How much % are you invested in your 401K

[krishnaaa]

Just now, Konebhar6 said:

Early withdrawl -> Have to pay 10% penalty + tax at the tax bracket during that year -> Bad option

Only way it works is if you have no income (retire or early retirement) and take out small amounts every year. 

What's your exit plan for 401k?

Less income also fine.

People in IT will retire sooner than you think.

[Konebhar6]

2 minutes ago, kiran1012 said:

401k is not meant for financial sound people @Konebhar6who know how to & where to invest their money.

it is for people who are not smart with portfolio management.

I have a different take on it.

Even Financial sound people do not take good decisions with regards to stocks. People often get attached (emotional) to stocks, cannot control Greed/fear leading to frustration. 

I would like to consider myself decent knowledge on Finance esp. stocks. My experience - Its tough to control Greed/Fear. Hence I moved to MFs/Div based stocks/funds, etc. Life has been happier ever since. 

[Thokkalee]

27 minutes ago, SaradaChinnodu said:

double income...no debts...maxing out so far.

Now we are thinking to just contribute up to the company match and hold on to the rest and invest them in S&P 500. We have plans of early retirement and dont want to pay 10% penalty when we withdraw from 401k. We rather pay the taxes now to have control over investments (our company 401k does not allow us to meddle with investments)

My advice is if you are not willing to take out before 59.5 years, go with 401k max out otherwise think about it.

Db prends: if you see holes in my approach , do let me know. Appreciate your advise.

If you have enough income, it is a no brainer to max out on the 401k and also IRA.. it is 27K  (20.5 401K + 6.5K IRA) per year per person, not counting the employer contribution… that would be only 14K in hand if you don’t contribute to 401K and pay taxes on it (assuming you are in the 30% tax bracket). you are losing 6K every year in taxes by not contributing.. over the period, this just adds up.. also you have 20K generating income instead of 14K.. 

[Konebhar6]

6 minutes ago, krishnaaa said:

Less income also fine.

People in IT will retire sooner than you think.

I am one of those who wants to retire early. If I am able to generate constant income that could replace 75% of my income I want to retire.

I am not sure If I will do that when I get to that age though. Practically doing it is a totally different story. I have seen many people who have replaced their income through business but still work in IT with less stressful work. They say its ICING on the cake.

[idibezwada]

2 minutes ago, Thokkalee said:

If you have enough income, it is a no brainer to max out on the 401k and also IRA.. it is 27K  (20.5 401K + 6.5K IRA) per year per person, not counting the employer contribution… that would be only 14K in hand if you don’t contribute to 401K and pay taxes on it (assuming you are in the 30% tax bracket). you are losing 6K every year in taxes by not contributing.. over the period, this just adds up.. also you have 20K generating income instead of 14K.. 

I don't think you can do IRA if you are doing 401K

[Konebhar6]

3 minutes ago, Thokkalee said:

If you have enough income, it is a no brainer to max out on the 401k and also IRA.. it is 27K  (20.5 401K + 6.5K IRA) per year per person, not counting the employer contribution… that would be only 14K in hand if you don’t contribute to 401K and pay taxes on it (assuming you are in the 30% tax bracket). you are losing 6K every year in taxes by not contributing.. over the period, this just adds up.. also you have 20K generating income instead of 14K.. 

Ila anukonee 401k contribution start chesa. But started thinking about exit plan these days. How would you take the money out? 

[Konebhar6]

2 minutes ago, idibezwada said:

I don't think you can do IRA if you are doing 401K

You can do ROTH. You are probably referring to Traditional IRA. You cannot do that. However if your spouse is not working, you can contribute to that.

[Manishican]

23 minutes ago, Konebhar6 said:

I am one of those who wants to retire early. If I am able to generate constant income that could replace 75% of my income I want to retire.

I am not sure If I will do that when I get to that age though. Practically doing it is a totally different story. I have seen many people who have replaced their income through business but still work in IT with less stressful work. They say its ICING on the cake.

Instead of retiring early, take a government job. You will barely work 10 to 15 hours in a week

[Mr Mirchi]

2 hours ago, sarvayogi said:

401k is just a waste of thing..ppl think saving every year small amounts will give big amounts at retirement

You are just giving your hard money to govt for free and for them to invset some where else and you loosing 40-45k an year(if both invest) in cash and again spending those expenses on credit cards and paying interest

u r wrong abbaaa....

[Spartan]

1 hour ago, Konebhar6 said:

You can never retire in USA. High maintenance. Property taxes, Car/Home Insurance, etc cost a lot. Need money after retirement too. 

Need to have a plan for that. 

retire ayi peekedemundi anna...

elago ikkada chuttalundaru..pillalu valla dari vallu chuskuntaru and will be busy with their lives....

[Manishican]

Just now, Spartan said:

retire ayi peekedemundi anna...

elago ikkada chuttalundaru..pillalu valla dari vallu chuskuntaru and will be busy with their lives....

Semi retire by taking government job

[krishnaaa]

35 minutes ago, Konebhar6 said:

I am one of those who wants to retire early. If I am able to generate constant income that could replace 75% of my income I want to retire.

I am not sure If I will do that when I get to that age though. Practically doing it is a totally different story. I have seen many people who have replaced their income through business but still work in IT with less stressful work. They say its ICING on the cake.

Business income would be Company income. You don't have to pay yourself for a year and draw 401k.

[Spartan]

Just now, Manishican said:

Semi retire by taking government job

ade chudali

[Konebhar6]

19 minutes ago, idibezwada said:

id em logic uncle....you will pay tax now if you don't contribute....by contributing in 401k your pretax money compounds kada...you still need some money for maintenance after 60....you can withdraw lower amount to be in the lower tax bracket....you can always pay taxes and invest in individual stocks but the question is since how many years are you investing and how many times did you beat the market and with what percentage?

 Full retirement age - 67. 100k per year would take 10yrs to withdraw. I would rather have that money before 67. Mind that, I do have a decent size 401k already. My company contributes 5% irrespective of my contribution.

My investments in MF's/Funds have worked as well as market. Also I think investment in real estate will beat the stocks. Take for instance JEPI/BST. They have performed well over years and give a 8-15% div every month. I am invested in these two and several other funds like this. Building a dividend portfolio that also grows as stock Market grows is the plan, so that I have income during retirement too.

Think of 10% penalty on top of the tax bracket you will be in when you get your 401k money.

[Konebhar6]

4 minutes ago, Spartan said:

retire ayi peekedemundi anna...

elago ikkada chuttalundaru..pillalu valla dari vallu chuskuntaru and will be busy with their lives....

Idi reality.