So after a long time I have paid off all my debt but my car and house. So now ready to start with 401K. So there are 2 options now. I only have 20k in the standard. So Is Roth better to put the money in. Sure wished I had planned better earlier. I can retire in 12 years but that's not going to happen.
Roth or normal 401K
- Thread starter rowan
- Start date
Brownslave688
You want a toe? I can get you a toe.
I prefer the Roth. Simply because (if the laws stay the same) I don't have to figure in future taxes or anything. What I see in my account is what I can pull out. Only have to worry about inflation.
It all comes down to your tax bracket in your retirement? Are you a driver? Are you currently working a crapload of overtime and making around 95k as a driver? You are getting killed on taxes.
If you only have 20k and you are around age 50 then you are way behind on retirement savings and will not be close to having a high tax bracket retirement. Skip the 401k roth and max out your regular 401k and save on the tax hit now since your retirement income will be lower.
You can always open a Roth outside of the 401k if you can swing it?
The Teamsters pension in 15 to 20 years is icing on the cake. Plan on it not being there just to be safe.
If you only have 20k and you are around age 50 then you are way behind on retirement savings and will not be close to having a high tax bracket retirement. Skip the 401k roth and max out your regular 401k and save on the tax hit now since your retirement income will be lower.
You can always open a Roth outside of the 401k if you can swing it?
The Teamsters pension in 15 to 20 years is icing on the cake. Plan on it not being there just to be safe.
Yes a driver age 39. Getting around 50 hrs a week. I have said in a a different post I'm only putting in 1 percent. Going to try and pay car loan off as soon as possible than ill go higher. I had way to many credit cards and so the plan I am on said to pay those off first. So I'm working saving for a emergency fund. Just had to get tires for my car 600.00 GONE. Seems like every time I get a little bit saved boom need something else.
Are you doing Dave Ramseys Financial Peace University plan? If you have all your credit cards payed off and just your car loan left I WOULD INCREASE YOUR 401k contribution to atleast 15%. PAY YOURSELF FIRST!
At age 39 you actually have time to save. But 1% will get you nowhere.
You are young enough to put some contributions in the Roth 401k. I would do both the regular and the Roth at age 39.
Go to the 401k website and change your contribution rate. You can change it anytime to see how it effects your take home pay.
Brownslave688
You want a toe? I can get you a toe.
Yeah at 39 I would bet u have 20 years left. That may not be your plan but averages say you'll work to almost 60. Our last retiree was 67 I think. I'm not trying to put u down but with 50 hours a week your looking at close to 95k a year. You should be able to put in 10-15% pretty easy. There are things that can make that hard. Single parent, high cost of living city, many kids, alimony. Your behind but u have plenty of time ahead also. Might I suggest start with a percent your comfortable with ex 10%. Then kick it up with every raise. My paychecks have been stuck around $1000 a week for 4-5 years because all my raises go to retirement.
Cool thanks for all the advice. Yes I'm on Dave Ramseys plan. Took a while but no credit cards. Sure was easy just to say charge it for so long. Now that I cancelled them, wow you have to plan a lot better. Just to put this out there. I'm maried 2 kids 6 and 13. I make good money but it never seems to be enough. Kids alwyas need stuff. House needs new roof, siding, upgrades. So on and so on. Don't want to sound like I'm complaining. I'm very thankful for the job I have.
This is good advice.
Sorry double post
Dave Ramseys plan is great. I listen to him everyday. But for me I dont stop funding retirement while paying down debt because YOU CAN NEVER GET THE YEARS BACK THAT YOU DIDNT SAVE FOR RETIREMENT.
You have the credit cards done which is huge. I would do 15% and see how your take home pay looks.
You have the credit cards done which is huge. I would do 15% and see how your take home pay looks.
kingOFchester
Well-Known Member
I equally fund my roth 401k and the regular 401k. Also have a "profit share" IRA account for my business that is also split between a roth and regular. The way I see it, I do not know what the future holds. What laws will be changed. What tax bracket I will be in and what the percentages will be. By splitting it evenly I will not win, by will not loose. Its like deciding whether to be long or short with all my stock decisions.
See it as another diversification decision.
See it as another diversification decision.
BMWMC
B.C. boohoo buster.
Keep whatever savings you make off the books. No IRA's, 401k's, CD, or money markets. Buy gold and some silver bullion. The more money you have the more preferable gold is. Some platinum, palladium as well as cash in multiple safety deposit accounts and at your own home, hidden of course.
Why? The central banks have thrown a Hail Mary into the worlds financial system by printing and securing collectively 22 trillion dollars. Most of which was used to replace the decline in the shadow banking system and to shore-up the 700 trillion dollar derivatives market.
Its the "wealth effect" they where trying to accomplish. By re-inflation asset prices, stocks, bonds, real estate the rich would feel wealth spend and that would trickle down to the greater economy. It didn't work. The velocity of money is practically non-existent because it became a chicken and egg problem. The wealthy need to see demand to invest in businesses (not just play the paper trade on Wall St.) and the poor and working class need the jobs first before they can create demand.
This gigantic fiat money printing and sovereign debt stimulus has run its course and the world is no better for it other than creating huge asset bubbles just to have a pulse and yet STILL dependent on the machine. All this economic "growth" through money printing debt spending will have to either...
1, Stop growing through debt and money printing and with it credit expansion and because we are a credit driven economy, the rapid decline in the greater economy. This will start a negative credit sovereign debt cycle that will need more cuts in spending and increase in taxes that slow the economy even more forcing more rounds of cuts and taxed (see Greece) and on and on until default or revolution.
2, Keep printing and grow more debt to continue the make believe economy until the oil reaches $130 a barrel and gas is $5 and with that the global abandonment of the dollars as the worlds reserve currency. Then the real ugly truth behind the US household wealth, budget, debt and unfunded liabilities is seen by all.
You already have a pension, stocks, bonds, and social security that are wholly reliant upon the systems health. Having a 1/3 of you wealth in tangible liquid non-paper assets in this new new world we live in is a better choice. Soon its not going to matter what RETURN you get on your capital but a return OF your capital.
I didn't even mention how congress is going to fix Social Securities unfunded liabilities. Its call means testing. Anyone that has over $30k from any other source will see a gradual decline in SS benefits with $75K being the mark when all SS benefits are stooped. Believe it.
Why? The central banks have thrown a Hail Mary into the worlds financial system by printing and securing collectively 22 trillion dollars. Most of which was used to replace the decline in the shadow banking system and to shore-up the 700 trillion dollar derivatives market.
Its the "wealth effect" they where trying to accomplish. By re-inflation asset prices, stocks, bonds, real estate the rich would feel wealth spend and that would trickle down to the greater economy. It didn't work. The velocity of money is practically non-existent because it became a chicken and egg problem. The wealthy need to see demand to invest in businesses (not just play the paper trade on Wall St.) and the poor and working class need the jobs first before they can create demand.
This gigantic fiat money printing and sovereign debt stimulus has run its course and the world is no better for it other than creating huge asset bubbles just to have a pulse and yet STILL dependent on the machine. All this economic "growth" through money printing debt spending will have to either...
1, Stop growing through debt and money printing and with it credit expansion and because we are a credit driven economy, the rapid decline in the greater economy. This will start a negative credit sovereign debt cycle that will need more cuts in spending and increase in taxes that slow the economy even more forcing more rounds of cuts and taxed (see Greece) and on and on until default or revolution.
2, Keep printing and grow more debt to continue the make believe economy until the oil reaches $130 a barrel and gas is $5 and with that the global abandonment of the dollars as the worlds reserve currency. Then the real ugly truth behind the US household wealth, budget, debt and unfunded liabilities is seen by all.
You already have a pension, stocks, bonds, and social security that are wholly reliant upon the systems health. Having a 1/3 of you wealth in tangible liquid non-paper assets in this new new world we live in is a better choice. Soon its not going to matter what RETURN you get on your capital but a return OF your capital.
I didn't even mention how congress is going to fix Social Securities unfunded liabilities. Its call means testing. Anyone that has over $30k from any other source will see a gradual decline in SS benefits with $75K being the mark when all SS benefits are stooped. Believe it.
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So will the zombies be arriving before or after the collapse of the U.S. dollar and the subsequent replacement of gold coins as the new world currency?
Lets pretend BMWMC that your economic doomsday scenario plays out. If the world gets to this place WE WILL ALL BE SO SCREWED IT WONT MATTER.
The reality is that America will shut its borders down and become a complete protectionist state if we ever get to this place.
High income Americans might get means testing for SS but people with annual income under a million. Not gonna happen.
Lets pretend BMWMC that your economic doomsday scenario plays out. If the world gets to this place WE WILL ALL BE SO SCREWED IT WONT MATTER.
The reality is that America will shut its borders down and become a complete protectionist state if we ever get to this place.
High income Americans might get means testing for SS but people with annual income under a million. Not gonna happen.
justcrankn
Member
That doesn't make sense. I enjoyed paying down my mtge till it was paid off. Then I was free to put more into investments. The bigger pay back is not depending on my job for the mtge.
Back to the original question, I prefer the Roth. Like Brownslave described, you look at your account and WYSIWYG. Looking at future laws, rules, and tax rates is a wild guessing game.
It makes sense. My mortgage rate is only at 3.25%. Thats cheap money. Why would I hold off funding $17500 a year into my 401k if my gross income is close to 100k per year? I can live off 80k and still prepay on my house if I want. YOU CAN DO BOTH.
If you skip just 5 years on funding your 401k thats $87,500 that you didn't save and YOU CANNOT GET THOSE YEARS BACK.
Future Tax rates will be in the same ballpark. I am guessing you are on the young side? So do the Roth. Just remember your retirement income will probably be lower than your working income is now.
I would rather have around $1,000,000 in a 401k(with a low house payment) vs a paid for house(with a low balance 401k) because I cant eat the house.
Brownslave688
You want a toe? I can get you a toe.
Rural of thumb is usually if you can get more on returns than what your interest rate is put the extra money into savings.
Example. You have a 5% mortgage. Your average yearly retirement return is 8%. It makes more sense to put your extra money into retirement because it will do more for you in the long run than paying off your mortgage.
All debt is not bad debt. If you lived a 100% debt free life for 50 years and then need a loan you might as well be an 18 year old fresh out of high school.
Example. You have a 5% mortgage. Your average yearly retirement return is 8%. It makes more sense to put your extra money into retirement because it will do more for you in the long run than paying off your mortgage.
All debt is not bad debt. If you lived a 100% debt free life for 50 years and then need a loan you might as well be an 18 year old fresh out of high school.
pretender
Well-Known Member
It makes sense. My mortgage rate is only at 3.25%. Thats cheap money. Why would I hold off funding $17500 a year into my 401k if my gross income is close to 100k per year? I can live off 80k and still prepay on my house if I want. YOU CAN DO BOTH.
If you skip just 5 years on funding your 401k thats $87,500 that you didn't save and YOU CANNOT GET THOSE YEARS BACK.
Future Tax rates will be in the same ballpark. I am guessing you are on the young side? So do the Roth. Just remember your retirement income will probably be lower than your working income is now.
I would rather have around $1,000,000 in a 401k(with a low house payment) vs a paid for house(with a low balance 401k) because I cant eat the house.
One painless way to do both is to do a monthly budget based on four weeks, and pay down your principal with your extra check in the months with five weeks.
kingOFchester
Well-Known Member
BMWNC,
I have some gold, silver and cash saved. I would never suggest putting 1/3 of my money into precious metals. If there is a total collapse of the Fiat, who is to say that bullion is going to be excepted by the public as a way to barter? Anything could be used.
Anything over 10% of your saving tied up in physical precious metals is a gamble at best. JMHO
I have some gold, silver and cash saved. I would never suggest putting 1/3 of my money into precious metals. If there is a total collapse of the Fiat, who is to say that bullion is going to be excepted by the public as a way to barter? Anything could be used.
Anything over 10% of your saving tied up in physical precious metals is a gamble at best. JMHO
BMWMC
B.C. boohoo buster.
10% used to be the recommendation but that's was before we saw an underrepresented, historic, and massive expansion of fiat money printing. That was then this is now. Holding gold. silver, or platinum is an insurance policy. The collapse of the fiat world is already happening and at this point it looks like a slow moving train wreck. When the dollar loses it reserve currency position and gold/oil/(insert another commodity here) are used for a new global asset backed reserve currency then having a larger share of gold to convert put you in the cat bird seat as everyone else is caught without a seat to sit in.
33% is the new 10%.
[video=youtube;dkQnP9OujK0]http://www.youtube.com/watch?v=dkQnP9OujK0[/video]
[video=youtube;uQrDyrzIel4]http://www.youtube.com/watch?v=uQrDyrzIel4#t=123[/video]
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