What's a good percentage to contribute per pay period for 401K.?

Question

I'm in my early 30s...and get paid twice a month.

Answer 1

it depends on your income!!! How much you want to have when you retired. If you have a pretty expensive lifestyle then you need to save alot more, then if you just live a modest life.

Good luck

Answer 2

A lot depends on how much you've already contributed. If you've already been contributing for the last 10 years, then you won't need to contribute as much. But you may be like me - I didn't really start contributing in earnest until I was about 32. I contribute 12%, get another 4% match from my employer, and still contribute more to my Roth IRA.

I'd say if you're just getting started and don't have any other provisions for retirement, you would want to contribute at least 12%. If you do this, the you'd be able to expect to draw the equivalent (after inflation) of about 65% of your current salary in retirement, using the following assumptions: 1) 35 years investment until retirement, 2) annual 3% raise, 3) 8% return on your investments, 4) 3% annual inflation, 5) withdrawals at retirement equal to 5% of principal, in perpetuity. This may not seem like a lot, but this also doesn't include any other amounts you may have from Social Security, pensions, or anywhere else.

So put in at least 12%, if not more. Good luck.

Answer 3

At the minimum, you should out in enough to obtain the full company match (if any). For example, if your company matches 50% of the first 6 %, then you should contribute at least 6% of your salary, then you get an additional 3% of your salary added to your account FOR FREE!!!

I have seen studies that indicate that each employee should be putting 20% or MORE away each year for retirement savings. Since you are in your early 30's, you should put as much as you can into the 401(k). The earlier you start and the more you put away will provide a larger retirement balance in the future.

Another issue - If your company has a company stock investment option, DO NOT put all your funds into it. Remember ENRON? Their stock 401(k) is worth 0. The goal is to diversify. Your HR department should be able to provide some help in this area.

Good Luck!

Answer 4

The usual employee contribution is 3% before tax, with the employer matching up to 3%. Most 401K will permit up to 6% employee contribution, with the employer matching up to 3%.

Someone that is able to manage salting away 9% before tax is going to have a pretty good nest egg but it does take time. Just remember that you can not take a disbursement without penalty until you are 62-1/2. If you stay with your present employer for the next 30 years you should be in pretty decent shape for retirement.

Answer 5

You should at least be contributing $1000 per month. Although since you are in your early 30's you might want to look at contributing more. You are starting a bit late.

Answer 6

you have have been given it actual...you're matched on the 1st 6 % of your pay....25 cents for each dollar. in case you wanted to maximise your journey then you easily could put in 6%. At 130k your maximum journey from the agency would be $a million,950.00 although, if the agency limits your contributions to 5% then your maximum journey finally ends up being 25cents as much as first 5%. reason they are probably doing it somewhat is to confirm passage of the discrimination tests. you're considered a exceptionally compensated worker...they are probably proscribing you to confirm the plan passes tests and stay away from paying refunds. So while you're limited then put in 5%.

Answer 7

Somewhere I read, please do not ask me to find it, that an average person will need to save 10% to 15% of his pre-tax income for a comfortable retirement. This means 10% to 15% of his income for his entire working career. This includes employer match if any. Look into specifics of your employer match. Maybe you can put in 10% and your employer will add something to that 10%.

Answer 8

Does your company contribute? I would stay around 6% at your age and go with a more dynamic profile changing it too a less agressive profile in your forties and raising it again closer to retirment.

Answer 9

Well you can be aggressive here. I would recommend maybe 4-5 percent. I don't know what you make or what you can spare. Its a percentage of what you make in those two weeks too..the more you make the more they take. But if you can be aggressive ..do it!! I am in my thirties also and we may not have that social security like they do now...be aggressive and be safe!!

Answer 10

It depends on how much you can comfortably afford to do without. When I went into my 401K, the guy said at my salary, the small percentage wouldn't amount to much. I said, well, with my salary, I couldn't even spare what I was giving now. :-)

Answer 11

As much as they will allow you to contribute. Do at LEAST the maximum that they will match, if your employer has a matching program.

If you are just now starting to save for retirement, you really need to put away as much as you possibly can.

Good luck.