401K set up advice

Discussion in 'UPS Retirement Topics' started by Cincypackagehandler, Jan 15, 2014.

  1. Okay so I'm 22 years old and have been with UPS for 4 years now and I wanna set up my 401K. I logged onto UPSERS and looked at it a couple weeks ago but was confused with exactly what plan would be best for me and I was confused how to do it. Also, does UPS provide any type of 401K match? Any advice would help. Thanks.
  2. Future

    Future Victory Ride

    Dump all your money into soy. Heard its going to boom soon!
  3. UpstateNYUPSer

    UpstateNYUPSer Very proud grandfather.

    No match.

    Check out the Bright Horizon Fund closest to your projected retirement year.
  4. Wally

    Wally Hailing from Parts Unknown.

    No on the match. Stock plan is discounted though.
  5. browndingo

    browndingo Member

    You didn't say if you were hourly or PT management. There is a match for PT management, made in UPS stock. UPS has changed the limit on the management match over the years and even gotten rid of it at times. Currently there's a match.

    Picking funds for your 401K depends on how much risk you're willing to take. You are not guaranteed that your money is going to gain value - you can even lose money, as most of us did a few years ago. It's always a good strategy to mix types of investment.

    As a general rule, many people take on more risk when they are younger, then when they get closer to retirement they move their investments into safer territory. It has to do with time - over the long run, most funds are going to increase in value. Riskier funds will go up and down a lot more in the short term, but you don't have to worry about that as much when you're 22 because you're holding on to that savings for 40+ years. When you're in your 50s, though, you'll want things to settle down so you have a better idea of how much you can count on drawing once you retire.

    The Bright Horizon funds that Upstate mentions are funds that will do this investment shift for you automatically. They will put your money in riskier investments when you are young, then gradually move them into safer ones as you approach retirement age. You choose the fund that is dated closest to the year you want to retire.
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  6. Jackburton

    Jackburton Gone Fish'n

    Along with the previous advice, I'd do two more things. I'd opt to do the ROTH 401k option as all your gains will be tax free, and as a young whatever you are, your tax rate is most likely nothing now anyways. It's a pay me now (Roth401k) vs pay me later (Traditional 401k) where your contributions and gains are tax deferred. I do t know about you but I don't want the government leeching even more off my success as I get older.

    The second thing you should do is look into the different funds available. As said previously, you can do the retirement date based scaling system, the Bright horizon fund, it's a set it and forget it. Or you can do a little research on the other funds like Russell 2000, S&P 400,500, REIT, and International. If you click the actual fund it will show you what the fund consists of, (ex 2.4% APPL, 2.1%GMR, etc. it will also show you the past performance and give you a basic idea of who the fund is geared for (ex "this fund is for moderate to longer term investors consisting of small and medium cap stocks)

    Regardless of what you decide to do, you're well ahead of your peers that have decided the Sizzler is more important than saving for retirement.
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  7. Brownslave688

    Brownslave688 You want a toe? I can get you a toe.

    Ok the only think I have not seen mentioned is an IRA. If you're not sure ups will be a career for you I would consider putting your money into an IRA over the 401k.
  8. PT Car Washer

    PT Car Washer Well-Known Member

    And why not do both?
  9. Brownslave688

    Brownslave688 You want a toe? I can get you a toe.

    If you have the money to do both hell yeah. I was just assuming as a part timer the OP would likely put under $5000 a year in.
  10. Thanks guys! I ended up getting a Roth 401K and I did the Bright Horizon fund for 2045 when I hope to retire. I really dont understand all of this but I wanted to get a somewhat early start so hopefully that pays off in the end.
  11. brett636

    brett636 Well-Known Member

    No match as already stated. Get started here
  12. brett636

    brett636 Well-Known Member

    Smart move on the roth as well as getting an early start in life. Every one of has the potential to retire a millioniare if not a multi millionaire if we just save a little bit over the longest time span possible. Getting started at 22 will put you on that path.
  13. UpstateNYUPSer

    UpstateNYUPSer Very proud grandfather.

    Good choice on both the Roth and the BH. 2045? Wow---that just seems to be so very far away.

    I will be retiring in 2019 but choose the BH 2025 rather than the 2020. Why? BH investments tend to be aggressive at first and then become more conservative the closer you get to the target date. I chose to go with the 2025 over the 2020 as I prefer my investments to be a bit more aggressive.
  14. Richard Harrow

    Richard Harrow Deplorable.

    Congratulations on being responsible enough at 22 to think about your future. I was also 22 when I started my 401k. Some things I learned then and more recently that may be of help to you:

    As ChickenLegs said, direct funds towards the Bright Horizon fund that's closest to the year that you hope to retire.

    The S&P's and the Russell 2000 are good bets, they are what I've made a lot of my own gains on.

    Don't waste your time with the REIT's. Not for a while at least.

    The company does not match your contribution, but do deduct as much as you can. The government is not taxing this money (yet), so think of it as them paying you to save money.

    Don't waste your time with the discounted UPS stock plan. The discount is only 5%, and on the final day of the quarter before the purchase, the company buys back stock, driving up the price and in turn lessening the amount you'll purchase.
  15. 104Feeder

    104Feeder Phoenix Feeder

    Fairly solid advice so far and congratulations on getting started so early. You didn't say what percent you decided to contribute, so let me suggest that you start with at least 5% and see how big of a hit your weekly check takes. Since you are doing the Roth you will feel every dollar but when you won't be taking the tax hit later. Then increase that percentage by 1% every six months until you get to at least 15%. If you feel a pinch just decrease it awhile then slowly build it back up. I would bump mine up every time we got a raise so I didn't feel it.

    The Bright Horizon is great, but I would allocate at least 30% there and do the rest in the S&P 500 and 400 Midcap funds. Generally this would be too much exposure in stocks but you have 23 years before you retire and 37.5 years before you can withdraw money from your 401k. Plus, you have a nice solid pension to draw from which is guaranteed money so, in my opinion, you can take on more risk in your 401k.

    Don't sweat market downturns or get overly excited about upturns. You'll do fine over time. And don't take any loans out from your 401k even for a house!
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  16. BlackJack616

    BlackJack616 Active Member

    I recommend a Roth IRA and a 401k.... I have one via Vanguard investing in the target target retirement fund...My remaining cash either goes towards a mortgage or index funds.
  17. What'dyabringmetoday???

    What'dyabringmetoday??? Well-Known Member

    Contact a professional.(opposite of these people)
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  18. Monkey Butt

    Monkey Butt Obscured by Mirrors Staff Member

    And if you go that route, go ONLY to a fee-based professional.
    A professional offering you free advice is worse than any advice you get on here.

    I personally try to pass on info I receive from my fee-based professional and his explanations why I should put my money here and there.

    There have been studies ( google Jeremy Siegel) that show over the last 80 years that there is no better place to put your money than stocks if you are not going to need that money for 17 years.
    Other studies have shown that the best net ROI (return on investment) is Index funds of which the new ETF fund stocks is an example.

    The advice that Upstate gave you and which you appear to have implemented is a very sound approach at this point in your life.

    A professional's advice $500 - 2500 will only erode your investments at this point.
    Once your nest egg gets to be over $500k, then spending the $1000 for a professional makes sense.
  19. Jones

    Jones fILE A GRIEVE! Staff Member

    If I were going to put all my money in one fund and leave it there for 20+ years it would be the S&P 500 because it has the lowest expense ratio of all the funds available at .01%.
    The Bright Horizon funds have the highest expense ratios at .1%, 10X more that S&P 500.
    By the time you have 500k you would be paying $500 per year in fees on the BH fund vs $50 per year on the S&P 500. Just something to think about.
  20. oldngray

    oldngray nowhere special

    S&P 500 has been one of best investment choices for many years. It is possible to get better return but not easily and only with a lot more effort and risk.