Curious to know how much everyone invests from their paycheck into their 401k. Do you only invest up to the match? Or do you max out your 401k contribution?
Also, how much does your company match of your 401k contribution?
Weighing a couple of offers and interested to see what the market is on this. Thanks!
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I contribute up to the match and that’s it. We don’t have a great option for what we can invest in. So take the free money. We also have an optional HSA which I max. Then I have a brokerage account and HYSA I have some of my paycheck automatically go into.
When I was young and not making much, I just did the match. Once I made more money, I maxed it out.
I max it out. The tax savings on 35 years worth of investment is significant.
I think there are two ways about it- either you are making enough that the $23k contribution limit is just a small portion of your savings, or you aren't yet making enough for it to be a small portion in which case the long-term tax savings is even more significant of a benefit.
If you work in investment banking, even as a first year, there is zero reason you should not be maximizing your 401k. Literally zero. Forgo something else in your life, but never your retirement.
You need to be putting 23k into the 401k irregardless of match. Match is typically 5% of eligible pay, plus extra matching if you are an executive or long tenured employee. Thats what I’ve seen at all my places of employment.
You also should be maxing out your HSA, and putting away 6.5k a year in a backdoor Roth IRA.
I don’t care if you have student loans or debt or a loser family member you have to support. You max out 502k and HSA and Roth IRA AND then you figure out how to pay for life. Just pretend these savings are part of your paycheck and you don’t earn as much as you think.
And in the event of some crazy emergency, all of this money can be accessed. It’s not like it trapped forever or something. The power of tax free growth is insane, but of course this basic concepts eludes most Americans.
What about if trying to save for a home? Are you putting off a home purchase until you have saved enough after maxing out 401k?
Smoke Frog has previously said that he has received parental/ in-law help with down payments, so saving for a house probably isn't as applicable to him as it is for you or me.
Honestly, I would still max out 401k anyway just because interest rates are so high right now, so buying a home and making payments is tough and as long as the bull run continues, you'll come out far ahead by investing in the market.
Yes I think retirement comes before anything. And if you actually work in high finance, 401k and Roth IRA saving should be very easy to max out.
As the smart Alec below mentioned, I did get family help to buy my apartments, but as usual he gives you no context, so I will.
My main/primary apartment in nyc is a 2 bedroom condo. It cost 2mm and the down payment was 400k plus another 100k to cover closing costs and mansion tax and transfer tax and 6 months reserves. I got 100k from dad and 100k from wife’s dad. That means I had to personally put up 300k myself. If I had losers for parents, guess what? I’d just buy a smaller or less desirable apartment.
My point is that there is no excuse not to max out your retirement as an investment banker. He’s trying to say not to listen to me because I can easily save for retirement because my family buys me everything. But the truth is I could have still bought my own place, it just wouldn’t have been as nice.
Try to think of your retirement savings as mandatory taxes you must pay. You can’t forgo paying federal income tax right? Think of your 401k and Roth IRA as the same mandatory payment, but instead of paying the government, you are paying yourself.
I believe my advice is sound, and the flak I receive is unwarranted or from thin skinned kids with no real life experience, but you decide for yourself.
If you have the compensation level (I’d say $150k+ if not in a VHCOL, $200k if in NYC or SF), always max out your 401(k). Go play with one of those retirement calculators and you will see that if you do that you’ll be 99-100% likely to hit your “retirement goal” on a typical timeline if you start in your 20s. Crazy not to take advantage of that opportunity. Everything else on top of that (taxable account, real estate investments, etc) then becomes your roll of the dice to a wealthier or earlier retirement, whichever you prefer.
My firm matches 4% but you need to put in 6% to get the full match.
I do up to the 401k match and max out my roth IRA every year
Some good points brought up here. For background, I’m $130 base, 10-30% bonus, no promote yet. By the time I pay rent, pay car payment (my last year), pay modest student loan, max 401k, auto transfer to my brokerage, I live a comfortable life and go out with friends. I am not able to afford large vacations $1500-2500 yearly. I bank the vast majority of my bonus.
On paper it sounds like I’m doing the right things, but my taxable acct has like $30k in it. I feel like I’m never going to be able to afford a home. Am I doing something wrong? Am I alone here??? This is not a complaint rather just seeing who is in same boat.
No, that is unfortunately called "the reality of life in 2024." Entire generations of people won't be able to afford to buy homes remotely close to major metros. That's how we can charge $2.00/sf-$4.00/sf rent and keep churning out apartment developments - people make plenty of money, but no one has $200k-$400k for the downpayment.
The good news for you is, you're in an industry with enormous income growth potential. That $130k becomes $180k, then $225k, etc. You pay off your car and get a big check and pay off your student loans, freeing up $1000-$2000 per month. You get another big check and save most of it. You marry intelligently and your wife brings in six figures as well instead of sitting at home doing nothing or "being an influencer." You get another big check. Now you have $200k-$400k for a downpayment and can easily afford the mortgage.
It sucks, and I've been living it all my professional career, but it's useful to remember that you personally have a route to success. The rest of your and my generations only bringing home $60k-$80k a year? Going to be lifetime renters or they'll move to Topeka, Kansas.
Cheers bro. Not feeling like as much of a schlup anymore. Sure as hell will be nice when I can make that down payment…
How do we get them to work hard if they were working hard and now just follow half baked harvest all day?????
Only match which is 4%
Like others have said - max 401k 1st. Not just company match - the entire $23k or whatever it is. Your company match is on top of the $23k contribution limit. Literally this should be prioritized above all else - when contributing in your 20s and 30s, you get like 4-6x on your money when youre 60 assuming like 7% annual returns.
Then do Roth next. After that, if you have an HSA then load that up. After that, think about 529 if you have kids or will have kids in future. Brokerage last IMO - paying taxes blows
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