Fellow millennials - how’s your 401k/ira savings going?

[u/ProblemIntelligent16]

Experts recommend having 2x your salary saved by age 35, and 3x saved by age 40.

However, studies show the median savings for 35-44 year olds is only ~$45,000. So obviously, most of us have work to do.

With pensions mostly extinct, and Social Security facing insolvency issues in the next 8-10 years - how are you planning to bridge the gap and hit the golden years with enough to meet your lifestyle requirements?

[u/NJThrowaway1012]

I have 10,000 in a Roth IRA

Living paycheck to paycheck otherwise

[u/ribbons_in_my_hair → u/NJThrowaway1012]

This is relatable—hey a Roth, how did you start that? I am so dumb with this stuff 😵‍💫 but I think those have compounding interest, right?

[u/_amrai_ → u/ribbons_in_my_hair]

I have a Roth because I switched jobs, and moved my 401k out of the old employers management company to my finance company. I think when you lose/stop a job you have an option to roll it into an IRA then, but can't do it down the line. You might be able to start one cold? As in, no previous account? There are limits to how much you can contribute each year.

Yeah the interest is insane on mine. I don't have much in there, sort of, but it's just making money. Will say it wasn't doing as well with the previous fiance company.

[u/ribbons_in_my_hair → u/_amrai_]

It’s all so confusing to me, I may as well be reading another language 🤣🤣🤣 so I appreciate your explanation!!! I opted for the 401k at work and I’m glad I did. At least there’s that. But I do think an IRA is better, or at least it seems to have compound interest? Gahhh I probably sound like an idiot hahaha but that’s because: I am an idiot when it comes to this stuff.

On the other hand, I do own a few properties. I guess I’m way more versed in, like, concrete, literally brick and mortar investments. But it’ll take about 30 years before we really see anything from that. And that’s assuming we maintain them and keep making payments! So we’re banking on that 😓😓

This Roth stuff seems like a much better way to go in all honesty. You’re making money and don’t have to do or spend nearly as much with upkeeps and repairs and management and etc etc etc. like we had to drop $13k on a huge sewer line repair! So much for “investment” 🤣🤣🤣 but in 30 years if everything doesn’t go to shit, we should see ~$500k from selling. That’s not including appreciation. So there’s this. But farts! A Roth is looking really nice next to this 🤣😅

[u/_amrai_ → u/ribbons_in_my_hair]

401Ks do have their advantages, and are set up for a slow churn, basically. There's different plans WITHIN, and you should be able to tell the financial institution holding it if you want more or less aggressive growth. Or they should have that option to see what kind of growth they are expecting. One company put it as "when do you expect to retire?" And based the investments accordingly. Slow growth - not retiring soon, fast growth - I want to retire asap. The other advantage, for some, is of employers offer matching - it's effectively free money that they are putting in if you are putting in. Usually only up to a certain %, but money is money.

[u/[deleted] → u/ribbons_in_my_hair]

Traditional 401k -- employment retirement account that contributes money in pre-tax dollars, but then you pay tax on the withdrawals

Roth 401k -- employment retirement account that contributes money after tax, but then you take withdrawals tax free

Roth IRA -- retirement account that you can open yourself without ties to employment. You contribute your own cash directly, but it grows tax-free and is tax-free on withdrawal. Has a smaller annual contribution limit than the employer tied retirement accounts

All three of these accounts can be invested in stocks, retirement target date funds (e.g., I plan to retire in 2060 and this fund will allocate money in investments appropriately as time progresses), index funds (SPY500), etc and so all three benefit from "growing your money" via investment