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Topic: Retirement planning
| Author | Message |
| Jerose | Posted – 2/28/2008 6:35:02 PM | show profile | email poster I'm doing a story for our company newsletter about journalist folks in their 20's and their saving habits. I'm curious to know who contributes to a 401K, IRA or Roth plan regularly. If you don't, why not? Is it because of a crap salary or because you want to live in the moment? Other ideas? Any responses personal or public would be appreciated. No criticism or judgments---everyone has a different story. Thanks in advance. |
| Girl at 23 | Posted – 2/28/2008 8:25:20 PM | show profile YES! I do save, and this is why... I contribute to a Roth IRA (maxed out for the past 2 years), a 401K, and taxable savings in money market funds (as a short-term savings vehicle). I think you are doing a great service writing this article for your company newsletter. Granted, my field pays more than journalism at the entry-level, but that means I can save 30%+ of my gross income, whereas someone making less may be able to save 10%. The important thing is to get into a mind-set where saving (paying yourself) comes before most other things. Please encourage your readers to put at least the company match into their 401K, or max out the Roth IRA if they don't have a 401K. Be educated - be informed - about your own finances. Nobody will be as concerned about your money as you are. I don't have much life experience, I can't say I overcame any huge obstacles, I got lucky in a lot of things - but I'm not from a rich family by any means. I just know that having money gives you OPTIONS. Having money gives you CHOICES. Buying things that put you in thousands of credit card debt reduces your choices significantly - why? Unless it was a medical emergency, why would you mortgage your future for a pair of shoes? For a purse? For a larger apartment? As one 20something to another, I'd tell your readers to please lay down a foundation that will give them choices down the road. |
| Upward Bound | Posted – 2/28/2008 10:01:00 PM | show profile Amen sister! I'm freelance so I dont' have access to a 401K, but I have maxed out on Roth IRA contributions for the last 5 years or so. I also have a separate investment account that I think of as a long-term off-limits investment. In it, I've invested in a few "investor funds" which are a risk-balanced variety of stocks, bonds and mutual funds. I have a savings account that I allow myself to dip into more readily. I know I'm lucky to not be living paycheck to paycheck, but regardless, I think it's important to save for tomorro. Who wants to end up penniless or, worse, homeless at the stage in life when health starts rapidly deteriorating. Just my two cents... |
| Marie | Posted – 2/29/2008 6:26:11 AM | show profile Take advantage of these plans, even if you can only manage 2% for now. Often, even if you're on a company's temporary payroll, you'll be offered the opportunity to investg in its retirement plans, even if it won't put you on its health plan. You'd be shocked at what investing 2% of your salary in your 20s will mean when you're 50. Don't mean to hijack this excellent topic. Continue. |
| Jill of all trades | Posted – 2/29/2008 11:11:43 AM | show profile I do contribute to my company's 401(k), but don't have much in the way of regular savings. Why? Because I-- like a lot of people-- am all or nothing. It seems pointless to save 50 or 100 bucks a month, but it adds up even in a regular old savings account. Compared to a retirement account... let's just say I wish the concept of compound interest was taught well in math classes instead of it being something thrown into Algebra 1 textbooks. |
| Saver | Posted – 2/29/2008 12:44:16 PM | show profile | email poster Been saving since age 21 I am not sure if this might be helpful to you but I am 30 (turned 30 in October 2007) and I have been saving for retirement since I turned 21 and had my first job as an editor at a nonprofit organization. I am still an editor in Washington, D.C., I freelance on the side, and I've written two books. Saving for retirement was the best financial decision I've made. My current financial situation for today is not as solid as I'd like (I don't own a home or have significant savings or investments) but I now have about $70K saved for retirement so I feel confident that I will have enough for retirement. It's all about compound interest--the sooner you do it--the better. Twenty-somethings should not waste money by NOT saving for retirement in their 20s. You can't get the time back and the compound interest over time is what makes all the difference. |
| Jerose | Posted – 2/29/2008 2:09:21 PM | show profile Thanks to everyone for the great answers! If I may ask, what sort of percentages do you aim to save? I'm recommending that early savers start slow, but I'm wondering if telling someone to save 5% is too ambitious. Of course it's always good to save whatever they feel comfortable saving. I'm in my 30's and save 20% of my paycheck. That's not realistic for someone who is living on Ramen, which I surely am not. |
| slink | Posted – 2/29/2008 3:11:23 PM | show profile I've maxed out a Roth since I was 22 or so. I'm 34 now, and the cash has really snowballed. I don't bother with a 401(k), because usually you have to have one open at your company for at least four years to get fully vested. I haven't yet had a job in my life where I knew I'd be there for four years. I think 401's are still better than nothing, but to me it makes more sense to max out a Roth first. |
| duty_calls | Posted – 3/3/2008 5:10:17 PM | show profile not all companies require that much time (4 years) before you're vested. my first employer (when i was 21) vested workers after one year, while my current employer requires 2 years of service (i'm early 30s now). from experience and from speaking to my accountant and my financial advisor, a 401(k) contribution of NO MORE THAN 10% is worth it, if for no other reason than it puts you in a lower tax bracket (which means less taken away from you come tax time). there's also the employer match, which helps. any contribution from you greater than 10% isn't worth it; 401(k)s are large, lumbering investment beasts, so you're better off diversifying your holdings and socking away some money in vehicles that are a little riskier and more rewarding. definitely max out the roth if you can. for tax year 2007, you've got until april 15, 2008, to max it out. the contributions might be after taxes are taken out, but it's tax-free if you wait until age 59.5 to withdraw the funds, AND you can use roth ira money (i think a one-time total of up to $10K) on a first-time home purchase. i didn't start my retirement planning or investment planning until about 2 or 3 years ago, in large part because of unsteady income and lousy spending and saving habits. i've hunkered down and learned to live within, even below, my means, which helps me sleep better. (yeah, i know the major coastal media centers are expensive, but i've lived in 2 of 'em thus far and have decent savings and a grade-A credit score.) the first responder is right--pay yourself first. second, live within or below your means. i had an accountant with a sign on her desk that said "no whining," and when it comes to money as well as life, that's pretty good advice. what she meant by it was: take responsibility for your decisions AND where you're headed. if you can't afford that vacation, don't go; if you can't afford the plasma-screen TV, don't buy it. your life won't end just because you can't watch reality TV in all its HD glory. |
| WritingEd | Posted – 3/3/2008 5:30:37 PM | show profile I'm in my 30s but have been saving for retirement since I got my first full time paycheck at age 22. The decision I've been most happy about is upping my 401k contribution by at least 1% every year when I get a salary increase. That way it's not even noticeable because my paycheck is still higher than it was. At my current company I started out at 5% and am now at 12%. I wish I had done this the first few years of working, but better late than never. My very first 401k contribution was just 2%. |
| Unemployed-gal | Posted – 3/3/2008 7:57:33 PM | show profile I don't contribute to any plan because I've been umemployed since I graduted from college two years ago. Yes, I do temp work, but the agency I work for doesn't have that kind of thing available. Which really scares me, because I only make $12/hour and, at the rate I'm going, it'll take another two years to find a job in my field (which isn't journalism, but close). I don't even spend that much; food and rent are my major expenses. Books I get from the library; I don't eat out or go to bars; and I don't spend money unnecessarily. Plus I don't have the additional expenses attached to having a car or a pet. But still, New York is an expensive city. So what about retirement savings plans for the actively seeking job hunter, who works nonetheless? Are there any kinds of savings plans available for my kind of situation? I'm 25 and I feel as though I'm not saving enough for after I leave the work force. The chances of me getting married to someone with money is slim; the chances of me marrying period are even slimmer. So I can't rely on other people to help me out when I'm older. |
| Unemployed-gal | Posted – 3/3/2008 7:59:21 PM | show profile PS--As soon as I DO get that first full time job, my 401K is going to be a priority. |
| Johnny Boy | Posted – 3/4/2008 9:37:51 AM | show profile The change on my dresser.... that's my retirement fund. Like most freelancers, I'll be working and writing until the day I drop. |
| slink | Posted – 3/4/2008 1:29:38 PM | show profile Duty: I said "fully vested." Lots of companies vest partially after one year (yearly 25% increments is what I've seen). Every full-time job I've had has required the 401 to be open for four years before giving you 100% of the company match, but that's just me. I'm sure it's not that way at every company. I would reconsider if my employer fully vested after one or two years. |
