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

[Nebraska_Disney]

A pension is generally secured by the PBGC and funding requirements.

That is great as long at PBGC is solvent and from what has happened in the last decade, that may not be the case or you are going to get pennies on the dollar of what you were expecting.

 

[Mrs. Ciz]

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.

You just described my DH's football coach friend. He worked as a truck driver his whole life and has just retired. He has no children, and his wife, whom he married late in life, passed away 2 years ago. He told my husband his social security is not enough to pay all his monthly expenses. He is $69 short each month BEFORE he's even bought groceries. He's been making ends meet by taking the difference out of the $5000 IRA he has. But that's ALL he has, and it will soon be gone! He is panic stricken and is looking for some kind of job so he can eat. Seeing it play out has made DH crazy about saving more for retirement. We only have about half of what we are going to need at this point because I was a stay at home mom/part time worker for 16 years. Now I'm full time and trying to catch up.

 

[chicagodisneyfan]

DH and I are in our 40s (44 and 49) and are aiming and on track to have 3.5 million.
Not counting on SS being around, or if it is - I think it may be means tested - so again, not counting on it.

 

[Action City]

Don’t look at your 401k today.

 

[tvguy]

Don’t look at your 401k today.

Down $15,000 in past week. But, not counting contributions, after this weeks losses, still up $80,000 from January 2017.

 

[Dakota731]

Down $15,000 in past week. But, not counting contributions, after this weeks losses, still up $80,000 from January 2017.

We are up $90,000 since January 2017 so I’m not complaining either! It’s a long term investment and we’ve made more this year than in the past five so I’m optimistic.

 

[Dakota731]

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

If public employees’ pensions are short, taxpayers are just taxed more. When a private company goes bankrupt sometimes the employee only gets pennies on the dollar for their pension.

 

[kymom99]

If public employees’ pensions are short, taxpayers are just taxed more. When a private company goes bankrupt sometimes the employee only gets pennies on the dollar for their pension.

Well I have to disagree. I am receiving a teachers pension and it is currently not fully funded. They are working on a pension bill that will strip our prepaid COLA, health insurance, all kinds of things.

 

[amcnj]

Well I have to disagree. I am receiving a teachers pension and it is currently not fully funded. They are working on a pension bill that will strip our prepaid COLA, health insurance, all kinds of things.

This is true. I know my state suspended cola's for state pensions some years back. They also raised state employee pension contribution rates and health care contributions. And from what I have read are also looking at health care reform to further help with the pension shortfalls.

 

[laceltris3]

If public employees’ pensions are short, taxpayers are just taxed more. When a private company goes bankrupt sometimes the employee only gets pennies on the dollar for their pension.

Public employee pensions can be altered by the government. This can impact benefits accrued in the future. Sometimes the hole is too big to fund with taxes. Municipal bankruptcies are rare, but not impossible.

Private employee pensions are not in general company assets that can be used to satisfy creditors. There are funding requirements. Even a bankrupt company generally has plans that are 70% plus funded, and can pay out that % of benefits. Usually the government steps in mand mandates companies fund the plans before things get too bad, presuming the company is solvent at the time. You might not get everything, but it is certain to be more than pennies on the dollar, because a company will go under long before that happens. ERISA is a comprehensive regulatory scheme the purpose of which is to secure employee retirements.

Multi-employer plans are in pretty rough shape, but that is often because of the impact of labor union negotiations.

 

[DisneyEater]

Simplest rule is 25x-30x of expenses. Income has nothing to do with what you will need in retirement.

 

[disneymagicgirl]

Simplest rule is 25x-30x of expenses. Income has nothing to do with what you will need in retirement.

So for example...to clarify...

You have $10k/mth goal in retirement (expenses and discretionary)

$10k/mth x 12mths = $120,000
120k/yr x 30 = $3,600,000 in retirement

Is that correct?

 

[DLgal]

So for example...to clarify...

You have $10k/mth goal in retirement (expenses and discretionary)

$10k/mth x 12mths = $120,000
120k/yr x 30 = $3,600,000 in retirement

Is that correct?

Yeah, pretty much, although you have to take inflation into account too. $10k/month in today's dollars doesn't buy the same amount as it will in 30 years...

This is a pretty good calculator:

https://www.bankrate.com/calculators/retirement/retirement-calculator.aspx

Set inflation to 2.5% (historical average)

 

[Dakota731]

Well I have to disagree. I am receiving a teachers pension and it is currently not fully funded. They are working on a pension bill that will strip our prepaid COLA, health insurance, all kinds of things.

Depends where you live. Our school board always votes with the teacher’s union so our property taxes go up big time every year. We live in a middle class suburb and houses in our neighborhood pay between $8000/$10000 a year for school taxes!

 

[kymom99]

Depends where you live. Our school board always votes with the teacher’s union so our property taxes go up big time every year. We live in a middle class suburb and houses in our neighborhood pay between $8000/$10000 a year for school taxes!

You are talking about local tax money for the local school districts. State taxes pay for the retirement programs.

 

[My3kiddos]

My rate of return went down 7% since last week

 

[rkstocke5609]

Depends where you live. Our school board always votes with the teacher’s union so our property taxes go up big time every year. We live in a middle class suburb and houses in our neighborhood pay between $8000/$10000 a year for school taxes!

Inspiration for one of those “Tiny Houses”

 

[rkstocke5609]

You are talking about local tax money for the local school districts. State taxes pay for the retirement programs.

Well, if the state of CA defaults on their govt pension obligations (which could happen) then this conversation could get real interesting. I just had a friend get screwed by an employer he works for buying out their union contract. He had two years away from his 30. No options to move somewhere else at this point..

 

[tvguy]

Well, if the state of CA defaults on their govt pension obligations (which could happen) then this conversation could get real interesting. I just had a friend get screwed by an employer he works for buying out their union contract. He had two years away from his 30. No options to move somewhere else at this point..

Most if not all public employee unions in California has it written in their contracts that the state agency employees work for must make up any pension shortfall. Given the Budget surplus in the Golden State, not likely ever to happen.

 

[kymom99]

Well, if the state of CA defaults on their govt pension obligations (which could happen) then this conversation could get real interesting. I just had a friend get screwed by an employer he works for buying out their union contract. He had two years away from his 30. No options to move somewhere else at this point..

It's already happening here.