From the article: Traditional IRA and Roth IRA Contribution Limits
How much do you contribute to your IRA or other retirement plans such as 401(k) accounts? Do you think people should always contribute to the maximum amount allowed or is it better to only go to the point you get matching money from an employer, such as a 401(k), and use any extra money to pay down debt? By sharing how you approach your retirement planning, you may help other readers who are reading this page right now! Share Your Story
Pay Myself First - 401k/Roth/Trad
- Since 1984 I maxed out IRA or 401k. When I lost my job in 2003 rolled the 401k to an IRA - some cash, mostly stock & have converted to a Roth when it makes sense, tax wise. I had a big drop in 2008 almost 70% but I hung in, kept the stock, kept contributing to a Roth. Never give up! Better to cut back expenses than 401k / IRA contributions. I work a part time job, but still make my annual contributions. Withdrew $10,000 for a down payment on a house in 2001, but that's it. The 70% loss? It's now only a blip on the way. Mike D - just a suggestion, reconsider letting tax code be a deciding factor in marriage.
- —Guest Jane
Yes we can
- Yes we can Max out 401 contribution limit. Also, It is really a very impressive and useful article for all those people who are looking for an information about 401k retirement plan.
- —Guest 401k limit
Allen - I believe it when I see it
- I have been contributing my max most of my career - from a few thousands to the current maximum of $17,000 per year. I have been contributing for the past 20 years and the funds are invested across several indexes (both domestics and international). I don't have complaints about my earnings but it is far from the Million $ mark and I am about 10 years away from my retirement! During all these years, my 401K got hit only twice (like your whole world gone to hell scenario). Each time my retirement funds took a hit, it took 2-3 years to recover to the original balance. From now until you reach 65, there will likely be bumps along the way. Though I admire your confidence, don’t think your returns will always be going in the UP direction. It is the roller-coaster like pattern that really hurts your retirement bottom line. If I were you, I would re-examine your financial health every five years and never put all your eggs in one basket. IMHO, Real Estate is still a great retirement
- —Guest Lawrence
Do the Math Before Maxing Out
- Word of wisdom for maxing out 401k's, key downside risks: Lack of liquidity/investment array -- Many employers do not offer MMFs or cash equivalent funds, which limits the investment array into risky assets. In addition, government bond funds can also be susceptible to market swings, and are not a safe haven as bond funds replicate the performance of an index a bond and do not exhibit the cash flow of a typical TIPS or treasury bond. 2. Overstatement and oversimplification of tax benefits -- Given the liquidity and management characteristics you forfeit in fully maxing your 401k, you should expect to be substantially rewarded via tax shelter, but several studies suggest the benefit could be paltry, ~1.7% tax savings in some studies given the US tax code is not progressive ENOUGH. Unknown tax savings as a trade-off for limited liquidity and small investment universe....I'll instead stick with only contributing to the employer match.
- —Guest David
401k hardship withdraw
- i worked for county line nissan in watertown ct for 4 years i gave my two week noticed i was talked out of it for a rasie i stil wanted to colesed out my 401k i have medical bills totatling more then my 401k thay just wont give me my money i contaced a lawer to take them to small clams court due you think this will work saddly in debt jon
- —Guest jon byron
hardship withdrawel
- I need to find out how I can withdraw my 401K. My mom lives with me and she has been diagnosed with lung cancer. We have had to call in Hospice this week. My brother and I are the only immediate family she has to take care of her. She does not have but 900 a month coming in and is on medicare. My brother is disabed and can't help with her that much. I may have to see about someone coming in and staying with her during the day and I just don't have that kind of money. Im not married so its just my income. I need some answers on this
- —spiresbr
How do I determine
- Hello, I recently have had to spend a lot of money to help family out. I would like to withdraw from my Roth IRA because I am afraid of the penalties, how do I determine the penalties if I take money from my Roth IRA?
- —Guest Airman G
I can't max out my Roth IRA
- The article implies that married couples are better off because the max income is $150,000 (combined). But single is $95,000. So if my fiance and I each make just under $95,000 per year, aren't we better off not getting married? We can make nearly $190,000 per year combined and still put our $5000 (each) into a tax saving Roth IRA. Taxes are becoming a reason not to marry.
- —Guest Mike D
I can't max out my Roth IRA
- The article implies that married couples are better off because the max income is $150,000 (combined). But single is $95,000. So if my fiance and I each make just under $95,000 per year, aren't we better off not getting married? We can make nearly $190,000 per year combined and still put our $5000 (each) into a tax saving Roth IRA. Taxes are becoming a reason not to marry.
- —Guest Mike D
Save save save
- While my coworkers fight for overtime I make more on interest off of my ira account. 'people dont plan 2 fail they fail 2 plan'
- —Guest John
Max 401k first
- Max 401 k first, becouse your employer matches a percent of it, after maxing this out and paying off credit card debts contribute to roth IRA
- —Guest Jose
Hey Lucky!
- You should take a look at this page - it might help you invest in the future: Compound Interest http://en.wikipedia.org/wiki/Compound_interest
- —Guest Unlucky
Bad math in article
- Why are you comparing $2k going into a Roth IRA to $2k going into a traditional IRA? Your $2k going into a roth is equivalent to $2.6k of pre-tax income going into a traditional IRA, assuming a 25% marginal rate. If you end up withdrawing at a 15% marginal tax rate, the traditional comes out 10% ahead of the roth.
- —Guest Eric
Hey Allen!
- I wouldn't be so sure about all your computations. You will need over 2 million when YOU get to retire. Your numbers need to improve dramatically. Sorry, bud.
- —Guest Lucky
Start Young
- As a recent college graduate I have found out there is no better time to start investing,then right out of school. No matter what happens to the economy just saving $2260 a year ($48 a week from your paycheck) after 40 years,with low risk investments will yield you over $1,000,000 by the time your 65. No worries about social security (which by the time I'm ready to retire will be long gone) My grandparents were smart enough to show me the world of investing while I'm young and can reap the rewards in which it has to offer. Its never too late!
- —Guest Christian B
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