a savings account this past year. YES, IN KNMOW; I put in after tax money into my 401K. However, my belief has always been that the more money in one spot will grow faster and highr over time,, THOUGHTS?

Not sure why (or how) you put in after-tax money into a 401k since it is supposed to be soley funded by payroll deductions. More money in one spot does not necessarily grow faster or higher. It it is higher risk in that if the account fails you lose. Hopefully within the 401k you have your funds distributed across a good asset allocation. Where is the savings account located?

Our goal with our savings is to pay down our current mortgage ($115,000 house; we owe $38,000) and save to move into a nice subdivision for our kids. OF COURSE, without all the high status baggage!

Not sure why you would want the baggage, but if you have no CC debt, no auto or student loans, then paying down the mortgage is a good thing. You might also want to consider starting 529 accounts for those pesky kids' education.

I just started a ROTH IRA this year and have been putting away $200.00 a month.

Way too little. You need $333/mo in 2005 to achieve the full $4000 contribution (assuming you do not make to much money to qualify). You have until April 15th 2005 to complete the $3000 contribution for 2004.



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Author: squirmyworm Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18306 of 25234
Subject: Re: 401K savings Date: 12/28/2004 12:03 PM
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I just started a ROTH IRA this year and have been putting away $200.00 a month.

Way too little. You need $333/mo in 2005 to achieve the full $4000 contribution (assuming you do not make to much money to qualify). You have until April 15th 2005 to complete the $3000 contribution for 2004.

But it's a good start, yes?

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Author: imsaving Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18307 of 25234
Subject: Re: 401K savings Date: 12/28/2004 12:29 PM
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Fuskie:

Savings account is located in a bank account with 1.9% yield. Also, in regards to my 401k (AFTER TAX), My employer lets me contribute after tax dollars after I meet the government $13,000 pre-tax contributions in '04. In addition, I do havethis account diverse and into asset allocation.

We do not hace CC cards nor auto loans as well. So we're in a position to really save. I don't know about you, but I want to retire early!

It's to each their own nowdays.... NO EMPLOYER IS GONNA LOOK OUT FOR YOU AND YOUR FAMILY! SO YOU FOOLS SAVE AS MUCH AS YOU CAN!!

In my opinion....



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Author: SirYoda Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18309 of 25234
Subject: Re: 401K savings Date: 12/28/2004 1:04 PM
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It's to each their own nowdays.... NO EMPLOYER IS GONNA LOOK OUT FOR YOU AND YOUR FAMILY! SO YOU FOOLS SAVE AS MUCH AS YOU CAN!!

------------

No need to shout. If you are here on TMF, you either know that lesson, or learn it real quick.

Yoda

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Author: 3muttsmom Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18310 of 25234
Subject: Re: 401K savings Date: 12/28/2004 1:56 PM
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My employer lets me contribute after tax dollars after I meet the government $13,000 pre-tax contributions in '04.

Welcome, imsaving!

Just curious, how will you go about distinguishing between the pre-tax and post-tax contributions when you're ready to take distributions in retirement?

Also, if you're planning on retiring early, I think putting these contributions into a taxable account might make sense. You can't touch this money in the 401(k) until you're 59 1/2 without penalties. You'll want some liquidity to live off of between retirement and that age, yes?

There are tax-efficient type investments that will keep costs down in the interim. Also, withdrawals (sales of assets) from a taxable account are counted as capital gains - long term taxed at 15% today. All withdrawals from a 401(k) are taxed at normal income tax rates.

just my $.02
3MM
who has also never heard of an employer who allows for after-tax contributions

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Author: agg97 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18311 of 25234
Subject: Re: 401K savings Date: 12/28/2004 2:11 PM
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Also, if you're planning on retiring early, I think putting these contributions into a taxable account might make sense. You can't touch this money in the 401(k) until you're 59 1/2 without penalties. You'll want some liquidity to live off of between retirement and that age, yes?

A common misconception, and totally untrue. You can roll it over into a traditional IRA after you retire, and take 72(t) distributions, or SEPP. Check out IRS Publication 590 for more info.

That being said, having a taxable account instead of utilizing your after-tax 401k would probably be a better move as you have the freedom to do just about anything with that money. By utilizing the after-tax 401k that your employer allows, you're limiting yourself to just the investment choices your employer chooses. In a taxable account, YOU get to choose where it goes!!!

BTW, I would funnel as much of that after-tax 401k into your Roth contributions, if you're eligible.

-Agg97

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Author: PayingFool Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18312 of 25234
Subject: Re: 401K savings Date: 12/28/2004 2:26 PM
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... You can't touch this money in the 401(k) until you're 59 1/2 without penalties....

Agg97: A common misconception, and totally untrue. You can roll it over into a traditional IRA after you retire, and take 72(t) distributions, or SEPP. Check out IRS Publication 590 for more info.


In addition, 401(k) withdrawals are exempted from early withdrawal penalties if you terminate employment from that employer (not a former employer) any time in the calendar year you turn 55, or later.


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Author: 3muttsmom Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18313 of 25234
Subject: Re: 401K savings Date: 12/28/2004 2:32 PM
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You can roll it over into a traditional IRA after you retire, and take 72(t) distributions, or SEPP

Oops! Forgot about the 72t distribution option.

Thanks for the correction, Agg97!

3MM

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Author: Fuskie Big funky green star, 20000 posts Top Favorite Fools Old School Fool Ticker Guide SC1 Red Winner of the 2010 Rule Breakers Challenge Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18325 of 25234
Subject: Re: 401K savings Date: 12/30/2004 1:29 PM
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But it's a good start, yes?

Yes. I apologize for not acknowledging that the important thing is to start saving to a Roth.

Fuskie
Who was too busy looking at the best of possible worlds to recognize the value of the current situation...

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Author: Fuskie Big funky green star, 20000 posts Top Favorite Fools Old School Fool Ticker Guide SC1 Red Winner of the 2010 Rule Breakers Challenge Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18326 of 25234
Subject: Re: 401K savings Date: 12/30/2004 1:31 PM
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Savings account is located in a bank account with 1.9% yield. Also, in regards to my 401k (AFTER TAX), My employer lets me contribute after tax dollars after I meet the government $13,000 pre-tax contributions in '04. In addition, I do havethis account diverse and into asset allocation.

If I was to make after-tax contributions, I would first focus on the Roth IRA where the earnings are tax free and then go back to the 401k where the earnings will still be taxable.

Fuskie
Who is more interested in retiring comfortably than retiring early, but wouldn't mind doing both...

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Author: splotto Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18345 of 25234
Subject: Re: 401K savings Date: 1/2/2005 9:40 AM
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But it's a good start, yes?

Anything is better then nothing. I started my IRA at TIAA-CREF and they allowed us to only send $50 per month. It was about all we could afford at the time. I still highly recommend that path to my freinds who tell me they can't afford to save anything right now (over and above the other advice I lay on them about that situation <g>).

Splotto


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Author: splotto Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18346 of 25234
Subject: Re: 401K savings Date: 1/2/2005 9:43 AM
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3muttsmom:

Happy TMF B-Day.

Splotto

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Author: 3muttsmom Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18349 of 25234
Subject: Re: 401K savings Date: 1/2/2005 7:47 PM
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3muttsmom:

Happy TMF B-Day.

Splotto


Thanks, Splotto!

Boy, did this year go by fast!

3MM


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Author: AcmeFool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18357 of 25234
Subject: Re: 401K savings Date: 1/4/2005 7:01 PM
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We are 34 years old and have 84,000 in 401K savings.

My question is, do you think this is a good start??? What do you FOOL's currently have.


I have not read any of the replies, but here goes...

I think that is an excellent *start* to your investing life. But you have a long ways to go, so don't get complacent!

In my case, I got out of grad school 4 years ago. I am 32 and my wife is 27. When I graduated, I had about $6500 in a Roth IRA and my wife had not yet started to save. We have both been maxing out our Roth IRAs (she is still in school) and I have maxxed out my 401k every year since. Today, we have about $110K between our IRAs and my 401k...

Acme

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Author: imsaving Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18360 of 25234
Subject: Re: 401K savings Date: 1/5/2005 10:10 PM
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I think that is an excellent *start* to your investing life. But you have a long ways to go, so don't get complacent!


Acme; Yes you are right with he statement above. At times I think I do get too complacment. I need to watch that. Maybe I can be complacement when I get near retirement/ hehe My goal is to have more than a million dollars at 50 years of age between my wife and I.

I figure if it's all in a pre-tax account, that I can at least do a 72t until 59.5. what do you think?

Thanks

imsaving

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Author: AcmeFool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18361 of 25234
Subject: Re: 401K savings Date: 1/6/2005 12:00 AM
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My goal is to have more than a million dollars at 50 years of age between my wife and I.

I figure if it's all in a pre-tax account, that I can at least do a 72t until 59.5. what do you think?


I think you have to look at the lifestyle you want to have in retirement, make a good estimate of how much that lifestyle would cost today, adjust the cost for inflation between now and retirement, and shoot for that target.

If $1M will get you the life you desire, then I think you have a great start and the beginnings of a plan. But if you are just using the $1M value because it is a nice round number...so is $10M!

Acme

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Author: edwinj Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18362 of 25234
Subject: Re: 401K savings Date: 1/6/2005 9:05 AM
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My goal is to have more than a million dollars at 50 years of age between my wife and I.

In addition to what Acme said, is that $1M in today's dollars or retirement dollars? Due to inflation, if I want $1M today, that means I'll need closer to $3M by the time I retire. (The actual calculation depends on assumptions about inflation and time until retirement.)

-Ed

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