My employer doesn't start matching 401k contributions until I've worked for a year.. should I still

[GreenFrog]

Pretty straightforward question.. my employer doesn't contribute until I've worked for a year, but so far I've just been putting in the x% that they would match anyway. I'm thinking I might hold off on the contributions for a year and then start contributing again when they start matching. It's only a couple hundred out of each paycheck, but it adds up to a couple thousand over a year and I'm thinking it could be better utilized in my wallet.

Also, when you folks first got your jobs and had disposable income, did you spend a lot of it? I'm kind of not saving as much as I should and I'm eating out often, buying clothes/shoes, and just living pretty well. I'd say 50-60% of my expenses are going towards eating out, but I'm starting to cut back on that and am cooking dinner at home now. Lunch I'll just eat out when I'm working, but breakfast and dinner I should be able to save on. Is it normal that I'm spending a lot of money? lol. I mean, I'm starting to realize I should start saving but even my other fellow co-workers who have been working for a year or two have told me that they, too, spent a lot of money when they first got jobs and started stabilizing afterwards. I've been working for about 8-10 weeks now, to give some perspective.

 

[Harold falcon]

A/S/L?

Just kidding, but there's no harm in contributing even if your employer doesn't match. Remember that's pre-tax income so it's a good investment especially if you aren't saving anything else.

 

[GreenFrog]

22/M/Boston
lol.

But yeah, I know contributing is a good idea overall, but is it a terrible idea NOT to?

 

[Eason]

Do you absolutely ******* love your job? Wait 6 months imo, see if you'll be staying there for the long term or not. Put the money aside that you had planned to invest, and deposit it later if you really want to. I "invested" in a 401k 9 months before the financial crisis hit, I quit my job, and left the country. Needless to say, my investment was not a good one. I needed the money I invested (I wasn't earning much to begin with) so after the initial 30% hit my stocks/bonds took from the financial crisis, plus the withdraw penalty (20% or something?), I lost half of it.

 

[GreenFrog]

Absolutely. I couldn't be happier with the position I landed out of college.

 

[Lord-Barrington]



22/M/Boston
lol.

What are you wearing?

 

[Pennglock]

Do Roth IRA first if you're under the income limit.

 

[GreenFrog]



What are you wearing?

a cotton wife beater from target, gym shorts, and a watch with a brown leather strap.

Do Roth IRA first if you're under the income limit.

I already have a Roth IRA (that's tanked 30% since I opened it..)

 

[Liquidus]

You should build up 6-12 months of savings in your checking account before putting money in a retirement fund. At that point, consider a Roth 401k.

 

[GreenFrog]

Sigh.. I need to save more money.

 

[Biggskip]

GF, some of the advice in this thread is just foolish. The reality is that every dollar that you invest in your 401k is a dollar that you won't have to pay taxes on. So even if you invest the money in cash one way to look at it is that you are getting a 15-20% return on your money.

A Roth IRA makes no sense unless there is some investment strategy which your Roth will allow you to take part in but your investment choices in the 401k will not AND those choices will provide above and beyond returns to make up for the taxes that you paid on the money that you put into the Roth to begin with.

Bottom line, don't do a Roth unless you are maxing out your 401k.

I realize that the the temptation to not save and spend the money now is great, believe me, I really do. That said, once you get used to not having the money, you won't even miss it.

 

[Harold falcon]

OP, if you're in Boston forget saving. There's a great bar up there called the 6B Martini Lounge. It is awesome. If I lived in Boston I would spend all my money there, I recommend you do so.

 

[Wjleier]

First of a all Roth and a 401 are two differnt saving vehicles. With a roth you pay taxes up front, with a 401 (essentiall the same as a traditional IRA) you pay taxes on the back end. Let me ask you, would you rather pay taxes on the seeds or the harvest? I'd rather pay them on the seeds. Second of all if your roth tanked 30% your 401 likely would have as well as they are both invested in the same things(stocks and mutual funds). The name is only the "shell" ,if you will, that your investment has on top of it for tax bennefits. You might also be wise to look into a strong cash value life insurance poilicy to treat it as a "bonds" portion of your investment portfolio. If with a good company over 30 years it historically about doubles the return of bonds and offers protection for you, if you have need. If no need for ins., then someday when you do have need you'll have some for a less expensive premium than waiting untill that age. Some Good companys for Whole life insurnace or Cash value insurance include Northwestern Mutual, Mass Mutual and Ny Life. If you choose that route make sure you have a good company. A bad one will probably not beat the returns of bonds so their are deffinetly tiers of Whole Life ins. policys. Find a good advisor and ask them about your options. Most people here will recomend you things based on emotions, bad experiences and little knowledge.

 

[Wjleier]

.

 

[Liquidus]



GF, some of the advice in this thread is just foolish. The reality is that every dollar that you invest in your 401k is a dollar that you won't have to pay taxes on. So even if you invest the money in cash one way to look at it is that you are getting a 15-20% return on your money.

Maybe I'm missing something here, but you do pay taxes on your 401k withdrawals when you retire.