I just purchased my first house, I'm putting 96.00 in my 401k every two weeks, and once all my bills are paid, I have roughly $180.00 left over per week to do whatever. What should I do with it? That is factoring in the fact that I spend about 40.00/week in gas, and about 40/week in food. I'm trying to save as much as I can. I want to retire when I'm in my 50's. I'm 25 now. Thanks!
2007-11-21 06:31:04 · 5 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
Jeffery didn't tell us what his assumptions were, but he appears to be assuming that your money is paid in once per year. Because your money actually goes to work every two weeks, your total nest egg will be a little more than he projects.
Assuming:
30 years to retirement
12% annual return
$96 deposited every two weeks
$734,000 total value
A 12% return is probably on the high side. A more realistic annual return would be 10%, which would result in a nest egg of $473,000.
I suggest you maximize your employer's matching contribution to your 401k. If they will match more $ that you have to deposit, you get an automatic 100% return on your money. So, put at least some of that $180 into the 401k. If you increase your contribution to $150 and assuming a 10% return, your nest egg would grow to $740,000. And all these calculations do not account for any contributions your employer might be making.
If you don't want to increase the 401k contribution, you could go with a Roth IRA. With a Roth, you can withdraw $ for education of a dependent. (Consult a tax adviser.)
I would really suggest, though, that you get every $ you can get from your employer. If they will match your contribution up to, say, 5% of your income, then put in your 5%. I have done just that throughout my career and I am now retired at age 52. I only need to work about 2 days a week now, and only when I want to. (Your results may vary.)
Good luck! Congratulations on your decision to save.
2007-11-21 09:17:05 · answer #1 · answered by RickB 2 · 0⤊ 1⤋
Well that is great! $96 every 2 weeks x 26= $2496/ year for 30 years= $74,880 total invest which will grow to roughly $600,000. In your 401k plan the money is taxed when you use it. So your looking at having about $450,000 after taxes. Which that would be fairly comfortable but you should have $1,000,000 to do well. Actually $96 every 2 weeks over a 12 month period is investing 26 times
2007-11-21 14:48:13 · answer #2 · answered by jeffery d 5 · 0⤊ 0⤋
Put at least $100 of the $180 into a highly-rated mutual growth fund.
2007-11-21 14:59:06 · answer #3 · answered by Judy 7 · 0⤊ 1⤋
Well $96 every 2 weeks for the next 25yrs won't aloow you to retire.
Sorry,,
You need to put in double that.
2007-11-21 14:35:23 · answer #4 · answered by Anonymous · 0⤊ 1⤋
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suggest u get 2 more pt/tm jobs cause u are living paycheck 2 paycheck and ur reserve isnot ur 401K
get read
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2007-11-21 16:42:07 · answer #5 · answered by Anonymous · 0⤊ 2⤋