How much do you recommend putting in your retirement fund?

exalted512
exalted512 Posts: 10,735
edited September 2008 in The Clubhouse
I've heard several different things and its about time for me to start saving up for it.

I've heard 3% of your paycheck, I've heard 10% of your paycheck...what do you guys recommend?

I'm working part time now (part time at my job is 38 hours/week, full time is 57) so I cant qualify for some of the benefits my company offers, but I thought I could just start by putting away some money in a savings account, then when I have a few grand in it, start looking at an IRA.

Discuss. :)
-Cody
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Post edited by exalted512 on

Comments

  • Mike Kozak
    Mike Kozak Posts: 931
    edited September 2008
    6-8% if you can swing it
  • kgingras
    kgingras Posts: 113
    edited September 2008
    Do they offer a 401k plan that you can contribute to? Even if they do not match you should still contribute as much as you can as it will lower your taxable income as well as grow tax free.
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  • shack
    shack Posts: 11,154
    edited September 2008
    A minimum of 6% and as much as 15% if you can swing it. If you have the abiltiy to participate in a company 401K or Roth 401K put the amount in to get the maximum match from your employeer (usually 6%). At your age and tax bracket (I assume it is low since you are starting out) look hard at ROTH IRAs. The tax benefits of a conventional IRA deduction won't help you very much now and the long term benefits of a Roth are HUGE!

    You will be paying taxes (a lot) for a very long time to cover the bailouts we are seeing now and the chance of you having any sort of Social Security is slim. You better plan well now.
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  • shack
    shack Posts: 11,154
    edited September 2008
    kgingras wrote: »
    Do they offer a 401k plan that you can contribute to? Even if they do not match you should still contribute as much as you can as it will lower your taxable income as well as grow tax free.

    Not tax free...tax deferred. A Roth IRA or Roth 401K has no tax deduction for the funds put into it but the earnings are TAX FREE.
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  • kgingras
    kgingras Posts: 113
    edited September 2008
    shack wrote: »
    Not tax free...tax deferred. A Roth IRA or Roth 401K has no tax deduction for the funds put into it but the earnings are TAX FREE.

    My bad.
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  • bobman1235
    bobman1235 Posts: 10,822
    edited September 2008
    I put in a little more than what my employer will match - 7% (they match up to 6).

    Wish I could swing some more but I gots me some bills to pay.
    If you will it, dude, it is no dream.
  • jdhdiggs
    jdhdiggs Posts: 4,305
    edited September 2008
    My family pretty much puts in as much as we can afford and still maintain our quality of life.
    There is no genuine justice in any scheme of feeding and coddling the loafer whose only ponderable energies are devoted wholly to reproduction. Nine-tenths of the rights he bellows for are really privileges and he does nothing to deserve them. We not only acquired a vast population of morons, we have inculcated all morons, old or young, with the doctrine that the decent and industrious people of the country are bound to support them for all time.-Menkin
  • disneyjoe7
    disneyjoe7 Posts: 11,435
    edited September 2008
    shack wrote: »
    Not tax free...tax deferred. A Roth IRA or Roth 401K has no tax deduction for the funds put into it but the earnings are TAX FREE.


    Right now that's how it stands on Roth accounts, but I prefer the tax deferred route. :)

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  • unc2701
    unc2701 Posts: 3,587
    edited September 2008
    Max it out. You'll stop noticing pretty fast and next thing you know, there's a whole pile of money there. The ABSOLUTE minimum you should do is what your employer matches.
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  • ben62670
    ben62670 Posts: 15,969
    edited September 2008
    anonymouse wrote: »
    There are many free retirement planning calculators out there. You start with your goals (i.e. what age you want to retire, how much in today's $ you need in retirement etc.) and it will project what you need to put in.

    Agreed. Play with one of these for a while, and you will see that adding a little more goes a long way;)
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  • Demiurge
    Demiurge Posts: 10,874
    edited September 2008
  • exalted512
    exalted512 Posts: 10,735
    edited September 2008
    And when you say a percentage of your check, do you mean take home or do you mean before taxes?

    My employer matches 3 or 6%, but I'm not qualified since I'm only part time. This is why I was thinking right now, I can just be putting money in a savings account, then when I get a job that does offer a 401K, I can start then. Also, just to make sure, when I do get that job, I can dump all the money in my savings into that right? I'm sure its a dumb question, just wanted to make sure.

    When I was 16 and first started working, I was putting 10% away...that all got used up while in college though...lol. I thought now would be a great time to start it up again. Especially since I'm not going to be able to rely on social security...

    BTW, if it matters, I'm 22 and making around $23k/year.

    Also, say you were plan on retiring at age 50-55, how much would you shoot for to have saved by then? I know it highly, highly depends on 100s of factors, but just shoot out some numbers for me if you would.
    -Cody
    Music is like candy, you have to get rid of the rappers to enjoy it
  • AndyGwis
    AndyGwis Posts: 3,655
    edited September 2008
    I'd say with cost of living rising and 50-55 being a pretty early age, maybe $1-2M to keep you at a pretty high standard of living with enough to last until you pass. Got to think that most people will be in their 80's or 90's when they die if they are pretty healthy. That's 25 - 35+ years and I doubt that SS or pensions will be as prevalent then.

    Sounds like a hell of a lot of money, but save a bit here and there. I would open an online MM / savings account with a decent rate. ING and places offer 3.5% or more right now. Pretty safe, really easy. Put as much as you can in there and let it grow. Maybe think about putting some on the market when you feel comfortable.

    I put whatever I can into my savings. Hopefully it will help in the long run!
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  • Hilbert
    Hilbert Posts: 316
    edited September 2008
    Anybody brave or dumb enough to offer an opinion about investment vehicles? I.e. stocks, bonds, cash? I'm thinking index funds, not direct ownership.
  • shack
    shack Posts: 11,154
    edited September 2008
    Hilbert wrote:
    Anybody brave or dumb enough to offer an opinion about investment vehicles? I.e. stocks, bonds, cash? I'm thinking index funds, not direct ownership.

    DO NOT ask for advice form anyone on this or any other forum for this kind of stuff. Don't ask friends or relatives either. Get financial info from a broker, or certified financial planner, etc or get info from publications like Kiplinger, Barrons, Morningstar etc...
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  • Demiurge
    Demiurge Posts: 10,874
    edited September 2008
    AndyGwis wrote: »
    I put whatever I can into my savings. Hopefully it will help in the long run!


    Ditto, my primary checking account only has enough money to covery my exact monthly expenses. I transfer money from my savings to my checking only when I need it, like my credit card. I buy nearly everything with my credit card and pay it off every single month.

    I find it much easier to save this way....and it's a real motivator when you see those liquid assets getting bigger and bigger. Then it opens up serious options to do things with that money by putting it to work for you.
  • Hilbert
    Hilbert Posts: 316
    edited September 2008
    shack wrote: »
    DO NOT ask for advice form anyone on this or any other forum for this kind of stuff. Don't ask friends or relatives either. Get financial info from a broker, or certified financial planner, etc or get info from publications like Kiplinger, Barrons, Morningstar etc...

    Good point. I certainly wouldn't act on advice received on a forum. I really just wondered if anyone has an opinion on how low the stock market will go, has it bottomed yet. But maybe that's highjacking the thread, in which case don't answer.
  • shack
    shack Posts: 11,154
    edited September 2008
    Hilbert wrote: »
    Good point. I certainly wouldn't act on advice received on a forum. I really just wondered if anyone has an opinion on how low the stock market will go, has it bottomed yet. But maybe that's highjacking the thread, in which case don't answer.

    I'm sure a lot of folks here have opinions...but it's not worth much since few here are really qualified to truly give an opinion. Hell...even the "experts" aren't sure where we are.

    Again, your best option is to get advice from a professional you trust and/or do lots of research from GOOD sources and then decide.
    "Just because you’re offended doesn’t mean you’re right." - Ricky Gervais

    "For those who believe, no proof is necessary. For those who don't believe, no proof is possible." - Stuart Chase

    "Consistency requires you to be as ignorant today as you were a year ago." - Bernard Berenson
  • unc2701
    unc2701 Posts: 3,587
    edited September 2008
    Demiurge wrote: »
    Ditto, my primary checking account only has enough money to covery my exact monthly expenses. I transfer money from my savings to my checking only when I need it, like my credit card. I buy nearly everything with my credit card and pay it off every single month.

    I find it much easier to save this way....and it's a real motivator when you see those liquid assets getting bigger and bigger. Then it opens up serious options to do things with that money by putting it to work for you.

    Yeah, just don't forget the 100k FDIC limit... which suddenly doesn't seem quite so theoretical.

    Huh... just noticed that there was a thread on exactly that yesterday. Anyhow, the rule is save AND diversify.
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  • Dennis Gardner
    Dennis Gardner Posts: 4,861
    edited September 2008
    At your age of 22, around 5% of your current salary = $100/month invested in mutual funds earning 12% (historic stock market average) until you are 65 years of age will be $1.7million.

    Not too bad for what is less than most of us spend on our Starbuck's, Red Bull, Diet Cokes, smokes or whatever your vice is. $3 a day.
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  • RuSsMaN
    RuSsMaN Posts: 17,987
    edited September 2008
    I'm never retiring, so I'm golden.

    Seriously - save early, save often, and get SOUND advice.
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  • BjornB17
    BjornB17 Posts: 752
    edited September 2008
    RuSsMaN wrote: »
    I'm never retiring, so I'm golden.

    Seriously - save early, save often, and get SOUND advice.

    you're so punny. :D
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  • wallstreet
    wallstreet Posts: 1,405
    edited September 2008
    After the past few days in the stock market, retirement's just a pipe dream at the moment.
  • exalted512
    exalted512 Posts: 10,735
    edited September 2008
    Also, is it a percentage of your take home pay, or a percentage of your pay before taxes?
    -Cody
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  • shack
    shack Posts: 11,154
    edited September 2008
    I always condsider a percentage of gross pay. That is also the way most 401K contributions are determined.
    "Just because you’re offended doesn’t mean you’re right." - Ricky Gervais

    "For those who believe, no proof is necessary. For those who don't believe, no proof is possible." - Stuart Chase

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  • jeremie
    jeremie Posts: 246
    edited September 2008
    I would recommend doing the max of 15k a year if you can afford it, then if you can afford it do a Roth IRA and other investment plans. Thats what i do and i like the numbers when i retire. Assuming the economy goes up in 20 years.
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