Analysts, what % of your pre-tax pay are you currently contributing to your 401(k)?
I want to maximize my employer match but I’m worried about over-contributing and tying up all my savings in a 401(k) when ideally I would want some medium-term liquidity with no penalty (e.g. I want to be able to withdraw savings in ~5 years to purchase RE, can’t do this from a 401k without significant penalty).
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I’m putting 40% now for this year so I can max that hoe out before this year ends. Market is too good need to take advantage of it.
EDIT: Putting this from below for everyone asking questions.
I'm paying $1960 total a month in rent NYC. Post-tax with the 401k deductions taken out are about $3400 a month (not sure on the exact number with 100k base). 2k rent and then I have a bit over 1400 left over for the month which definitely is not much at all. But I tend to only eat 1 real meal a day and a lot of time when I want to eat something I'll just have a bowl of oatmeal or ramen and some heated up frozen bread. Otherwise, I don't even have time to go out but this could change as I ramp up more and get better (hopefully?)
It's not an ideal way to live, but I rather sacrifice now and not have to work 10 years from now being retired because I find myself miserable working quite frankly. I guess you could say I'm one of those FIRE people. It's definitely doable 40% though with even with expensive rent with these new bases.
How tf are you putting in 40% pretax?? Do you live in LCOL/not pay for rent? Genuinely just impressed and would love to hear your advice on this (recently dropped my 25% contribution to 20%, on 100k salary base and cheap af rent (1200-1400/mo)
did a similar thing, had money saved up from prior internships that I used instead if didn't have enough to cover. Figured it was a difference of getting tax-advantaged savings versus normal after-tax
No I’m paying $1960 total a month in rent NYC. Post-tax with the 401k deductions taken out are about $3400 a month (not sure on the exact number with 100k base). 2k rent and then I have a bit over 1400 left over for the month which definitely is not much at all. But I tend to only eat 1 real meal a day and a lot of time when I want to eat something I’ll just have a bowl of oatmeal or ramen and some heated up frozen bread. Otherwise, I don’t even have time to go out but this could change as I ramp up more and get better (hopefully?)
It’s not an ideal way to live, but I rather sacrifice now and not have to work 10 years from now being retired because I find myself miserable working quite frankly. I guess you could say I’m one of those FIRE people. It’s definitely doable 40% though with even with expensive rent with these new bases.
Similar vibes here - i put in 33% pre tax with rent at similar rate. only real expenses are eating out and shopping (which is rare) so I generally save paycheck money in addition to 401k money
Currently 30%. Don’t plan on scaling back unless change of lifestyle.
Edit: Just realized I misread OP. I max out 401k then use remainder of 30% towards investments/savings.
Not OP but can I ask about some details about your spending? What city, base salary, rent expense do you do to afford doing this? weekends out//drinks, or eating out during the week?
(OP) also curious, I’m at 15% and thought that was relatively high.
also, what do you plan for your bonus? Very impressive if you can save 30% of base and most/all of bonus
for more details about my situation, I just started as an A1 in a major city (NY/SF) paying $2,300 in rent. Not super conservative about spending but my nights out (Friday, Saturday, and maybe one more weekday) are not anywhere fancy (no bottles or tables or expensive covers) so I’m probably spending $50-60 a night max with ubers
In a LCOL. Spend around $1500 a month on mortgage including utilities.
I use to go out a lot in college. Once I graduated I calmed down and find myself at home on weekends or at friends. Not going out saves a lot. I don’t eat out, if I do it’s once a week.
Also I don’t find myself buying dumb shit like a lot of my friends that say they don’t have any money. You don’t realize how much little things add up. Like Starbucks, Fastfood, app purchases, subscription services, etc.
Sorry for the ignorance. Completely new to this whole 401k stuff since I will be entering FT next year. Isn’t that % more than what you can contribute to 401k? Isn’t the limit $19,500? Again, probably a dumb question just trying to get a better understanding.
Not a dumb question at all - it's because you start FT in July so don't have a full year to get the contributions
(OP) Curious where you invest the remainder if you don’t mind. Like I said in post I’m looking for short/medium-term liquidity so I was thinking just index funds, maybe a chunk in something like Fundrise, and some in BTC, ETH.
Just my personal take, but fundrise isn't worth it. Buy a REIT and call it a day. In terms of medium liquidity, the easiest answer is buying an Index fund. Everything else will either be very risky or won't have much return.
Would definitely recommend maxing the full amount (not just company match). This year, I started using bonus to take out a decent chunk then just ramped up my contribution percent for the few months following. You don’t really miss it from the bonus then once you max, every single paycheck for the rest of the year goes to you which feels great
I would be cautious with the answers on here. Most people on here don’t have responsibilities beyond taking care of themselves and building their own future. What is your living situation? I max out 8% but that’s because I’m a first year analyst in the process of building my 6 months emergency fund (close to $24k) before I start dumping cash into indices later this year. Just cleared my student debt (~$18k). I also take care of my parents and terminally ill grandparent so that’s at least $2k per month.
You shouldn’t have cleared the debt lmao. Don’t be one of the old guys complaining when student loan reform comes down the line. Writing was on the wall.
Again, you’re making a lot of assumptions and don’t know my situation. Not everyone has federal loans. I didn’t qualify because of my DACA status.
Max out if you don’t have any student loans.
No you should still max out over student loans. I’m the guy doing the 40% contributions above. About just under 50k in debt, better off letting that money grow and put the absolute minimum toward the loans if you have to. It’s highly likely there will at least be some form of forgiveness or interest cuts in the future you need to take advantage.
Sorta dumb question, but as a first year, I'm trying to backload to get as close to the max as I can for a roth 401k this year. Say my bank matches 4%, will I get up to 4k matched in the year no matter when I contribute or did it have to be spread across the year and it would have to be 4% of each paycheck to get the whole 4%?
First off the matching is for Traditional 401k not Roth 401k.
And yes for the match it has to be the 4% throughout the year. It can’t be all at once or compressed into a few months for matching. You should still contribute as much as you can but I’d recommend traditional 401k over Roth since you already have Roth exposure from your IRA and you want to get that tax deduction.
I'm pretty sure you can still contribute to a roth 401k and get the match, but the matched amount itself will be in a traditional 401k, but correct me if I'm wrong. Also don't see the benefit of a traditional 401k for this year. With only half a year of salary + signing bonus, my AGI for the year will only be about $60k, and (hopefully) won't ever be lower, so it seems like the best time to pay taxes upfront and get tax free growth rather than getting the tax deduction on $60k income. Of course after having full year of income + bonus starting next year, will switch over to a traditional 401k.
Are there certain requirements at some banks in order for your 401k matching to vest? Are there some banks where you need to be there for more than 2 years in order for you to get your matching contributions?
Yes a lot of banks make you complete your 2 year period for you to keep your signing bonus and 401K match, but apparently PE firms recently offering jobs to 1st years have bought out the signing bonus and 401ks the analysts would lose for leaving early
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