Americans Are Putting Billions More Than Usual in Their 401(k)s • Hacker News Board

Re: Americans Are Putting Billions More Than Usual in Their 401(k)s

#21

Post by chimeracoder » Thu, Jan 05, 2017, 5:13 PM UTC

koolba wrote: post #15

vinhboy wrote: post #6

Say what you will about government incompetence, but the idea of tying things like my retirement and healthcare to my employer just sounds terrible. Also, auto-enrolling people into 401K sounds kinda like... ya know... social security.

> Also, auto-enrolling people into 401K sounds kinda like... ya know... social security. Companies auto enroll people into 401(k) programs because of participation requirements. For "highly paid employees" (i.e. executives) to be allowed to contribute to a 401(k), there requires a minimum level of participation from the rest of the workforce at the company. The easiest way to do so is to auto enroll people on day one…

> For "highly paid employees" (i.e. executives)

Highly Compensated Employees are not just executives. Anybody who makes more than $115,000/year qualifies, which applies to a lot of engineers. Also, anybody who controls more than 5% of the business qualifies, whether or not they are an executive, and regardless of their salary.

Re: Americans Are Putting Billions More Than Usual in Their 401(k)s

#22

Post by AngrySkillzz » Thu, Jan 05, 2017, 5:14 PM UTC

astockwell wrote: post #2

Headline is shameless click-bait. Percentage change is much more valuable than absolute dollars. From the article: "An increase in retirement savings of 0.6 percentage points [from 2010 to 2015]".

Reading is fundamental. 0.6 on a rate of 6.2. That's roughly 10%. What would you do if your savings was 10% larger?

Re: Americans Are Putting Billions More Than Usual in Their 401(k)s

#23

Post by leggomylibro » Thu, Jan 05, 2017, 5:14 PM UTC

callinyouin wrote: post #4

I'm not planning on Social Security being around by the time I'm old enough to tap into it, and I'm also not planning on having any kids to bail me out when I go senile, so yeah I'm putting a lot into my 401k. I think a lot of people my age (turning 30 next week) are feeling the same way, so I wonder if it's younger workers driving this trend.

I'm in the same boat; I view my social security "contributions" as a lifestyle tax from the last generation, and I'd opt out of them in a second if I could. Instead, I'm planning my retirement around Roth IRAs and 401k savings.

I think this is definitely a common sentiment amongst us youngsters.

Re: Americans Are Putting Billions More Than Usual in Their 401(k)s

#24

Post by douche » Thu, Jan 05, 2017, 5:15 PM UTC

vinhboy wrote: post #6

Say what you will about government incompetence, but the idea of tying things like my retirement and healthcare to my employer just sounds terrible. Also, auto-enrolling people into 401K sounds kinda like... ya know... social security.

If your employer offers a matching program for some percentage of your contribution, hey, it's free money.

Personally, I've also got some outside IRAs and mutual funds as well; better to not have all the eggs in one basket, I figure.

Re: Americans Are Putting Billions More Than Usual in Their 401(k)s

#25

Post by koolba » Thu, Jan 05, 2017, 5:15 PM UTC

chimeracoder wrote: post #21

koolba wrote: post #15

Earlier quoted context omitted.

> Also, auto-enrolling people into 401K sounds kinda like... ya know... social security. Companies auto enroll people into 401(k) programs because of participation requirements. For "highly paid employees" (i.e. executives) to be allowed to contribute to a 401(k), there requires a minimum level of participation from the rest of the workforce at the company. The easiest way to do so is to auto enroll people on day one…

> For "highly paid employees" (i.e. executives) Highly Compensated Employees are not just executives. Anybody who makes more than $115,000/year qualifies, which applies to a lot of engineers. Also, anybody who controls more than 5% of the business qualifies, whether or not they are an executive, and regardless of their salary.

They'd qualify but I'm pretty sure when the law was first written it didn't have them in mind. It was specifically to prevent top level executives or business owners (>=5% of company) from creating 401k plans for only themselves.

Re: Americans Are Putting Billions More Than Usual in Their 401(k)s

#26

Post by Kluny » Thu, Jan 05, 2017, 5:15 PM UTC

chiph wrote: post #3

With more money chasing after the same quantity of equities, I would have thought the market prices would have been going up. But they've been essentially flat over the past year. Even though firms have been buying back their stock. There must be another reason why they've been stagnant.

My funds are doing quite well. Gains of about 7%.

Re: Americans Are Putting Billions More Than Usual in Their 401(k)s

#27

Post by chimeracoder » Thu, Jan 05, 2017, 5:17 PM UTC

sikim wrote: post #20

I wonder what percentage of 401k contributors has an IRA. General rule of thumb is to contribute enough to 401k to get maximum company matching and max out your Roth IRA contribution first. IRA is generally preferred because you can choose your own fund (e.g. Vanguard) and has more flexibility in certain situations. By having both pre-tax (401k) and post-tax (Roth IRA), you would be also diversifying your tax liabili…

> By having both pre-tax (401k) and post-tax (Roth IRA), you would be also diversifying your tax liability in your retirement.

The way your comment is written, it implies that 401(k)s are necessarily pre-tax and IRAs are necessarily post-tax. Both 401(k)s and IRAs come in Traditional and Roth forms, so you could also use pre-tax money for contributing to your IRA, and post-tax money for contributing to your 401(k), or any combination thereof.

You can also split contributions - ie, contribute to all four accounts in the same year - as long as your total contributions are within the limits.

Re: Americans Are Putting Billions More Than Usual in Their 401(k)s

#28

Post by pwthornton » Thu, Jan 05, 2017, 5:17 PM UTC

cjkalsdf wrote: post #18

callinyouin wrote: post #4

I'm not planning on Social Security being around by the time I'm old enough to tap into it, and I'm also not planning on having any kids to bail me out when I go senile, so yeah I'm putting a lot into my 401k. I think a lot of people my age (turning 30 next week) are feeling the same way, so I wonder if it's younger workers driving this trend.

You think the stock market will be around when you are old enough to need your 401k? I max my contributions but I have no faith they won't be wiped out in some future crash.

You buy shares in the stock market, not dollars, so a crash shouldn't hamper your ability to retire, unless you want to retire during the crash itself (although diversity of assets would help with this).

The stock market recovered years ago from the Great Depression and is doing really well again.

Re: Americans Are Putting Billions More Than Usual in Their 401(k)s

#29

Post by user837387 » Thu, Jan 05, 2017, 5:17 PM UTC

cjkalsdf wrote: post #18

callinyouin wrote: post #4

I'm not planning on Social Security being around by the time I'm old enough to tap into it, and I'm also not planning on having any kids to bail me out when I go senile, so yeah I'm putting a lot into my 401k. I think a lot of people my age (turning 30 next week) are feeling the same way, so I wonder if it's younger workers driving this trend.

You think the stock market will be around when you are old enough to need your 401k? I max my contributions but I have no faith they won't be wiped out in some future crash.

Forget the stock market, will you still be around. I'd plan accordingly (tongue in cheek)

Re: Americans Are Putting Billions More Than Usual in Their 401(k)s

#30

Post by jgalt212 » Thu, Jan 05, 2017, 5:18 PM UTC

cjkalsdf wrote: post #18

callinyouin wrote: post #4

I'm not planning on Social Security being around by the time I'm old enough to tap into it, and I'm also not planning on having any kids to bail me out when I go senile, so yeah I'm putting a lot into my 401k. I think a lot of people my age (turning 30 next week) are feeling the same way, so I wonder if it's younger workers driving this trend.

You think the stock market will be around when you are old enough to need your 401k? I max my contributions but I have no faith they won't be wiped out in some future crash.

fair enough, but if there's a broad based and persistent market crash then there will be broad based and persistent deflation. Ergo, you won't need to have saved all that much money to retire.