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Post by ferris1248 on Mar 1, 2024 9:09:39 GMT -5
"They’re everyday workers who clocked into their jobs day in and day out, all the while faithfully socking away money for the time, decades out, when they finally retired. And now they’re millionaires." "Fidelity Investments announced this week that the number of people with seven figures in their 401(k) accounts jumped 20% from September to the end of December. That struck a major chord with readers — nearly 4,000 of you weighed in on the news of so many regular folks saving for retirement and reaching the million-dollar mountaintop." "As I wrote in my column, the bigger balances came from a combination of a few things, not just the strong stock market. These people played the long game. The average savings tenure of Fidelity account millionaires is 26 years. And they save at a high rate — 17.5% of their pay on average." "The key is to start maximizing 401(k) growth as soon as you enter the workforce. I spend a lot of time explaining this to my younger 20-something-year-old relatives who have really good jobs but they're not maximizing investing as they should be — because they enjoy spending on things that they really don't need." "Whatever your company's maximum match is, you should contribute that amount and most importantly, while you're employed don't ever withdraw/borrow funds from your 401(k)." "Every high school in America should teach the power of compounding, dollar cost averaging and consistent investing. From your first job until you retire, you should sock money away." finance.yahoo.com/news/readers-had-a-lot-to-say-about-those-newly-minted-401k-millionaires-100010284.htmlfinance.yahoo.com/news/soaring-number-of-americans-are-now-401k-millionaires-100001736.html |
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Post by johngalt on Mar 1, 2024 10:44:58 GMT -5
A Roth IRA is a better option.
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Post by richm on Mar 1, 2024 10:47:20 GMT -5
Just good advice.
Compound interest is the key and the longer it sits, the more it makes.
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Post by ferris1248 on Mar 1, 2024 11:47:37 GMT -5
A Roth IRA is a better option. A roth has it's place if you're not eligible for a 401K. But Roth IRAs have a much lower contribution limit—$6,500 per year for 2023 and $7,000 for 2024, compared to a Roth 401(k). Roth IRAs are also self-funded and don't allow for matching employer contributions. |
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Post by richm on Mar 1, 2024 13:45:22 GMT -5
I was doing ROTH 401K until they made me partner and I couldn't anymore.
We were debating this a bit somewhere and i done the math on contributing X into the account monthly for 20 years as 401K vs 401K ROTH. The taxes were identical - it makes sense, the govt puts a lot of effort into not losing any revenue.
Of course I was using 22% tax bracket and assuming that the person doing the withdrawals would be paying 22%. Even-Steven.
The main advantage of the ROTH is that there are no minimum distributions and you can pass em directly to heirs. Otherwise, I'm not so sure there is much of an advantage. Yer not likely to go into the next tax bracket when retiring...but may drop a tax bracket so you pay 22% on ROTH and maybe get 18% or whatever the next one down is on regular 401K.
In my instance, regular 401K saves me X in taxes right now, which might be keeping me in a lower tax bracket.
And, no, I don't think my 401K will hit 7 figures. Gonna have to get there another way.
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Post by swampdog on Mar 1, 2024 14:01:18 GMT -5
The big key is open an IRA or some retirement plan that isn’t easily available for you to spend. Young folks today don’t consider the compounding of interest on their savings. I remember family that paid Uncle Sam a lot, so they could get a big tax refund. They wouldn’t listen to me telling them the plan is to owe the IRS as little as possible, but don’t let them use your money for free just so you can get a refund.
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Post by ferris1248 on Mar 1, 2024 15:16:19 GMT -5
The big key is open an IRA or some retirement plan that isn’t easily available for you to spend. Young folks today don’t consider the compounding of interest on their savings. I remember family that paid Uncle Sam a lot, so they could get a big tax refund. They wouldn’t listen to me telling them the plan is to owe the IRS as little as possible, but don’t let them use your money for free just so you can get a refund. I know folks like that. They look at it as a savings plan. I guess when rates were 0% it might make sense. |
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Post by richm on Mar 1, 2024 15:48:45 GMT -5
The big key is open an IRA or some retirement plan that isn’t easily available for you to spend. Young folks today don’t consider the compounding of interest on their savings. I remember family that paid Uncle Sam a lot, so they could get a big tax refund. They wouldn’t listen to me telling them the plan is to owe the IRS as little as possible, but don’t let them use your money for free just so you can get a refund. I always claimed more than was supposed to so that I wouldn't have to pay at tax time. Never paid a dime at tax time until Trump changed the tax stuff and got slapped with a $1,000 tax was not expecting or wanting. It was supposed to stimulate stuff - pfff. Nowadays I pay what and when acct tells me. |
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Post by conchydong on Mar 1, 2024 16:12:34 GMT -5
Simple things can make you successful even if you are an average Joe. Throwing an extra hundred or two on your mortgage can save you a tremendous amount of money in the end. Just takes some discipline and a little sacrifice.
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Post by ynotjax on Mar 1, 2024 17:41:35 GMT -5
Back in my mid 20s I had a lot of savings and I took advice from my parents to open a account with Janice funds and I started with about 3-5 thousand my work did not have a investment plan and but a pension plan. Late 80s I got another job with a full benefits and I never added any money to that account then got married had kids just left it there and to my surprise I now have close to $200,000.00 in it compound interest and dividends really pays off.
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Post by ferris1248 on Mar 2, 2024 9:03:36 GMT -5
It pays to start saving early. I did but got wiped out in a divorce in my 40s. I recovered though and really started saving and investing. It can be done later in life but starting early is a big advantage.
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Post by richm on Mar 2, 2024 9:58:34 GMT -5
It pays to start saving early. I did but got wiped out in a divorce in my 40s. I recovered though and really started saving and investing. It can be done later in life but starting early is a big advantage. I got wiped out in 2008-2010 recession. Max contributions for like 15 yrs wont touch someone doing 10-15% over 40 yrs. my folks taught saving, not investing. Been tough to make investing decisions. |
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Post by tonyroma on Mar 2, 2024 10:45:21 GMT -5
Been dropping 10-15% into a 401k since I was 20. Not sexy or exciting but hopefully won’t be eating fancy feast in my 70’s.
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Post by ferris1248 on Mar 4, 2024 7:49:39 GMT -5
One big item you need to pay attention to is the "catch up contribution" on 401Ks.
You need to check and see if you qualify and if your program allows it.
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