(Closed) How do you allocate your savings/retirement money?

posted 6 years ago in Money
Post # 3
Member
13012 posts
Honey Beekeeper
  • Wedding: November 1999

I load up my 401K; I get a 100% match up to 6%, so I try to capitalize on whatever they’ll give me!  We lock away a lot of money in high interest CDs, have separate savings accounts for emergencies, wedding, house, and other savings.  I imagine once the wedding is over, the wedding savings will default to retirement savings.  Portions of my checks go to each every time they’re direct-deposited, so I never have to worry about moving money around. 

Post # 4
Member
7311 posts
Busy Beekeeper
  • Wedding: October 2011 - Bed & Breakfast

You should definitely speak with a financial planner to help you evaluate your options. Right now we each put 5% into our 401K, and our employer provides another 1% match, for a total of 6% annually. We get to decide how our 401k is invested. I have mine at 25% government bonds and other stable, but low yeild, funds, and 75% in various stock funds. Last year my European stock fund took a big hit and I lost money on it, and my US investment capital fund barely made any gains, but that’s the chance you take. In the coming months our employer is also adding a Roth option, and we will be able to direct the investment allocation of those funds as well. Once we settle on the house we are under contract to purchase, we plan to sit down with our planner and see if Roth may be a good option for us to diversify our retirement savings. The benefit of the Roth is that when we withdraw the money we’ve invested, it will be tax free, whereas our 401k withdraws will be taxed because we invested pre-tax dollars on the front end. We are also saving for DS’s college, so after he is done college we will be able to allocate more for retirement savings. i think the general rule of thumb is to save 10% of your annual income for retirement.

 

Post # 5
Member
1729 posts
Bumble bee
  • Wedding: December 2012

i work in financial planning.. i agree- seek one out.most do free consults.but  roth ira is def the way to go!

Post # 6
Hostess
18643 posts
Honey Beekeeper
  • Wedding: June 2009

I would put up to the match in your 401k then put money into a Roth IRA.  Talk to an advisor about what types of investments you should be using. 

We contribute the max to our 401ks and Roth IRAs (we save my entire paycheck).  We are in our mid-20s so we have everything in stocks both domestic and foreign but the amount of risk probably won’t agree with everyone.

An IRA or 401k by itself isn’t risky.  What you buy determines your risk.  Since you are young, you can afford to take more risk because you have decades for the accounts to grow.

Post # 7
Member
2063 posts
Buzzing bee
  • Wedding: August 2012

6% of my paycheck and 15% of FIs

Post # 8
Member
1798 posts
Buzzing bee
  • Wedding: August 2011

You need to meet with a fee-only financial planner. They will help you figure out how much you need for retirement and what contributions you need to make. Also, one of the big reasons people get in trouble with retirement is not taking enough risk. It sounds crazy, but if your young, you need to take some smart risks (stocks) in order to earn enough interest to beat inflation. A financial planner can help you understand how to divide your investments between stocks, bonds, etc. based on your age.

Post # 9
Member
14488 posts
Honey Beekeeper
  • Wedding: June 2011

I max out my 401k and Roth IRAs every year.  Roth is best to get started as early as possible so it can start growing, and everything that it makes it tax free.  401k is pre taxed money and tax deferred, so right off the bat, you have 25-30% more money to invest and work for you depending on your tax bracket.  IMO, if you’re saving for retirement, nothing can beat the leg up that tax free contributions of 401k gives you.  Take ANYTHING your employer will match, even 50%.  If you get these started now and max it out, you can always decrease it later if you find you need more cash on hand, but  the money in there already will have more time to work for you and grow and time is the key.

Post # 10
Member
893 posts
Busy bee
  • Wedding: May 2013

@Robin_Sparkles:  Maximize your company’s matching and if you can, maximize your IRA as well.

Post # 11
Member
913 posts
Busy bee
  • Wedding: April 2014

@msfahrenheit:  Agree with this totally! OP, the key is “fee-only.” Other financial planners work on commission and will try to sell you investments that may not be in your best interest.

I don’t even think you need a financial planner necessarily, just a few basic books. I would start with Ramit Sethi’s I Will Teach You To Be Rich for personal finance and Bogleheads’ Guide to Investing for investing.

Post # 12
Member
10367 posts
Sugar Beekeeper
  • Wedding: September 2010

You’re throwing away free money right now by not taking advantage of the 50% matching up to 5% on your 401k. Start by kicking that up to AT LEAST 5%.

An IRA is a good deal if you think your taxes now will be less than your taxes when you retire (since that is after-tax income). We hedge our bets by contributing to both. You can only put $5000 a year into an IRA, so we max that out, and then put 15% of my income into my 401k. My husband gets a pension, so that is additional income on top of our savings.

We’ve done our 401k and IRA investments to mostly track the DOW and S&P500, and have made really substantial gains in the past few years. We’re feeling pretty secure about things at the moment!

Post # 13
Member
10367 posts
Sugar Beekeeper
  • Wedding: September 2010

Also, it should be said that you can change how your money is allocated within the 401k/IRA at any time. You can move it from stocks to bonds or to straight cash if you see the economy headed to a big dip again. People lost their life savings because they didn’t think a dip that big could happen, and did not take action. We know now that it can – so I think our generation will be a little quicker to act in the future.

Post # 14
Member
6124 posts
Bee Keeper
  • Wedding: August 2012

Fiance and I attended a free retirement workshop through our work (we work at a university), and have another one planned later this year.  It was a 6 week course.  Just a nice way to get educated on some things and they showed us a ladder worksheet.

Basically we try to max out as many accounts as we can.  We have two ROTHs, two 457b, a 403b and HSA account.  Then – thankfully – our work puts in 14.2% of our salaries each into a 401a (no contributions are allowed to this one) on top of that.

I visit once a year with my TIAA-CREF person to help me allocate my accounts.  We rebalance annually too.  Perhaps wherever you have your current retirements with will have some planning suggestions for you, or you can go with a financial planner like others suggested.

The topic ‘How do you allocate your savings/retirement money?’ is closed to new replies.

Find Amazing Vendors