When were you able to max out your 401k, IRAs?

[retire2022]

all here is another chart which includes other different plans

https://www.datair.com/annuallimits.htm

[CyclingDuo]

The heading on this chart says "Historical Roth IRA Contribution Limits" but Roth IRAs didn't become available until 1998. And catch up contributions didn't exist for any kind of IRA until 2002.

Good catch! We will all have to email the Financial Samurai and let him know. Here's the link to the page with the misinformation: https://www.financialsamurai.com/histor ... on-limits/

It was the traditional IRA that was passed into law in 1974. And you are right, the catch up contributions began in 2002. My bad for not looking closer at the graphic when searching for one.

Here's a better one (hopefully) that depicts the history (before the bump in 2019 to $6000)...


https://dqydj.com/history-of-contributions-ira-limit/

Edit to add the Roth IRA contribution limit history as well (before the latest bump to $6000 for under 50 and $7000 for 50+)...


https://www.investmenthunting.com/origins-roth-ira/

I also edited my original post to remove the misinformation from the Financial Samurai.

[pdavi21]

Anytime I worked the full year.

[lexie2000]

We both maxed out right away. We were DINKs living below our means. We were living off of one income and saving the other so it did not affect our lifestyle at all. We continued maxing through the purchase of our first home and then when we went to a single income.

[fennewaldaj]

It have always felt that the Boglehead "maxing out your retirement accounts" mantra from many quarters is a useless metric. There are many circumstances where it is overkill and many circumstances where it is woefully insufficient. This BH obsession on it is counter-productive and places unnecessary stress on forum members to conform.

I've usually tried to max retirement accounts but that has always been in the context of a company imposed 15% max and usually a non safe harbor plan that capped me at 10%. Sometimes Roths are available and sometimes not.

So yes for some it is unrealistic to max retirement accounts if they are not very high income and they have access to a plan that allows for statutory max, and maybe even mega backdoor Roths. But I'm not going to go as far as your post. I don't think there is anything better you can do than maximize, to whatever extent realtically possible, tax advantaged retirement accounts. It is forced a d segregated savings. I would not characterize it as an obsession or counter-productive. I think what is needed is a little more nuanced definition of "maximize".

For a average to moderately above average couple (say ~$50k-$100k family income) maxing out 2 401ks and 2 Roth IRAs is likely massive overkill thats a 50% savings rate even for the high end. It looks like from a quick search about 75% of couples make less than 100k. So for 75% of the population maxing these accounts is more than needed.

[carol-brennan]

I have always maxed it out, every year I have been employed full-time in the U.S. That's been 25 years now.

It was never a stretch to do it, and I have always wished that the limits were higher so that I could shield more of my income from the tax woman. Of course, I've always lived well below my means and avoided debt as much as possible. I also had a stretch where I worked two or three jobs, although I did that because I could, not because I needed the money.

Financial planning, like the good health that typically results from avoiding bad habits (alcohol, smoking), is a lifestyle that results from a combination of attitude, outlook, discipline, and ability. I'm not suggesting that all of these attributes are entirely under your control. Indeed, I am quite sure they result from many factors outside of your control: your upbringing, your temperament, the natural chemicals and hormones produced by your body. In other words, there's some luck involved.

But to the degree possible, adopt the lifestyle.

[chw]

Around age 35, but was contributing full amount to get company match beginning at 22, and started traditional IRA around age 25 (Roth was not inexistence).

[obafgkm]

For about the last five years I actually cut my 401k contributions back to be just enough to get the employer match so that I could start spending more on things like travel before I retired.

Can you go more into your thinking about this? Besides wanting to spend more pre-retirement, what other factors got you to "take your foot off the gas"?

Except for the year my wife died, I've put the maximum allowed in both my 403(b) and Roth IRA for about a dozen years (IRA for longer than that). What with the Roth IRA and the 403(b) I inherited from my wife, and being about 7 years from retirement when I'm 61, I've been wondering about not putting as much into retirement and cash-flowing some experiences (travel, mostly) with my daughter, who is in her young teens. I currently have about $1.9 million, mostly in Roth IRA, my 403(b), my inherited 403(b), and a 529.

But it is hard to get out of the mindset of "maxing it out".

[mnsportsgeek]

We have 2 401Ks, 2 Roth IRAs, and an HSA. I’m not sure I’ll ever max out the 401Ks unless we go down to 1 income.

[Watty]

For about the last five years I actually cut my 401k contributions back to be just enough to get the employer match so that I could start spending more on things like travel before I retired.

Can you go more into your thinking about this? Besides wanting to spend more pre-retirement, what other factors got you to "take your foot off the gas"?

Except for the year my wife died, I've put the maximum allowed in both my 403(b) and Roth IRA for about a dozen years (IRA for longer than that). What with the Roth IRA and the 403(b) I inherited from my wife, and being about 7 years from retirement when I'm 61, I've been wondering about not putting as much into retirement and cash-flowing some experiences (travel, mostly) with my daughter, who is in her young teens. I currently have about $1.9 million, mostly in Roth IRA, my 403(b), my inherited 403(b), and a 529.

But it is hard to get out of the mindset of "maxing it out".

I was in my earely 50's and planning on retireing when I was about 58. I was at the point here I would have been OK if something happend and I had to stop working but that would have been a notch or two lower lifestyle than I was planning on.

The numbers were a lot more complicated but somewhat over simplifed I was looking at a safe withdrawl rate of around 3% so if I contributed an extra $10,000 that would mean that my retirement budget could be $300 a year(about $33 a month) more which would not have made a noticable different to me even if I got laid off and had to stop working early.

If I did not get laid off then when I was 58 then I could delay my retirement and work few months if I wanted to to get my savings up to the point where I would have been if I had not spend the $10,000 earlier. Delaying your retirement for a month has a big impact since not only do you have a months more income but you also don't spend a months expenses from your retirment savings.

I didn't have a lot of money in Roths or Taxable accounts that I could use instead so the best way to fund things like travel was to reduce my retirment account contributions.

I was still contributing 6% of my salary to get my employers 3% match so I did not totally stop saving.

[angelescrest]

It have always felt that the Boglehead "maxing out your retirement accounts" mantra from many quarters is a useless metric. There are many circumstances where it is overkill and many circumstances where it is woefully insufficient. This BH obsession on it is counter-productive and places unnecessary stress on forum members to conform.

Agreed. Not sure what the point of this thread is, especially when there’s no reference to things like income, financial goals, etc.

[MarkBarb]

What do you mean by "maxing" out your 401K? I've heard people use that phrase for putting in the amount that gets the maximum match from their employer. I've heard people use that for putting in the $19,000 max pre-tax contribution to their 401K. I've heard people using it to mean the full $56,000 allowable contribution (pre-tax plus match plus after-tax).

[JD2775]

First maxed out my ROTH about age 35, 401k not until I was 40.

Late starter here

[JBTX]

What do you mean by "maxing" out your 401K? I've heard people use that phrase for putting in the amount that gets the maximum match from their employer. I've heard people use that for putting in the $19,000 max pre-tax contribution to their 401K. I've heard people using it to mean the full $56,000 allowable contribution (pre-tax plus match plus after-tax).

This is really the source of the disagreement. We are dealing with dramatically different targets and dramatically different incomes. One size doesnt fit all

I would say one should shoot for at least 20% of gross income. Perhaps more if you are higher income. If you can do it all in tax advantaged that is great. If you can do more than 20 that is also great.

I didn't have access to all the tax advantaged space that some do now. In spite of that, practically all of our savings is in tax advantaged in our 50s. It is highly unlikely that I could have or would have maxed out using today's rules, although I probably would have saved more.

[azianbob]

What do you mean by "maxing" out your 401K? I've heard people use that phrase for putting in the amount that gets the maximum match from their employer. I've heard people use that for putting in the $19,000 max pre-tax contribution to their 401K. I've heard people using it to mean the full $56,000 allowable contribution (pre-tax plus match plus after-tax).

I am referring to the maximum contributions to retirement accounts that are available to most (BH) people.

401k - $19000 or $25000
IRA - $6000 or $7000

The median salary for US is around $60k. $25000 is a little more than 40% of that. So while it is difficult, it is still possible for a regular BH (who tends to have a little higher income than the US average anyways to begin with) to achieve.

Stuff like the $56,000 allowable contribution are not readily available for most people, because you either need a work 401k that allows for additional after tax contributions and allows for distrbutions before leaving the company, or a personal business or side job that makes enough so 25% of your income is at least $56k or whatever. These are not things normal people with a 8-5 salary job have or can do reasonably easily. You generally have to make like over $250k at least to get to these levels.

I am asking about maxing out because there is no other real standard of saving I could point to, so since these are limits set on retirement accounts, I asked the question since that represented a "max" majority of people can strive for.

For instance, if someone does the max contribution every year starting now, and for simiplicity sake we don't increase the limits, and estimate a 7% return, in 25 years it will grow to $2 million, $3 million in 30 years, and $4.6 million in 35 years. Those are amounts majority of people would be glad to retire with.

[Spirit Rider]

I am asking about maxing out because there is no other real standard of saving I could point to, so since these are limits set on retirement accounts, I asked the question since that represented a "max" majority of people can strive for.
...

For instance, if someone does the max contribution every year starting now, and for simplicity sake we don't increase the limits, and estimate a 7% return, in 25 years it will grow to $2 million, $3 million in 30 years, and $4.6 million in 35 years. Those are amounts majority of people would be glad to retire with.

You are still missing the point. The only relevant metrics are what is your savings rate, how tax efficient is your tax portfolio and what is your desired withdrawal rate at what age. Reaching arbitrary fixed contributions limits is meaningless out of context any your $3M in 30 year example is massive overkill for the vast majority of Americans.

Other useful metrics are; what multiple of your salary is your current portfolio at what age or what multiple of your retirement expenses is your projected portfolio. The former is more useful early in and the latter is more useful later.

I realize people need yardsticks for bragging rights, but let's at least use meaningful yardsticks.

[retire2022]

Here is a chart for historical individual tax rates, one can use to create their own spreadsheet along with the IRAs, and 401,403b, 457 and other plans you could see how well you would have done. This would be a forensics accounting exercise.

I also recommend one download one's Social Security employment record of their annual salaries since they first started working, if one cares to nerd out.
this covers years in case you may wanted to know what your family had paid from years 1862-2013

https://files.taxfoundation.org/legacy/ ... ominal.pdf

Moneychimp has a interactive tax chart as well

http://www.moneychimp.com/features/tax_brackets.htm

[zratis]

Almost did it last year at 24, but missed the 401k by ~$2000.

This year I set my bonus to max 401k contribution, I also received a substantial pay raise, so I should hopefully max out ROTH and 401k at 25

[stoptothink]

Almost did it last year at 24, but missed the 401k by ~$2000.

This year I set my bonus to max 401k contribution, I also received a substantial pay raise, so I should hopefully max out ROTH and 401k at 25

That is quite a feat. I have a 21yr old who works for me who did it last year. She is going to be very wealthy.

[CyclingDuo]

The median salary for US is around $60k. $25000 is a little more than 40% of that. So while it is difficult, it is still possible for a regular BH (who tends to have a little higher income than the US average anyways to begin with) to achieve.

Of the current 82,911 BH members, does accurate data exist that qualifies the bolded section of your statement?