Is 5% too much to put into a 401K? I make 50K per year and about 2000 in total expense per month.?

Question

I am 33, divorced and have two kids 12 and 10. I make about 50/K. They live primarily with my ex while i have them Friday -Monday. I have pretty low expense: rent 720, car payment 200, 100 for student loan, 400/ month support. No other debts (wahoo). I haven't been putting any into 401K because I struggle financially until about a year ago.

The max my employer matches is 2% so 5% is actually going to be 7%. So I figure that roughly that will be about 3500 per year, but it only costs me 2500.

I am thinking that 5% might be too high, or am I just worrying too much. I figure it is better to put in to much than not enough at this point.

I picked the aggressive plan that our group offers. 80% stocks/ 20% bonds.

After 4-5 years, I figure I will go down to the moderate. 60/40

Answer 1

too much? 5% is not enough to retire on. People are living longer and expenses always go up. To retire at your present lifestyle, saving 20% is ideal.

Answer 2

If you've got that much to invest and won't need the money until retirement or at least until you're 59-1/2, the 401K is as good a place as any, since it grows tax-free. If you took the same money (the extra over what's matched) and invested it somewhere else, you'd pay tax on the gains as you go, and tax on it initially when you got it as income, so would lose a lot of the compounding.

Answer 3

At your age contribute 10% to 15%. Take advantage of the plan. The more you invest, the more you are taking advantage of the plan. It doesn't matter how much you earn, you should definitly do at least 10%!

Also, an 80/20 mix is fine until you are 50 years old. Don't worry about switching your plan in 5 years.

Answer 4

As long as you can pay all your expenses and live comfortably, I'd say that 5% is not too much at all. With the company match you are getting an immediate 40% return on your investment! Keep going and if you can afford 6% do that.

Answer 5

interior the united statesA. with out dependents, no deductions, single, short kind. you may anticipate taking domicile $37500.00 and receiving component to the own deduction the government helps as a refund on the top of the 365 days. around (1200.00) a stable rule of thumb would be 25% to cover Taxes, Soc.Sec. and Medicare. yet by using January of 2010, this would and probable will all substitute. no person easily knows how plenty you would be required to pay below this administration.

Answer 6

Put as much as you can afford. I used to put 17 percent in at my old job. It does grow very well. I also stated in safe investments and did very well.