Is 401k that good nowadays ?

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Is 401k that good nowadays ?

Postby r2006 » Sun Jun 30, 2013 12:26 pm

Hello, new member here, I am 52 years old and just started to read about investments and 401k plans. I have no savings and no assets, and I am trying to figure out a plan for my remaining 15 years until retirement (assuming I could work until I am 67).

My company matches 75% for the first 8% on a 401k plan, and I have a question about 401k plans in general.

Here is my thinking, please bear with me just for the sake of argument:

If I do 8% to 401k for 15 years, assuming this works as a common bank account, and no salary increase, with the company contribution I will have about $150,000.- in my account. My monthly contribution for this will be roughly $450.-

Now, If I save $600.- every month, under the same assumptions as above, after 15 years I will have about $108,000.- in my account.

I don’t see a significant difference between these 2 amounts. But please read on.

Admittedly, my contribution will be less than $600/month for the 401k and I could end up with $40k more over 15 years, but 401k is taxable, while my savings are tax free. I also understand the 401k contributions are pre-tax, although I don’t see the true advantage, in the end these money will be taxed anyway.

So, ($150k – tax) > ($108k) ?

Now if this money goes into an investment plan, the amounts will vary, hopefully go higher, and so on. I understand that.

What I don’t see is why does everybody say 401k is way better than a personal savings and investment plan.

My main issue is a principle issue: why should I give somebody else my money to save (and invest) for me ? isn’t this what happens on a 401k plan ?

So to start with, I am looking at 2 possibilities:

- go with my company’s 401k and chose an investment portfolio ( I am thinking index funds, will learn about this more as I read more)

- skip the 401k and go with my savings, I found a good article on how to start investing in index funds by putting in a small amount each week or month buying directly from people that run the index fund (I am thinking, Vanguard).

Which one would you recommend for starters? My goal is to save as much as I can for retirement.

I am planning to save some cash for an emergency fund, and also buy some silver/gold, but that will take a couple of years, and I want to get started now with something, and as I get more knowledgeable I will figure out more options. And if the 401k is so much better (please tell me why….) I would hate to realize a couple years from now that I wasted this time by not contributing.

Your time and advice is highly appreciated.

Best regards.
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Re: Is 401k that good nowadays ?

Postby Grt2bOutdoors » Sun Jun 30, 2013 1:20 pm

If you were walking by on the street and saw $337.50 lying on the ground would you keep walking or would you pick it up? If you keep walking, that is what you will pass up by not contributing $450 per month today. Last I looked, the sky does not rain money, however your employer is raining money and by not contributing you are passing up free money.
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Re: Is 401k that good nowadays ?

Postby patrick » Sun Jun 30, 2013 1:24 pm

I'm not sure exactly how you came up with your numbers, but in general the 401K is better. Only in special and rare circumstances would it not have an advantage, and you haven't indicated you fit any of those. It looks like you are assuming you would be putting in more money to the non-401K investment, but in practice you would have to put in less.

You say that you know the 401K is pre-tax, but did you properly figure that into your calculations? If you save $450 per month in the 401K, you don't pay income taxes when it goes in. If you avoid the 401K you have to pay income taxes on that money at the start -- for instance, if in the 25% tax bracket, you have to pay $112.50 in taxes on the $450. So you start out with $450 a month, plus match, going into the 401K, versus $337.50 per month outside it. Of course this varies depending on your tax bracket and how much you invest.

You also seem to have ignored the taxes on investment returns, which only apply outside the 401K. Whenever you receive interest or dividends on the taxable you have to pay taxes on it (unless your income is low).

Finally, while the 401K is taxed on the way out, the tax rate in retirement is likely to be less than your tax rate while working -- especially if you only will have a small amount of savings to take out.

You have to assume that your tax bracket is the same in retirement AND that you would not have to pay any taxes on investments returns outside in order to make an UNMATCHED 401K equal saving outside. But even then, the match provides a large advantage to the 401K.
Last edited by patrick on Sun Jun 30, 2013 1:26 pm, edited 1 time in total.
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Re: Is 401k that good nowadays ?

Postby livesoft » Sun Jun 30, 2013 1:25 pm

The money you put in your 401(k) is not taxed going in. The earnings in the 401(k) are not taxed when they happen either. The money and earnings are taxed when they come out.

The money you put in your savings is taxed before you put it in. The earnings by the savings are taxed every year. The money and earnings are not taxed when they come out of savings.

The bottom line is that Money is Taxed, but it is probably taxed overall less in a 401(k) than in Savings. So if you want to pay more taxes, avoid the 401(k). If you want to pay less taxes overall, then contribute the maximum possible to your 401(k) which is $23,000 a year nowadays.
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Re: Is 401k that good nowadays ?

Postby neurosphere » Sun Jun 30, 2013 1:27 pm

First off, the money in your 401k is yours. It's no different than your checking account in a way. You didn't "give" your money to the bank, they are holding it for you. In a 401k, your investment options might be restricted to what's in your plan, but that 401k money is yours. When you terminate employment, you can move it wherever you want.

I think you have several misunderstandings on the math and other rules of a 401k.

You say you get a 75% match on your contributions. So let's assume you put $1000 in the 401k this year. Your employer will give you an additional $750. Let's assume there is no vesting period. That $750 is FREE money. It's yours. Why would you ever not take advantage of that. Even if that $750 is taxable upon withdrawal, $750 minus taxes is still more than zero.

Hopefully others will chime in and help you further understand the tax advantages of a 401k, particularly if you are in a higher tax bracket.
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Re: Is 401k that good nowadays ?

Postby surfer1 » Sun Jun 30, 2013 1:30 pm

You don't have to max out the 401k every year, but I do believe that you should max out up to your employer's contribution limit, so 8%. That's free money, tax-free or not. But over that amount, you could put into a taxable account or savings. You're going to have to pay the taxes now or later anyway. There was an article I read that put's it pretty well, The Case Against Maxing Out Your 401(k) (not an endorsement).
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Re: Is 401k that good nowadays ?

Postby TomatoTomahto » Sun Jun 30, 2013 1:34 pm

In addition to what everyone else says, maybe the fact that you don't see a "significant difference" between 108k and 150k should be a tipoff.

Not to be snarky, but you're 52 yo and have no assets or savings; you have to get started saving. Figure out your strategy later (by reading and Bogleheads.org), but in the meantime max out the 401k.
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Re: Is 401k that good nowadays ?

Postby Jim180 » Sun Jun 30, 2013 1:40 pm

You say if you put it in savings instead it would be tax free. How so? Tax-free MM? Municipal Bonds? Your money in the 401K could potentially provide a much higher rate of return if your plan has equity options than any tax-free option you have in savings.
Last edited by Jim180 on Sun Jun 30, 2013 1:41 pm, edited 1 time in total.
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Re: Is 401k that good nowadays ?

Postby stevewolfe » Sun Jun 30, 2013 1:41 pm

r2006 wrote:My company matches 75% for the first 8% on a 401k plan, and I have a question about 401k plans in general.
Here is my thinking, please bear with me just for the sake of argument:
If I do 8% to 401k for 15 years, assuming this works as a common bank account, and no salary increase, with the company contribution I will have about $150,000.- in my account. My monthly contribution for this will be roughly $450.-

Now, If I save $600.- every month, under the same assumptions as above, after 15 years I will have about $108,000.- in my account.


Welcome to the forum. I'm confused by the above question - my assumption is that you are contributing $450 a month to the 401(k) and that that is the amount you can both afford to contribute as well as that will capture the maximum employer match (e.g., 75% or 6%). However, then you compare saving $600 in your account, which I assume would be an after tax account. This will cost you about $750 a month (roughly assuming 25% tax bracket) - I'm not seeing this as an equal comparison...

r2006 wrote: Admittedly, my contribution will be less than $600/month for the 401k and I could end up with $40k more over 15 years, but 401k is taxable, while my savings are tax free. I also understand the 401k contributions are pre-tax, although I don’t see the true advantage, in the end these money will be taxed anyway.


What are you planning to invest in that is tax free? For example, let's assume you plan to use I-bonds or EE savings bonds - those are merely tax deferred, not tax free. Municipal bonds are tax free (depending on where you live), however, you would still presumably need to invest in stocks and any dividend thrown off would be taxable (as well as capital gains depending on your tax bracket). So again, I don't see this as an equal comparison...

r2006 wrote: What I don’t see is why does everybody say 401k is way better than a personal savings and investment plan.
My main issue is a principle issue: why should I give somebody else my money to save (and invest) for me ? isn’t this what happens on a 401k plan ?


I'm not sure why you are saying that you are giving the money in a 401(k) away to someone else to manage? I think if you ask your employer they will categorically tell you that other than providing brochure-ware about the funds in the plan that they are absolutely NOT managing your money, nor are they "taking" your money - it is titled in your name. Sure, they may select the funds in the plan, the default fund in the plan if you don't choose one, etc, but that's not the same as giving the money to someone else. You look at the funds in the plan, make your selections and direct your monies - just as you would in a taxable account.

I think there are a lot of resources on the wiki that can help you with researching this more for yourself. And I'm sure many other folks will offer their opinions here. One thing to keep in mind is that your employer offered you a salary - that salary was part of your total compensation along with your benefits costs - one of those benefits was your 401(k) match - if you choose not to take that money you are, in effect, working for less than they planned to pay you. That's not very good business on your part.

Bogleheds wiki on 401k's
Bogleheads wiki home

I'd take advantage of your employers 401(k) at least up to the match - it's a generous match, my employer is 100% of the 1st 3% and 50% of the second 3% by comparison.
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Re: Is 401k that good nowadays ?

Postby nisiprius » Sun Jun 30, 2013 1:47 pm

r2006 wrote:...My company matches 75% for the first 8% on a 401k plan... why should I give somebody else my money to save (and invest) for me ? isn’t this what happens on a 401k plan ?
No. What happens in a 401(k) plan is that you invest your own money, just as you would in a personal savings plan, into a what is usually a limited set of a few dozen choices of mutual funds. There is a complicated balance of plusses and minuses. Let's break it into two parts. Easy part first.

Part 1: The company match.
Part 2: Everything else.

The company match is a huge plus which makes the deal overwhelmingly favorable, and with a 75% match you would, forgive me, be foolish not to contribute up to the maximum that the company matches.

Everything else is a complicated balance of pluses and minuses that almost always works out to be a plus. Not necessarily a huge plus, not necessary as big a plus as it once was, and not necessarily as big a plus as people make it out to be, but, still, a plus compared to taxable investing on your own. It's not always obviously better than investing in a Roth IRA on your own, though. People go nuts trying to compare the two but in reality there isn't much difference, and the difference depends on impossible-to-predict things about your future income, future tax laws, future investment performance.

OK, here are some of the plusses and minuses:

a) The minus is that the 401(k) plan usually restricts you to a limited menu of mutual funds, often just a few dozen, and they often aren't the kinds a Boglehead would pick; they typically have relatively high expense ratios, and more-or-less hidden fees on top. It would not be unusual to find that a 401(k) plan included a set of target-date retirement funds with 0.70% expense ratios and an 0.30% plan management fee on top of that, so you would have a 1% drag compare to investing yourself i a Roth IRA outside the plan. Some plans are better than this. Some will include one decent fund like an S&P 500 index fund with a low ER, and by juggling your other accounts you can just use that one in the 401(k) plan and fill out your other portfolio outside.

b) Plus: nontaxable compounding. The money your investments earn while they are within the fund does not get taxed.

c) Almost certainly a plus: tax deferral. You do not get taxed on the money you put in--it gets deducted from your income ahead of taxation. You do get taxed when the money comes out. Usually one assumes that it's better to be taxed later than to be taxed now, and that one will likely be in a lower tax bracket in retirement.

The point is this: even if there's a small minus to the 401(k) compared to, say, your own Roth IRA, it's tiny compared to the big plus of the company match.

Let me put some numbers on that. You say you are 15 years to retirement. Likely the 401(k) includes a money market fund. Suppose it earns zero, probably true now but probably not true for 15 years, but suppose. You put in $1,000. The company puts in $750. It just sits there for 15 years. At the end of 15 years you withdraw $1750. If you do the math, that is the equivalent of a 3.8% annual return on your investment--in a fund that by itself is earning zero! For any other investment choice, it is adding 3.8% to your returns, whatever they are. Even if high-expense funds and management fees put a 1% drag, you're still way ahead.
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Re: Is 401k that good nowadays ?

Postby hoppy08520 » Sun Jun 30, 2013 1:58 pm

Hello and welcome to the forum. I may be repeating what some others are saying, but here goes.

I think you've got some misconceptions and it seems that the comparison you've set up isn't really comparing apples to apples.

There is really only one scenario in which saving in a taxable account is better than saving in a 401(k), and your scenario definitely isn't this.

That one scenario where taxable investing might be better is:
* The 401(k) plan has very high expenses AND you anticipate being in the plan for 15+ years. Not sure about your plan's expenses.
AND
* The 401(k) plan does not provide a match. Your plan does provide a very good match - 6% of your salary is good. Many plans only do 3%, many others do less.

I think you've over thought this and went down a rabbit hole. Just consider this: YOUR COMPANY IS GIVING YOU FREE MONEY. DON'T TURN IT DOWN!

Sorry, I almost never write in ALL CAPS but I wanted to get your attention.

OK, on to some specifics.

r2006 wrote:Hello, new member here, I am 52 years old and just started to read about investments and 401k plans. I have no savings and no assets, and I am trying to figure out a plan for my remaining 15 years until retirement (assuming I could work until I am 67).

My company matches 75% for the first 8% on a 401k plan, and I have a question about 401k plans in general.

r2006, let's be blunt here, you're behind and you really need to step up your savings. If at all possible, consider contributing the maximum allowed to the 401(k), which is $17,500 plus a $5,500 catch up for those over 50 years old. If you can't do that, try to work up to it. At a minimum, you should contribute 8% of your salary, whatever that is, to earn the maximum company match you are entitled to. This is not just my opinion. Everything you'll ever read on 401(k) plans tells you that you're turning down free money if you don't contribute up to the point where you get the maximum match.

r2006 wrote:Admittedly, my contribution will be less than $600/month for the 401k and I could end up with $40k more over 15 years, but 401k is taxable, while my savings are tax free. I also understand the 401k contributions are pre-tax, although I don’t see the true advantage, in the end these money will be taxed anyway.

I think this is a misconception.

The "true advantage" of the pre-tax contributions to the 401(k) are that even though they "will be taxed anyway", they are likely to be taxed at a lower rate when you withdraw that money upon retirement. Suppose you're in the 15% Federal tax bracket today. You may very likely be withdrawing your 401(k) contributions where all or part of those dollars are being taxed at the 10% or even 0% Federal tax bracket. So, rather than taking a 15% tax hit today, you could defer that tax hit until tomorrow and possibly take no tax hit at all.

Given your profile, it's likely that you'll be paying very low or no Federal income taxes during retirement. If that's the case, your 401(k) contributions will be essentially tax-free.

Also, keep in mind that your savings are not tax-free. You paid taxes on them today, at whatever your marginal tax rate is (defined as the tax rate you paid on your last dollar of income). And you will be taxed every year on the dividends, if any, that you earn on those savings. Finally, upon selling the investments, you'll be taxed on any capital gains (which , granted, is likely to be low based on your profile).
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Re: Is 401k that good nowadays ?

Postby bsteiner » Sun Jun 30, 2013 2:54 pm

Here's why the 401(k) contribution makes sense, even if there's no match, and even if you're in the same tax bracket when you retire.

Suppose you're in the 25% tax bracket, and you'll still be in the 25% bracket when you retire. You put $6,000 into your 401(k) plan. You can look at it as being $4,500 of your money (what you would have had after taxes if you didn't make the contribution) and $1,500 of the government's money (the tax you would have paid if you didn't make the contribution).

You can also look at the 401(k) account as being 75% yours and 25% the government's.

Over some period of time, your $6,000 account will grow to $12,000. You take it out, give the government its 25% share ($3,000), and keep your 75% share ($9,000). Your 75% share grew from $4,500 to $9,000 tax-free.

If you didn't put the $6,000 into your 401(k) plan, you would have paid $1,500 tax and put $4,500 into your taxable account. Over the same time, it would have grown to something less than $9,000, since you would have paid tax on the income and gains each year.

The match makes it even better. So does the likelihood that you'll be in a lower tax bracket when you retire.
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Re: Is 401k that good nowadays ?

Postby livesoft » Sun Jun 30, 2013 2:56 pm

I think we need to calm down and let the OP read all the responses. They are quite intimidating, aren't they?
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: Is 401k that good nowadays ?

Postby JamesSFO » Sun Jun 30, 2013 3:08 pm

r2006 wrote:but 401k is taxable, while my savings are tax free. I also understand the 401k contributions are pre-tax, although I don’t see the true advantage


Emphasis added to OP above... This is most emphatically wrong. Your 401K is tax-deferred space, your savings are taxable. Let's stay simple if you want $1,000 worth of savings in the 410K you earn $1,000 and put it in the account. It grows tax free until withdrawal and you only pay taxes then.

To save outside the 401K, you need about $1,300 in earnings and pay the taxes and get $1,000 in paycheck. Every time you collect interest/capital gains you pay taxes on those.

The 401K will almost always win.

(BTW, taking the OP at face value and not as a troll)
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Re: Is 401k that good nowadays ?

Postby r2006 » Sun Jun 30, 2013 9:09 pm

Thank you so much for your replies.

I understand now that I have some misconceptions about 401k plan. The best point made in all the replies I have read is that my after-tax savings and the returns on the investments that come out of those savings are taxable. I did not think of that.

I know that I am behind, long story, but the bottom line is I am trying now to make the best of these 15 years, and I believe in understanding what I am doing instead of hiring somebody to tell me what to do. This is why I started this research and I am happy I found this forum.

Ok, I see now that 401k looks better, I am going to look into that. What portfolio would you recommend ? I can post here the list of funds if that helps (and if it is allowed). There are "lifecycle funds", "indexed funds" and "actively managed funds" listed in the 401k plan.

I am sorry if my questions are really basic, that's where I am now and better later than never.

Thank you.
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Re: Is 401k that good nowadays ?

Postby livesoft » Sun Jun 30, 2013 9:13 pm

I suggest you up your contribution to your 401(k) so that you reach a $23,000 contribution by year-end. And do that even if it uses up your entire paycheck. You can live off of those savings that you have instead.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: Is 401k that good nowadays ?

Postby tylerherman » Sun Jun 30, 2013 9:34 pm

r2006 wrote:Ok, I see now that 401k looks better, I am going to look into that. What portfolio would you recommend ? I can post here the list of funds if that helps (and if it is allowed). There are "lifecycle funds", "indexed funds" and "actively managed funds" listed in the 401k plan.

I am sorry if my questions are really basic, that's where I am now and better later than never.


Read this http://www.bogleheads.org/wiki/Getting_Started
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Re: Is 401k that good nowadays ?

Postby TomatoTomahto » Sun Jun 30, 2013 10:27 pm

r2006 wrote:Ok, I see now that 401k looks better, I am going to look into that. What portfolio would you recommend ? I can post here the list of funds if that helps (and if it is allowed). There are "lifecycle funds", "indexed funds" and "actively managed funds" listed in the 401k plan.

The list of funds and their ER (expense ratios) would be useful. The fact that there are indexed funds and life cycle funds is a good sign; let's hope they dont have exorbitant ERs.
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Re: Is 401k that good nowadays ?

Postby r2006 » Mon Jul 01, 2013 7:57 pm

This is a quick excel file that contains the basic investments funds that my company in offering in its 401k plan. The "Current elections" is what they automatically chose for me, and the "thinking to request change" is what I am thinking to change to. Please advise.

I don't know what the "Lyfecycle funds" are.

My interest now is to study and learn about these topics, and at the same time get started with a 401k plan that makes sense. Later on when I will understand these topics much better, I will be able to make my own decisions, but for now I am asking your advice.

Thank you.

This is the image url -- http://postimg.org/image/8u520ml0n/
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Re: Is 401k that good nowadays ?

Postby avalpert » Mon Jul 01, 2013 8:26 pm

r2006 wrote:This is a quick excel file that contains the basic investments funds that my company in offering in its 401k plan. The "Current elections" is what they automatically chose for me, and the "thinking to request change" is what I am thinking to change to. Please advise.

I don't know what the "Lyfecycle funds" are.

My interest now is to study and learn about these topics, and at the same time get started with a 401k plan that makes sense. Later on when I will understand these topics much better, I will be able to make my own decisions, but for now I am asking your advice.

Thank you.

This is the image url -- http://postimg.org/image/8u520ml0n/

May I suggest you make a separate post in this format: http://www.bogleheads.org/forum/viewtopic.php?f=1&t=6212

It will provide all the context for you to get relevant advice
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Re: Is 401k that good nowadays ?

Postby hoppy08520 » Mon Jul 01, 2013 8:49 pm

r2006 wrote:This is a quick excel file that contains the basic investments funds that my company in offering in its 401k plan. The "Current elections" is what they automatically chose for me, and the "thinking to request change" is what I am thinking to change to. Please advise.

I don't know what the "Lyfecycle funds" are.

My interest now is to study and learn about these topics, and at the same time get started with a 401k plan that makes sense. Later on when I will understand these topics much better, I will be able to make my own decisions, but for now I am asking your advice.

Thank you.

This is the image url -- http://postimg.org/image/8u520ml0n/

Based on the expense ratios in your spreadsheet, you have a great plan.

If you want a balanced Boglehead portfolio of index funds, which is very close the Vanguard default recommendations (adjusted for each person's risk tolerance), then I'd recommend:

40% - Bond Market Index Fund
20% - International Index Fund
30% - 500 Index Fund
10% - Russell 2000 Index Fund

If you want to make this portfolio more aggressive or conservative, then just increase or decrease your bond holding while keeping the three stock funds at the same proportion relative to each other.

If you want a 1-fund solution, then choose the LifeCycle fund that matches your desired asset allocation. While it's slightly more expensive in terms of expense ratio, it's a good place to park your money for now until you get more knowledgable and comfortable with this. See wiki article Target Date Retirement Funds for more on "LifeCycle" funds. These are very common now in 401(k). They are intended to be a a single-fund solution that has everything you need. They grow more conservative over the years as you approach your "target date" of retirement. While these funds can be good for average investors, you need to watch out for expenses -- in your plan the LifeCycle funds are 6 times more expensive than the index fund alternative I put up above. The other caveat with LifeCycle funds is that a lot of people just pick a year -- you really need to look more carefully at the stock/fixed-income allocation and make sure it matches your preferences.
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Re: Is 401k that good nowadays ?

Postby r2006 » Mon Jul 01, 2013 8:52 pm

Will do thank you.
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Re: Is 401k that good nowadays ?

Postby r2006 » Mon Jul 01, 2013 9:34 pm

Thank you everybody for your replies, this has helped me a lot.

I appreciate the help.
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Re: Is 401k that good nowadays ?

Postby Default User BR » Tue Jul 02, 2013 1:27 am

It turns out that r2006 is a fellow traveler at MyMegaCorp. One of the features of the plan is that you can contribute more than the 17.5k employee elective deferral (plus the catch-up amount age 52 allows). When the limit is reached, the contributions automatically switch to after-tax non-Roth contributions. These can be rolled out in-service to a Roth IRA with little tax due. The plan allows only 25% of salary for regular contributions, so getting going is imperative.

Besides being more expensive (or because of it I suppose) the LifeCycle funds hold a lot of actively-managed funds. I wouldn't bother with them.

Besides the bond index fund, the stable-value is worth considering. Its rate is down these days, at 2.12% for 3rd quarter, but it's still a usable choice. It's the only active fund I would suggest at all.

The International Index is good, it tracks the MSCI ACWI IMI ex-U.S. index.


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Re: Is 401k that good nowadays ?

Postby r2006 » Tue Jul 02, 2013 10:33 am

Thank you Brian. :-)
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Re: Is 401k that good nowadays ?

Postby Kosmo » Tue Jul 02, 2013 2:14 pm

Default User BR wrote:It turns out that r2006 is a fellow traveler at MyMegaCorp.


I'm also a member of that particular club, so I'm familiar with these funds. In addition to what Brian said about contributions, you should definitely consider the advice about setting your AA (asset allocation) properly. There's a good bit of overlap between the large companies fund and the S&P500 fund. If you feel comfortable with a 90/10 AA (stocks/bonds), then I'd suggest swapping that 25% large companies fund over to the international fund. But I don't think 90/10 is appropriate for your retirement horizon.

Since you're still learning, keep it simple. Age-10 in bonds is a rule of thumb (which many people may debate, but I'll use it here since you appear to be aggressive rather than conservative). That makes your AA roughly 60/40. I'd suggest:
40% S&P500
20% international index
40% bond market index
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Re: Is 401k that good nowadays ?

Postby Strevlac » Tue Jul 02, 2013 3:53 pm

Assuming those ERs include admin fees, etc (and probably even if they don't), this looks like a GREAT plan.

Any of you willing to share who this plan is through?
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Re: Is 401k that good nowadays ?

Postby r2006 » Tue Jul 02, 2013 7:50 pm

Thank you all, great info.

At the moment I am reading and trying to understand the stock index and the index funds. I think I go the basics of stocks, bonds and mutual funds ... The very basics that is.

I might develop a hobby with this. :D

Since I am a very late starter, I might choose to do a high risk on 20% or so once I figure out how to read the market.

Some sources I've seem say you need 1 million in your 401k to retire comfortably, I don't see that happening for me, but I'll try to do my best with what I have.

Great community. :sharebeer
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Re: Is 401k that good nowadays ?

Postby tyler_cracker » Tue Jul 02, 2013 8:55 pm

r2006 wrote:I might choose to do a high risk on 20% or so once I figure out how to read the market.


sorry but :oops:
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Re: Is 401k that good nowadays ?

Postby Default User BR » Wed Jul 03, 2013 1:40 am

Strevlac wrote:Any of you willing to share who this plan is through?

I wouldn't be comfortable with it. Does it matter?


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