76.8% Return on 401K

[Birdhunter1]

It wasn't long ago that for about 2 weeks my retirement investments were making what I was making everyday at work. Not to go poolitical just staing fact we had a change of power in the White House and it hasn't grown the same.

It's still growing but not at the same pace as my income every day.

 

[MossRoad]

The biggest thing we could teach any young person is compound interest. If you start investing in your IRA or Roth IRA when you get that first job you will retire young and rich. Time is on your side. Just a couple thousand a year starting when you are 18 would do wonders for an early retirement.

Yep. I wasn't able to get to that point at 18. I waited until 25. We've been doubling our net worth about every 7 years. So at the end of our life, that 7 years delay between 18-25 will mean a HUGE chunk of change I could have left for my wife and kids. Fortunately, I'll still have half of that HUGE chunk. But the thought of if I'd have just started 7 years earlier and the amount that would have been at age 70 is mind boggling.

Think about it.

If you have $20,000 and you double it, that's $40,000. That doesn't seem like much.
If you have $200,000 and you double it, that's $400,000. Hmm....
If you have $2,000,000 and you double it, that's $4,000,000. YIKES!

Yet, those are all the exact same percentages.

Get kids to understand compound interest!!! It can change their life.

 

[MossRoad]

It wasn't long ago that for about 2 weeks my retirement investments were making what I was making everyday at work. Not to go poolitical just staing fact we had a change of power in the White House and it hasn't grown the same.

It's still growing but not at the same pace as my income every day.

You're more worried today VS last March??



Investments are for the long haul.

 

[Cougsfan]

Yes, some of us older guys were truly lucky to have jobs back in the day when 401k's and company financed retirement plans were the norm. These days, a young person has to 1) astute in investing (many don't have a clue) and 2) depend on the luck concerning the appreciation of their choice of piggy banks. 3) the government not cutting back on social security. I predict in 40 years there are gonna be a large percentage of retirees with totally inadequate funds to finance their retirement.

 

[Cougsfan]

Not to go poolitical just staing fact we had a change of power in the White House and it hasn't grown the same.

Maybe I am slow, but it sounded like you were going pretty political to me. Tribal might be a better description.

 

[Snobdds]

Back in “the day”, big companies provided BOTH defined benefit pension plans and 401-k’s with matches.

No longer.

Glad I worked back in the day.

MoKelly

Mine still does, plus free health insurance for life if you have 20 years and retire at least at 55.

People make more in retirement than they do working here. And we still have young kids willing to change jobs for another $4 per hour. I always tell them, your going to make four dollars more an hour but give up twenty dollars in benefits. There is a sucker born every minute.

 

[MossRoad]

Yes, some of us older guys were truly lucky to have jobs back in the day when 401k's and company financed retirement plans were the norm. These days, a young person has to 1) astute in investing (many don't have a clue) and 2) depend on the luck concerning the appreciation of their choice of piggy banks. 3) the government not cutting back on social security. I predict in 40 years there are gonna be a large percentage of retirees with totally inadequate funds to finance their retirement.

I think some good advice for a young person is to tell them not to count on Social Security being there. If it is, great, that's gravy. But don't rely on it to be there as part of your retirement. My parents told me that back in the late 70's, so my wife and I planned on it not being there.

 

[MoKelly]

Mine still does, plus free health insurance for life if you have 20 years and retire at least at 55.

People make more in retirement than they do working here. And we still have young kids willing to change jobs for another $4 per hour. I always tell them, your going to make four dollars more an hour but give up twenty dollars in benefits. There is a sucker born every minute.

Wow! Good for you.

We had to have 15 years of service and retire at 60+ to get the retiree health care.

Defined benefit pension plans reward long term service. Where I worked it was common to have folks retire with 30+ years. If you retired at 60 with 30 years you had:

- 401-k with whatever you contributed (up to 6%) plus 100% company match via an ESOP

- defined benefit plan replacing 70% of your average top 5 earning years

- retiree Heath care equal to when you were working (supplemental to Medicare)

Lots of folks left at 30 years.

MoKelly

 

[RSKY]

This is from memory but we had a guy at my last place of employment who brought his paperwork in and showed it to our boss when they announced the plant closure. He was a union guy who got into the company sponsored 401K even though they didn't match anything for the union people. If I remember right he basically played a bond fund against the Goodyear company stock and had increased his fund to $1.6 million. Think about that. Goodyear stock is notorious for going up and down in large amounts. All his investment went into the stock until it hit a certain dollar amount. He then changed it all to the bond fund. When Goodyear stock dropped to a certain point he bought it back emptying the bond fund. I worked there four years and the stock was around $30 when I started and dropped to $3.89 before I quit.

That took balls.

I remember that he was able to put a significant amount of his wages into the 401K because his wife made good money.

RSKY

 

[Birdhunter1]

You're more worried today VS last March??

View attachment 696297

Investments are for the long haul.

Maybe I am slow, but it sounded like you were going pretty political to me. Tribal might be a better description.

(1) Not saying I wasn't worried about my investments a year ago, they were tanking. Yes I am aware investments are for the long haul, and it is a nice feeling to know that your investments are marking more money than you are that day.

(2) Not getting political just stating I had some major investment growth for a specific time period and they later were not growing as fast.

 

[JethroB]

Back in “the day”, big companies provided BOTH defined benefit pension plans and 401-k’s with matches.

No longer.

Glad I worked back in the day.

MoKelly

I was fortunate to work for a company like that for 24 years. Then our company got bought and the pension was immediately frozen and no new hires could enter the pension plan. Years later I took a lump sum payout and rolled it to a IRA. Glad to have gotten out of that orphaned plan.

 

[fried1765]

Anybody here under the illusion that Roth rules will not be altered in the future.?
The Roth rules WILL BE CHANGED, and your Roth money will be taxed!l
Why?
Because it is there.....just waiting to be taxed!

 

[MossRoad]

Anybody here under the illusion that Roth rules will not be altered in the future.?
The Roth rules WILL BE CHANGED, and your Roth money will be taxed!l
Why?
Because it is there.....just waiting to be taxed!

At least I'll still have something after taxes.

Better to be able to buy a turd sandwich with mustard VS just a turd sandwich.

 

[fried1765]

At least I'll still have something after taxes.

Better to be able to buy a turd sandwich with mustard VS just a turd sandwich.

Kinda depends on the brand/flavor of the mustard.
I do not like Goulden's!

 

[Birdhunter1]

Anybody here under the illusion that Roth rules will not be altered in the future.?
The Roth rules WILL BE CHANGED, and your Roth money will be taxed!l
Why?
Because it is there.....just waiting to be taxed!

I'm 40 and do not doubt that one bit.

 

[MoKelly]

This is from memory but we had a guy at my last place of employment who brought his paperwork in and showed it to our boss when they announced the plant closure. He was a union guy who got into the company sponsored 401K even though they didn't match anything for the union people. If I remember right he basically played a bond fund against the Goodyear company stock and had increased his fund to $1.6 million. Think about that. Goodyear stock is notorious for going up and down in large amounts. All his investment went into the stock until it hit a certain dollar amount. He then changed it all to the bond fund. When Goodyear stock dropped to a certain point he bought it back emptying the bond fund. I worked there four years and the fund was around $30 when I started and dropped to $3.89 before I quit.

That took balls.

I remember that he was able to put a significant amount of his wages into the 401K because his wife made good money.

RSKY

Yes! Nowadays, after Enron, it’s quite difficult to buy company stock in a 401k.

 

[JethroB]

I was the administrator of my employer’s 401k plan before I retired. Lots of federal ERISA rules & regulations of how a plan is to be run but little on what investment options should be offered. My best move was to hire a good investment advisory firm to keep me out of jail or being sued. Company or even individual stocks threw up red flags. Initially the overall plan balance was very heavy in the default money market fund. Scary mess I inherited. Went from 6 funds to 21 with the defaults being changed to age based Vanguard funds.

 

[dmccarty]

Kinda depends on the brand/flavor of the mustard.
I do not like Goulden's!

OHHhhhhhh, you are one of THOSE guys who asks for The Grey Poupon!

Seriously though, last year we were on a trip and staying at place with a kitchen so we could prepare our own food. The local store has a brand of mustard we do not have locally. One was a horse radish and the other a honey mustard mustard. Now, we have these types of mustard in the local store, but the brand we bought on vacation was SOOOO much better. And I used up one of the mustards! Dan Sad.

Going back soon so I will buy a few extra bottles of that mustard.

Later,
Dan

 

[MossRoad]

I've been using the Heinz Mayoracha Sauce quite a bit lately.

Heinz Mayoracha Sauce, 16.6 oz Bottle | Heinz®

Heinz Mayoracha Sauce, 16.6 oz Bottle

www.heinz.com

And a store brand honey mustard. Very tasty.

 

[PuffyC]

Couple comments but first a disclosure that I admit to being partial towards the Roth account.

I'll tell a story to someone starting a 401K account:

1. Pretend you're a farmer and today is the day to buy the seed for your land.
2. You can buy your seed one of two ways
3. You buy it out of my RIGHT hand, you will pay for the SEED, you will pay NO sales tax....you instead will pay tax on the harvest.
4. You can instead buy your seed from my LEFT hand. You will pay for the seed, you DO pay sales tax and now, your harvest is TAX FREE.

Which farmer would you rather be?

I'd dare say that of the (hundreds) of people that have heard that.... invariably 99.9% of them choose the tax free harvest which is how the Roth works. Or look at it this way.....you put in $100 today and do your best to grow it to $1,000 when you retire. Would you rather pay the tax on the $100 or the $1,000?

Highly compensated people "can't" do a Roth IRA = NOT necessarily true. They can do what is called a "Back Door Roth" Google can be your friend (though I admit I didn't google it to see what pops up)

It's moronic that the govt makes people do these gymnastics to get this done.

Obligatory Disclaimer: One should always discuss with their CPA or other tax advisor

Don’t forget that by paying taxes on the front end, let’s say it’s 20%, you get 20% less seed to plant, meaning your harvest gets cut by a whopping 20% as well. So really the question would be “do you want an 80% harvest that is tax free, or do you want a 100% harvest that is taxed?” Whether one is better than the other mostly just depends on what your top bracket is today vs what you think it will be come harvest time.