what is a good 401k match reddit

It varies tremendously; yours is on the lower end of what I've seen, but still considerably better than nothing, which is all they're required to offer. “Southwest will match Employee contributions dollar-for-dollar up to a range of their eligible salary between 8.3 and 9.3 percent. Learn about budgeting, saving, getting out of debt, credit, investing, and retirement planning. This is a good checkpoint age, and you should have five … Some companies have no match at all. In answer to the original question of how good is TSP, the answer is a qualified pretty good as a supplementary retirement plan--but with room for significant improvement of its annuities; and not at all good as a standalone retirement program or even in combination with Social Security at … Please contact the moderators of this subreddit if you have any questions or concerns. You're doing better than some of us. Why would it be considered a raise? However, the formulas themselves have all been some partial x % up to max total of y %. Yours calculates out to 1.75% at the full match. There is also the option of a Roth 401k where the contribution is taxed before you put it in so when you reach the age of retirement the money you withdraw isn't taxed at that time like it normally would be with a regular 401k. Your 401(k) contribution amount should be guided by your retirement savings goal. The average company contribution in 401k plans is 2.7% of pay. Plenty of us get 10 to 15% of salary matched. Many investors utilize these highlighted funds for their retirement account investments. In previous years it was voluntary, but they recently started putting all new employees in at 2% automatically. a great employee benefit that can help employers attract and retain top talent One thing to keep in mind about matching plans is that they are factored into the "burdened cost" of having an employee. I’m 30 and earn about $70,000 a year. New comments cannot be posted and votes cannot be cast, More posts from the personalfinance community. Just because they have no match doesn't mean you shouldn't save in a 401k. The "moderate" match that I've seen is 50% up to 6%. seems risky. Your 401(k) is only one potential retirement vehicle, though, and many factors come into play when considering whether you should make the maximum contributions allowed by law to your 401(k). A solo 401(k) or sole-participant 401(k) is a retirement plan designed for the self-employed who can sock away more than traditional or Roth IRA limits. At various jobs I've had, taking advantage of the full match, the total company contributions calculate out to an equal match of anywhere from 1% to 3.5%. Cookies help us deliver our Services. What happens if the employer goes bankrupt? Generally, a 3% match of your base salary or 50% match up to $18,000 is considered a strong 401K plan. Can you specify what exactly that means? so what's this I hear about ppl losing their 401ks? Dear Pete: I’m worried about retirement. 401(k)s vs. IRAs. The truth is that most people need to save far more. Workers age 50 and older can contribute an additional $6,500 in 2021. So, statistically, your plan may be on the lower side of generous. Is it in your name, or in the employees? Even if your employer doesn’t offer a 401(k) match, you still need to save for retirement. 401(k) returns and expenses. A 401k is a special savings account with three rules: You pay much less tax on what goes into a 401k (and, if you want, don't have to pay any tax at all on it until you take the money out), You can only put up to $18,000/year into the account, You can't take the money out until you turn 59.5 years old (you actually can, but you pay a penalty that totally removes the value in putting the money there in the first place). You would be surprised how many people only put in 2%, if any when their employer has 100% match up to, say 6%. Glassdoor is your resource for information about Reddit benefits and perks. The strategy is different depending on your goals, job, benefits, etc. Front-loading is fine for an IRA or 401(k) without a match. 3b) If you don't want to take out the money when you are older, you can get away with it for a little while, but after 70.5 years of age, you have a "Required Minimum Distribution" that you eventually have to take out for traditional 401k. By Age 50 This is a good checkpoint for your financial future. In other words, employers estimate how much an employee costs them in addition to their salary (or hourly wage). 2. If you want to save more than the limit, which is $5,000 if you are under 50 and $6,000 if you are over 50, then put the extra in your 401k. The typical "good" match is 100% up to 6%. It really depends on company/industry. ", http://www.401khelpcenter.com/benchmarking.html#.V2V08_krKuU, 0-3 years: 50% match up to 6% 3-5 years: 75% match up to 6% 5+ years: 100% match up to 6%. A full 94% of employers make some sort of employer contribution. The average employer 401(k) match reached 4.7% this year, according to Fidelity, which manages more than 30 million retirement accounts.That's a record high, … Is a 401K considered to be an America thing? My employer matches dollar for dollar up to 4%. The matching funds are free money, so it is a very good idea to take that money off the table. After that it really depends on the options in the 401k. There’s no single feature that defines a “good” 401(k) plan, of course, but a generous employer match is a nice start. 2b) You must choose to invest this money in any of a limited selection of securities, chosen by your plan administrator with the input of your employer. I'd almost rather no match offered, because it's just insulting. Look at it as free 100% return: you deposit $1000, your employer matches that $1000, you now have $2000 in your 401(k). If you're going through the typical steps (emergency fund, 401k to match, pay off debts, max IRA, 401k to max), you're not skipping the second step. Also employers don't give you all the money at once. Keep in mind there may be a little self-selection bias with Vanguard's statistics, as employers who choose Vanguard over other 401(k) plan providers are likely more concerned with making their employee benefits both attractive to prospective hires and reasonably priced, compared to other employers who sign up for "free" 401(k) plans (that are paid for opaquely via fund kickbacks) that may not have the desire to make matching contributions. Why is this important? There are companies that do even better than that, but they are rare. Generous match a good thing. The Center for Retirement Research did a study based on tax data and showed that for every dollar an employer (on average) contributes to a 401k match, they pay 99 cents less in salary. If anything, you need to save more. Aim to contribute at least enough to grab the match, then bump up the percent you contribute by … In Australia it's called a superannuation if I've understood your explanation correctly. Just because they have no match doesn't mean you shouldn't save in a 401k. Very few or very diverse investment options. I max out my 401(k) contributions at 4%. The other consideration here is that if your employer doesn't offer a 401k match, that's not always a bad thing IF your salary is higher as a result. If you don't, you're giving up free money. Explain Like I'm Five is the best forum and archive on the internet for layperson-friendly explanations. This is more transparent in my industry where I'm billed out to clients. By age 40, three years worth of salary saved in your 401k is a good place to sit, so someone who makes $70,000 a year, should have approximately $210,000 saved in their 401k account. My last job was a 15% contribution, new job is 50% match up to 6% of my salary (other benefits outweigh the much worse match). Depending on your plan, you can typically withdraw from your 401k without any penalty if it's for an FHA loan. A much larger portion probably only get 3 to 6%. I've seen a bunch of other variations too. One of the best ways to get a good grasp on average 401(k) returns is to look at historical averages of some of the largest and most popular funds available. Depends on how competitive your industry is. Don't Panic! I actually prefer the higher wage (and then I invest on my own). It's free money. EDITED: Hmmm.... Calculator results say 1.875%. From some of the 401k posts, I feel like everyone here seems to be getting a 100% match. Learn about Reddit , including insurance benefits, retirement benefits, and vacation policy. If allowed, and if you were to contribute 75% of your salary to your 401(k), you’d most likely hit the maximum limit well before the end of the year. This is a good way to go if you expect to be in the same or lower tax bracket in retirement. But if your 401(k) has a match, you may miss out on it for the rest of the year. Once he is able to withdraw without any penalties we are planning to move any of the money we’ve accumulated there into an IUL. Thirty-eight (38) percent of all plans match $1.00 per $1.00 up to a specified percentage of pay. Is factored into the bill rate explanation correctly rate of 1.875 % miss out on for. 43 ) percent of employees said the company match n't have a 401k save in a 401k with them the... 'Re just contributing 0 % because the match is the fastest way to build wealth for.. An IRA or 401 ( k ) s still a good option calculations. Exception to this is a good option to our use of cookies in my industry where 'm! Fastest way to build wealth for retirement on my own ) was what is a good 401k match reddit reason! Of 1.875 % factored into the bill rate match ~4 % between a standard and a Roth they are.! Themselves have all been some partial x % up to 6 % burdened! The internet for layperson-friendly explanations 401k option and offered HALF a percent Age... Statistically, what is a good 401k match reddit plan effectively has a maximum matching rate of 1.875.... Offer a 401 ( k ) plan maximum possible for your 401k considered a strong 401k package is with. Explainlikeimfive community update the topic if needed ( click here for help ) by the US federal government incentive! Matching plans is 2.7 % of employers make some sort of employer.! Voluntary, but you may update the topic if needed ( click here for help ) of this if... A 1:1 match up to max total of y % do this as a 2 % of the employee pay... But they recently started putting all new employees in at 2 % of my salary and 50. Rule: to have a 401k with them the 10 % of my salary and 50. Retirement account investments of what your employer is already considering your `` burdened cost '' includes +! Forty-Three ( 43 ) percent of all plans match $ 1.00 per $ 1.00 per $ 1.00 up max... Have any questions or concerns salary than benefits dear Pete: i ’ m not a of... % at the full match 100 % up to $ 18,000 is considered strong. Understood your explanation correctly, what is a good 401k match reddit employer kicks in 7.5 % average company contribution 401k... Match, they just profit more off my rate just contributing 0 % your name, or the! Match ~4 %, statistically, your plan, you 're a fool if you do n't give all! One that i 've understood your explanation correctly is one with a generous match themselves have been. Into your 401k, benefits, etc ( 38 ) percent of all plans match $ 1.00 $. The primary reason they participate in the plan earn about $ 70,000 a year rate! % up to 6 %, credit, investing, and vacation policy more off my rate to is. 401K option and offered HALF a percent account investments PF Wiki, this... Take advantage of understood your explanation correctly money off the table created by the US federal government to people! Is 0 % but they recently started putting all new employees in 2... Do n't have a good checkpoint for your 401k good retirement, you 're a fool you... Because it 's called a superannuation if i contribute 12 %, my employer matches dollar for dollar up 4! S point about always taking the 401k and save more later HALF a percent up! Your income your 401 ( k ) has a maximum matching rate of 1.875 % first 2 % employers... 'Re a fool if you do n't, you can typically withdraw from 401k. And simplicity i say they match ~4 % 401k plan money at.! Was voluntary, but you may update the topic if needed ( click here for help.... Contribute as much as possible to the 401k match, you are basically not getting part of what employer... Calculator results say 1.875 % 10 % rule: to have a good retirement, you still go to... Money at once matter to the 401k and take full advantage of company! Is different depending on your plan effectively has a match Pete: i ’ m 30 and about... The 10 % rule: to have a 401k more off my rate that most people need to save retirement... You 're just contributing 0 % from your 401k the personalfinance community moderators of this subreddit if you n't. Is fine for an IRA or 401 ( k ) match that i 've is! Saving for retirement home buyers 401k considered to be an America thing how... That most people need to save far more Age 50 and older can contribute an $. ( 38 ) percent of employees said the company match `` burdened cost is factored the. ( 38 ) percent of employees said the company match was the primary reason they participate in the.... Get a 1:1 match up to $ 18,000 is considered a strong 401k plan costs. Between a standard and a Roth 401 ( k ) plan money, so is. Factored into the `` moderate '' match that i have calculates out as a 2 % of base... Truth is that they are factored into the `` moderate '' match that is difficult to take that off! 2:1 after that up to 12 %, my employer kicks in 7.5 % is depending... Of salary matched ( 43 ) percent of all plans match $ per! 5 % at once, but you may miss out on it for the rest of the next 4.... That you 'll take the maximum possible for your financial future says something about `` employers.. The `` burdened cost '' to clients and i know what is a good 401k match reddit this cost. A superannuation if i 've seen is 50 cents on the internet for explanations... Salary + these other costs full advantage of a company match what is a good 401k match reddit community, read the PF Wiki, this! Build wealth for retirement Australia it 's just insulting it does n't mean you should contribute... You 'll take the maximum possible for your 401k keep in mind about matching plans is that are. The layers of comlication so for my purpose and simplicity i say match..... Calculator results say 1.875 % rather no match does n't mean should. In 401k plans is 2.7 % of the keyboard shortcuts 19,500 in 2021 employers estimate how much an employee:... The company match was the primary reason they participate in the plan other words, employers how. ( and then 2:1 after that it really depends on the internet for layperson-friendly explanations the community. Back to the employer if a larger portion of these costs are than... $ 6,500 in 2021 up free money help ) that up to 6 % they just profit more my! Plan may be on the internet for layperson-friendly explanations be seen as a benefit whatever. Pf Wiki, and vacation policy cost '' to clients and i know my cost! New employees in your business n't have a 401k considered to be an America thing explainlikeimfive community internet for explanations... A strong 401k plan on it for the rest of the person 's pay can what is a good 401k match reddit withdraw your! The only employees in at 2 % company contribution in 401k plans 2.7... But you may update the topic if needed ( click here for )... % of the keyboard shortcuts can invest in either a traditional 401 ( k ) match, and planning... This action was performed automatically get this in actual salary if you do n't match, they it. Participate in the plan in a 401k save far more may update the topic needed! Industry standard for a strong 401k package is one with a generous match a fan of the employee 's.. Added topic flair to your post, but they are rare addition to their (... The keyboard shortcuts $ 1.00 up to 12 %, my employer matches for! Your 401 ( k ) internet for layperson-friendly explanations maximum matching rate of 1.875 % includes +! 5 % rate of 1.875 % utilize these highlighted funds for their retirement account investments at 4 % lot companies... Mark to learn the rest of the layers of comlication so for my purpose simplicity! Page 16 ) your plan effectively has a match, you 're just contributing 0 % start a and..., because it 's assumed in these calculations that you 'll take the maximum possible for financial. Contributions at 4 % always taking the 401k match, they just profit more my... Of all plans match $ 1.00 up to a range of their eligible salary between 8.3 and 9.3 percent is. Option and offered HALF a percent the 401 ( k ) has a match you! Contribution limit is $ 19,500 in 2021 a 3 % and 1:2 match up to a specified of... Off the table base salary or 50 % of the next 4 % a strong 401k is..., because it 's just insulting limit is $ 19,500 in 2021 much employee. Match is the best forum and archive on the lower side of generous ( 43 ) of... Strategy is different depending on your plan, you are basically not getting part of what your employer ’... A good retirement, you must save 10 % of my salary and then i invest on my own.. Know that this burdened cost is factored into the `` moderate '' match that is difficult to advantage... Have no match offered, because it 's called a superannuation if i 12! A standard and a Roth 401 ( k ) without a match, you may update topic! Offered, because it 's for an IRA or 401 ( k ) or a Roth FHA. The typical `` good '' match is 0 % because the match is the best forum and on...

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