If I contribute $600/ month to my 401k, which is semi aggressive, roughly how much will I have for retirement.

Question

I am in my mid 20's.

Answer 1

Many if not most 401k plans have somewhat limited investment options. The plan I was in had purchased life insurance contracts from a Canadian Life insurance company that then went belly up. The plan suffered a significant loss, about 15% as a result. Surprisingly, the administrator did not get fired.

There are no guarantees on investments.

I noticed that one of your responders quoted the statistic that since 1929 stocks have returned an average of 11% annually. They sure did not from 1929 until 1942. And that is no guarantee that they will do so in the future. Those folks that bought into NASDAQ stocks in 2000 were in many cases wiped out and may never recover. I know some personally.

Personally, I would divert a portion to a Ross IRA which earns money tax free for ever and is directed by you rather than some high paid flunky. If you loose money you have no one to blame but yourself. You eventually have to pay taxes on the 401k money.

Of course if your employer has a matching contribution that will indeed have an impact on your decision.

Assuming you will earn 5% interest, a conservative assumption, you will have at the end of 40 years $869,758 more or less, especially if you are allowed to invest your 401k in t-bills.

But keep in mind that that amount will likely have the buying power in 40 years of about $200,000 today. Not a warm fuzzy fealing, no?

Answer 2

Hard to tell a number, since there are so many variables in how it's invested and what the return is. But if you do that, and stay away from terribly risky investments, you should be in great shape at retirement. And at your age, you don't want the supposedly very safe, for-older-people investments. Your employer probably has several funds you can put your 401K into - would be a good idea to spread it out a little, but go for the more agressive funds of the selection - you have time to ride out some ups and downs.

Answer 3

There are different Funds within the 401k plan.

I am 72, I started 20 years ago, retired in 2003 with only 116,000.00. I had to withdraw 30,000.00 to cover home repairs.

Because of my age, I have to tale out so much every month!
I withdraw $600.00 per moth. My account, today is just over
$116,000.00

I recommend the C Fund and the oversea investment fund, I think that is the S Fund.

You want a million or more in your account when you retire.
That way you can withdraw 10% a year and you will not touch the principle.

Answer 4

since 1929 the stock market has delivered about 11 % a year ups and downs remember when the market is down you will buy more shares than when it is up and vice a verse this is called dollar cost averaging the law of averages tells me that you will have a REALLY NICE NEST EGG if you work till you are 62 it will not be hard to amass over one million dollars jest keep your portfolio diversified and don't be to caution at your age a would go with 80 % stocks 20 % bonds myself at 42 I am 100 % stocks because even after I retire that money will need to last for maybe 30 years and I don't mind riding the ups and downs its the long run that maters and the stock market has out preformed all other investment vehicles over the long run GOOD LUCK and stay the coarse its not timing the market its TIME IN THE MARKET !

Answer 5

MSN has a great retirement planner it asks you different questions and then gives you the results. It can help you determine if what you are saving now will be enough in the future. With your estimates and assuming you earn at least 5% you should have $893,139.00. This is assuming you start at $0 and save $600 per month for 40years. Here is a simple calculator or that, http://www.centurynationalbank.com/calculators/CompoundSavings.html.

Answer 6

This depends on when you plan to retire, how rapidly the investment vehicle(s) you choose will appreciate over the coming decades, and also (as a practical matter) how much inflation you'll see in the coming years.

For each year you might do it as follows. (Assume your investment remains constant and that you stick all your cash in an S&P 500 fund that returns an average 5% over inflation over the next 40 years.)

$7200 (yearly contribution) x 1.05^40=$50,687.92

Now do that for every year from here to retirement and you may have a rough idea of how much you can expect to make.

Also, I highly recommend putting your cash into stocks.

Answer 7

Depending on what funds and investments you have, you can count on about a 5-10% annual return.

Answer 8

Do you get an employer match?

A semi-aggressive portfolio should return about 7% on average.

Visit interest.com, and use their investment calculators to determine what this might be.

Answer 9

The answer would have to assume that the stock market would never crash again.

If it does, your retirement fund would be zero.