So will my 401K be there when I retire?

[Taverner]

I'm 40 exactly.

Have a several x 10 thousand in there now.

But when I retire, hopefully as soon as possible, will it be there? IN any substantial amount?

[Oceansaway]

1. depends on where its at.....

95% of mine is in a guaranteed interest account....

the other 5% is in my former company stock.....


i'm with Fidelity Investments

[leeroysphitz]

2. You get to retire?

[Common Sense Party]

3. Why wouldn't it be?

You say you're 40. Then you say you want to retire "as soon as possible." How long is that?

If you want to retire in two or three years, you're hosed.

If you want to retire in 25 or 30 years, you may be okay, depending on how much you're saving.

[Taverner]

5. 20-25 years is my goal

Pre SS, so that when the SS checks come in they're extra.

[haele]

4. You'll probably have what you put into it. And maybe some of the company matching funds...

But whatever's left of the interest over the years will probably get eaten by fees and inflation.
That's what has happened to my folk's 401K. They lost about 40% when the market crashed, which pretty much left them what they put in it.

Haele

[JoePhilly]

8. I don't follow you ...

I've been investing in my 401k for about 15 years. I've been maxing my contribution for about 10 of those years.

Each year, I get a tax break on any amount I put in the 401k. It comes out to be about 1/3rd. So if I put in 15k, I save about 5k in taxes.

Then, there is company match. For my company, they match up to 6% of salary. So that's another 5-7k at my pay range, added to the 401k each year.

So ... even if I ignore what the market does, the tax break saves me money, and the company match adds money.

Of course my contribution, and the company match are, depending on how I invest them, "at risk".

But let's say you put your 401k in the stock market starting in 2000. From then to 2006 the market runs basically flat, 10,500 to 12,000. So your gain is basically the tax break and the company match.

When the market spiked, you might have been thrilled. Then it crashed. And now, its right back at 10,800.

So, where are you now?

Well, if you held, you are fine. You maintained the tax break, you maintained the company match, and when the market fell, you contributions bought MORE then they did from 2001-2006. And now that the market is back to 10,800, your net 401k chart should be above where it was before the crash ... and note what I mean there is that, your now total passes above the crash ... its almost as if the crash never was.

So you are probably ahead of where you were before the market bubble and crash. Of course you could be WAY AHEAD. When the market jumped to 13k ... you could have taken gains in your 401k then (moved it all to cash or something similar) ... the crash would have passed over your house, and then you could have bought back in when the market hit say 8k (which was way too low). I have a story about a friend who did this in a big way.

But even if you missed that ... you are basically on the same path today that you were before the bubble and crash. Your 401k gets you a tax break, a company match, and the ability to be as timid or agressive as you choose to be. And your graph should be going up in a decent way.

[WestSeattle2]

9. It's amazing how many don't look at their 401's in this light - I

work in an office where almost all of us are in the low to mid six-figure income range, and a very, very small percentage participate in the deferred comp plan. Then, of course, most complain about their income tax rate. Huh? There is just an amazing disconnect for most Americans when it comes to finances. It's shocking really, especially for a society based on capitalism.

[JoePhilly]

11. Bingo ...

When you get up to around 6 figures ... or even 70-90k ... folks don't get this. They don't max the contribution, and they bitch about taxes. Probably because they never had money before.

I was a poor kid. And I remember when Reagan dropped the tax break for student loans and credit card interest. As a poor kid, accepted to an expensive private university, those were my only way to pay for college.

So that prick made it harder for a poor kid like me to go to college ... but a rich kid, who's family could shift debt structures around and get a tax break, say on home equity, they saved money.

I learned from that.

If you make money, they create tax breaks for you ... and if you ever get to the point where you can use those, do it.

I'm always amazed that income I now receive via stock dividend is taxed at a lower rate than income I make working.

That alone tells you what you need to know ... the GOP thinks that investment income is more important that income created through actual work. meanwhile, the GOP tells people who work hard (often people who have no idea about how stock dividends work), that those workers are the backbone of America.

What a LIE. The GOP protects income generated by WEALTH, not income generated by WORK.

Makes me scream.

[WestSeattle2]

14. Exactly! The systemic inequities in our society are breathtaking -

It's only because of the horrific levels of ignorance in this country, that people aren't marching in the streets. Most have no idea the extent to which they're getting hosed. Hell, most of the support for republicans comes from the very people they're hosing.

[JoePhilly]

17. Agree.

Folks who don't get the tax breaks that the rich get assume that its all even ... they have no idea.

[cbdo2007]

18. Your post will fall on deaf ears here. It's too complicated for the average DUer to understand.

I tried to explain dollar cost averaging here once and people thought I was a freeper. Someone said that if you invested in Microsoft 10 years ago, the price is the same now so you've not made anything. I went from the low end of the 2000 "crash" to recently and you actually would have made money with dollar cost averaging which is how every long term investor should invest. Oh well.

Also with the 401K, our company would match 50% of what we put in up to 6% of our income. So if I was only putting in $3,000 per year they were puting in $1,500. Automatic 50% gain every year not including the tax break. You're not going to get a 50% gain on most stocks unless you're really good.

[JVS]

6. 401k's never die, they just shrink into insignificance.

[doc03]

7. It's a crap shoot, at 40 they say to put a large percentage in

equities and ride out the bear markets. I turned 62 and retired this year I rolled my 401k into an IRA. I followed their advise and kept my portfolio allocations in line with my age. I guess I did a little better than I would have if I just stuck it in a CD but no way near what they said I would. I did really good in the 1990's but the 2000's were a washout. Unlike most workers today I was lucky to have a Defined Benefit Pension Plan and don't have to rely on the 401k for income for now. I expect I will have to start withdrawing in a few years to make up for inflation since my pension is not covered by a COLA.

[lonestarnot]

10. Yeah it'll be there, but it'll be in someone else's pocket.

:evilgrin:

[liberal N proud]

12. If you still have access to it, you might be able to retire

[cbdo2007]

13. Oh come on....now what makes you think you're going to get an honest answer about this on DU???

ha hahahaha. Of course 95% of the people here will say no in some sarcastic way, but of course it will have grown significantly still before you retire. Just keep doing it. Look at any record of the stock market over a 5+ year period and you'll most likely see large gains. The people here who think it's all a scam and is only for suckers and is just throwing away your money...are the same people who will be relying solely on SS when they retire and living out of a tiny trailer somewhere. I'm 33 now and wasted many years not understanding the stock market and everything and now that I do understand it, I'm kicking myself and working hard to catch up. Luckily the current bull market has helped a lot $$$

[HughMoran]

15. Maybe

:D

[RagAss]

16. Be conservative....don't do what I did...

I got lucky....lucky like you read about..pulled out of the market in 2007 into a money market fund my 401k plan offered. Then when the market crashed I got back in(Spring 2009)....bought into a financials fund...put everything I had and bet it on the banks coming back.....everyone thought I was crazy...I tripled my money in that fund...and I just pulled out last week and put it all back in a money market fund that makes almost no interst...but who cares...I took the one gamble that life gives you and won...I'll keep contributing for the next 5 years or so, until I retire or they throw me out the door.