How much is optimal to have in 401K when retiring?

[lovin'fl]

We are shooting for 2 Mil since we aren't counting on SS to be there. If it is great, but we feel it is better to be prepared if it isn't.

Same with us.

 

[bdcp]

https://www.msn.com/en-us/money/ret...mistake/ar-BBIu5S1?li=BBmkt5R&ocid=spartanntp

I can tell you what is not enough - Saw this article today. "When it comes to retirement savings, Americans are falling short. According to a report from the Economic Policy Institute, the median retirement savings of all working-age families, which the EPI defines as those between 32 and 61 years old, is just $5,000." Crazy, but I know so many live paycheck to paycheck and they just don't see anyway to save and then you have those that spend, spend spend never thinking about the future. Scary.

That's simply crazy. My two DS (32 and 34) both have a lot more, like 30-50 times as much. Heck, even when DH and I lived paycheck to paycheck because I was home with our boys, we put $25/month into a mutual fund and then later put 9-10% of DH's salary when he had a co matched 401K and I did 9% when I went back to work. With matching, my 9% is actually 15%. We did it from day one so we never knew any different. A lot of people think that the gov will take care of them (SS). What so many don't understand is if you have a 401K that you can put pretax money into, the offset usually makes up for the difference and you don't see less money in your paycheck when you do your taxes. Even putting only 1-2% away per year is better than nothing. So many don't get the "pay yourself first".

 

[Dakota731]

I wonder what OP and spouse would do with all their time if they retire in their forties? I have several friends who are teachers (who in our state can retire with almost full pay and Heath benefits at age 57) who were bored after the first few months of retirement especially during the winter months. Every one of them has found a part time job except one man who sits in front of his tv all day long. Maybe poster just need to look for a new career that fulfills her more instead of trying to retire so young. You could live fifty more years so why not be productive and challenged

 

[tvguy]

I wonder what OP and spouse would do with all their time if they retire in their forties? I have several friends who are teachers (who in our state can retire with almost full pay and Heath benefits at age 57) who were bored after the first few months of retirement especially during the winter months. Every one of them has found a part time job except one man who sits in front of his tv all day long. Maybe poster just need to look for a new career that fulfills her more instead of trying to retire so young. You could live fifty more years so why not be productive and challenged

It is interesting that the typical retirement age is dropping, while life expectancy is rising.
It is an issue for employers who offer pensions, because more and more people are living long enough to earn more in pension benefits than they made when they were working.

 

[Hikergirl]

I wonder what OP and spouse would do with all their time if they retire in their forties? I have several friends who are teachers (who in our state can retire with almost full pay and Heath benefits at age 57) who were bored after the first few months of retirement especially during the winter months. Every one of them has found a part time job except one man who sits in front of his tv all day long. Maybe poster just need to look for a new career that fulfills her more instead of trying to retire so young. You could live fifty more years so why not be productive and challenged

They could do whatever they wanted.
Why would you care what someone does if they choose to retire early? Not everyone needs to work or have a career to be productive.
What an odd thing to post.

 

[tvguy]

They could do whatever they wanted.
Why would you care what someone does if they choose to retire early? Not everyone needs to work or have a career to be productive.
What an odd thing to post.

Not odd at all. I know a lot of folks who retire and are lost and go back to work. However, I hope NOT to be one of those people.

 

[Hikergirl]

Not odd at all. I know a lot of folks who retire and are lost and go back to work. However, I hope NOT to be one of those people.

I think it is odd for the pp to suggest that if you retire early you won't be productive and challenged, and that maybe the OP just needs a new career to be so.
Not everyone that retires early spends the rest of their life sitting on a couch watching TV.

 

[tvguy]

I think it is odd for the pp to suggest that if you retire early you won't be productive and challenged, and that maybe the OP just needs a new career to be so.
Not everyone that retires early spends the rest of their life sitting on a couch watching TV.

Well maybe. But like I said, certainly not odd in my experience. Retirement isn't for everyone.

 

[Hikergirl]

Well maybe. But like I said, certainly not odd in my experience. Retirement isn't for everyone.

There are no maybes about it. You don't have to have a career and make money in order to be productive.
You clearly are missing the point.

 

[rkstocke5609]

There are no maybes about it. You don't have to have a career and make money in order to be productive.
You clearly are missing the point.

Absolutely true. One could volunteer time helping the homeless ,for example , and that would be productive.

 

[tvguy]

There are no maybes about it. You don't have to have a career and make money in order to be productive.
You clearly are missing the point.

No, I agree. I think you misunderstood what I was trying to say. Some people retire and don't find it to their likely. Not sure feeling productive is the issue, they just need the structure work provides, or companionship of co-workers.

 

[Hikergirl]

No, I agree. I think you misunderstood what I was trying to say. Some people retire and don't find it to their likely. Not sure feeling productive is the issue, they just need the structure work provides, or companionship of co-workers.

I guess I am misunderstanding why you quoted my post then

I know retirement isn't for everyone, my FIL will never retire, and I don't see my dh really retiring either.
However that isn't what the pp I quoted meant, she questioned why the OP wants to retire and that she may just need a career change, and stated that the she still may have 50 years so why not be productive and challenged.

That doesn't read -some people just find retirement doesn't suit them. It reads why would you retire early when you still can work and be productive for another 50 years. I'm "arguing" that continuing to work and being productive are not mutually exclusive. I would even argue that people who don't find retirement to their liking can and probably do find ways to be productive that still don't include a paying job.

 

[Nebraska_Disney]

I have an "to the audience" type of question, especially those who are relying on pensions. What happens to those promised pensions it seems many are relying upon when they are no longer viable for the companies promising the payouts? I know there is a government program that takes over if a pension for a private company goes bad, but you also don't get but a fraction of what was promised to you. I also know that the government program which does all of this is maxed out currently. I don't want to be a fear monger, but I am also a realist. If all these companies which are still offering pensions and promising $X,XXX dollars a month in retirement can't meet these obligations, those counting on them better have a plan B in place. It could/can/will happen to any company out there, time has shown that.

Curious to hear other people's thoughts on this.

 

[tvguy]

I have an "to the audience" type of question, especially those who are relying on pensions. What happens to those promised pensions it seems many are relying upon when they are no longer viable for the companies promising the payouts? I know there is a government program that takes over if a pension for a private company goes bad, but you also don't get but a fraction of what was promised to you. I also know that the government program which does all of this is maxed out currently. I don't want to be a fear monger, but I am also a realist. If all these companies which are still offering pensions and promising $X,XXX dollars a month in retirement can't meet these obligations, those counting on them better have a plan B in place. It could/can/will happen to any company out there, time has shown that.

Curious to hear other people's thoughts on this.

No pension here. My retirement will be my IRA's and 401ks , Savings and Social Security as a supplement. My wife's Grandfather had a pension from a company that went bankrupt. No government program stepped up, he lost 100% of that income and was left with Social Security and savings.

 

[laceltris3]

I have an "to the audience" type of question, especially those who are relying on pensions. What happens to those promised pensions it seems many are relying upon when they are no longer viable for the companies promising the payouts? I know there is a government program that takes over if a pension for a private company goes bad, but you also don't get but a fraction of what was promised to you. I also know that the government program which does all of this is maxed out currently. I don't want to be a fear monger, but I am also a realist. If all these companies which are still offering pensions and promising $X,XXX dollars a month in retirement can't meet these obligations, those counting on them better have a plan B in place. It could/can/will happen to any company out there, time has shown that.

Curious to hear other people's thoughts on this.

I think that nowadays there are car more cash balance plans than those providing benefits based on the final years of earnings, which would be far more likely to become insolvent. I have had a cash balance pension at each of my employers, and vested in two of them, each paying a % of my salary each quarter, and a specified interest rate. For example, at one former employer, the plan pays a guaranteed 4% interest rate. I generally treat that money as the bond part of my savings, as the plan is fully funded and can make 4% on its investments sustainably. I still earn the 4% per year, even though I left the company years ago. Much the same thing with my current employer, but the % rate is based on a treasury note payment, and I am getting current contributions. Since cash balance plans pay out less, generally, and both plans are funded and guaranteed by the PBGC, up to reasonable maximum income limits, I am not worried about it. I don't "count" on the money, per se, or include it in my savings, but I generally will assess the amount when I am near retirement. After the great recession, I have decided to take out some of that pension money as an annuity. While you can generally earn more in an IRA and pass it down, I see the value in having some guaranteed lifetime income that supplements social security, that could reduce the need to deplete assets in a down market.

 

[runwad]

I have an "to the audience" type of question, especially those who are relying on pensions. What happens to those promised pensions it seems many are relying upon when they are no longer viable for the companies promising the payouts? I know there is a government program that takes over if a pension for a private company goes bad, but you also don't get but a fraction of what was promised to you. I also know that the government program which does all of this is maxed out currently. I don't want to be a fear monger, but I am also a realist. If all these companies which are still offering pensions and promising $X,XXX dollars a month in retirement can't meet these obligations, those counting on them better have a plan B in place. It could/can/will happen to any company out there, time has shown that.

Curious to hear other people's thoughts on this.

We have pensions and you are absolutely right! That is why I save like crazy in my 401k and dh puts $ in his deferred comp. Hence us probably having more $ in retirement than we do now. If the pensions go bye bye then between 401k @ deferred comp and ss we'll have enough. We have no debt everything is paid off. I'm 51 and dh is 53. I've always been paranoid about being poor or a burden in my old age, so I made it a priority not to be!

 

[laceltris3]

We have pensions and you are absolutely right! That is why I save like crazy in my 401k and dh puts $ in his deferred comp. Hence us probably having more $ in retirement than we do now. If the pensions go bye bye then between 401k @ deferred comp and ss we'll have enough. We have no debt everything is paid off. I'm 51 and dh is 53. I've always been paranoid about being poor or a burden in my old age, so I made it a priority not to be!

I just want to point out that your deferred compensation may be less secure than a pension. A plan participant is generally an unsecured creditor of the employer who would get wiped out in bankruptcy. I know many people who have had large sums wiped out by an employer bankruptcy. A pension is generally secured by the PBGC and funding requirements.

 

[runwad]

I just want to point out that your deferred compensation may be less secure than a pension. A plan participant is generally an unsecured creditor of the employer who would get wiped out in bankruptcy. I know many people who have had large sums wiped out by an employer bankruptcy. A pension is generally secured by the PBGC and funding requirements.

My dh works for a county government. How can that money be taken? It is his money he contributes from his pay...kinda like a 401k but no match...but can be invested in the market.

 

[laceltris3]

My dh works for a county government. How can that money be taken? It is his money he contributes from his pay...kinda like a 401k but no match...but can be invested in the market.

Public employment is different than private employment, obviously. With public employment, I agree that deferred comp is more secure than a pension.

ETA At a company, deferred compensation is only a promise by your employer to pay you back in the future. You are not at the front of the line if the company is insolvent. Most people think that their employer could never go bankrupt, but things can turn quickly.

 

[runwad]

Public employment is different than private employment, obviously. With public employment, I agree that deferred comp is more secure than a pension.

Thank goodness you were making me nervous!