Look at the out of pocket maximums, and the plan costs. A high deductable plan usually has a lower cost and a much lower yearly out of pocket maximum.
How many in pre-retirement make catch-up contributions to 401K
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I wish I still could but it is no longer available at my workplace. So far it has worked out well not having any medical issues the last few years.
*70-80% IMO.
When my own + company contributions to my traditional 401k and Roth 401k accounts reached the IRS limit, I switched to the catch-up contributions in November for the last few paychecks. After the last paycheck this month, I'll switch back to the non-catch-up contributions for the 2023 paychecks. Fortunately, making these changes to future contributions is fairly straight-forward online.
If you started early, catchup contributions really don't move the needle. Your compounded earnings will be 10's of times more than your catchup contributions.
Maybe in years when the market is down.
It's that old a penny a day, doubled over 30 days or $1 million today.
Take that penny a day that is doubled every day for 30 days.
Start early and have 30 years of compounded growth and the catchup contributions are almost rounding error.
Maybe in years when the market is down.
It's that old a penny a day, doubled over 30 days or $1 million today.
Take that penny a day that is doubled every day for 30 days.
Start early and have 30 years of compounded growth and the catchup contributions are almost rounding error.
My out of pocket was the same for a mid-tier traditional plan and the HDP. Premiums where 1/2 and the company kicked in the first $1000 into the HSA.
It's been a net positive for me. But it's not life changing money, just less spending on health costs.
I suspect some of the savings is reduced administration as the first $4k of expenses are on me.
Plus HSA money carries over, so no need to spend it all by year end.
I am on a Medicare Advantage Plan basically forced by the employer I retired from. So no HSA. I do have a HRA however.
True but a lot of people don’t make that first step. Make it easier for them. Ten percent to start. Teach the discipline of paying yourself first each pay period. It’s a journey of sorts. Then you learn how to budget by buying what you need and not what you want. Eventually that ten percent becomes 20% or 30%.
Back in the 80’s I started with $25 a month through a company called Twentieth Century Mutual Funds. That amount grew over the years as I got raises and decided what was more important. That company is now American Century and I am a member of their Private Client Group. Time and discipline got me there through good and bad market periods.
Sorry to hear that. This is the part most people don't talk about. You can do all the right things preparing for retirement and something like a divorce can set you most of the way back to square one. That happened to me 1/2 way through my career, so I was never able to max out or do catch up contributions. I lost 65% of mine plus paying CS. It sucked and I did a lot of overtime just to survive and be able to continue to contribute a decent amount.
That is my thinking. Kinda late to make a big difference. Maybe for some, but I suspect the wiser won’t “need” to do this. It may have benefits for them, but it won’t be required.
Im thinking that when I get to that age, I will be better off doubling down on my mortgage instead. Have to wait and see. For now I’m simply not eligible.
Very well said. It is an opportunity to save. I wish I had the opportunity to participate in the 'catch up" years. Lost my 401K job before I reached the age to catch up.
If one plans ahead and has the discipline to set aside money, it is a great opportunity. If I didn't choose to save while I could, I could have been eating dog food by now.. One is in charge of their finances when they can set aside some money for tough times. A little luck never hurt either..
Either way, I am grateful..
You managed very well. I was fortunate with my first semester of business class in community college. "Pay yourself first" was the saying. Take your paycheck and pay yourself first by taking a predetermined percentage of your paycheck and put it in savings and live from the remainder of your paycheck. I am living proof that that mindset really works. I had very modest jobs starting out, but after 30 years of paying myself first consistently from every paycheck and investing carefully with disicpline, it worked. I can now stop working when I want to. Luck also helped, but discipline for 30+ years is what made it happen.
The IRS needs to increase the yearly contribution limit of 401K / 403B to have a max limit of $35K and catch up limit of $40K.
I took a different approach and only put what the employer matched in the 401, 4%, and max out roth when I heard about that, and put everything I could in a regular taxable account and paying off house.
I wanted to be able to "retire" at a younger age than the typical 62-67.
At 46 I am feeling good about being able to stop working anytime, Just looking for a reason to leave, and the recent 15% raise they gave us to keep up with inflation does not help.
I wanted to be able to "retire" at a younger age than the typical 62-67.
At 46 I am feeling good about being able to stop working anytime, Just looking for a reason to leave, and the recent 15% raise they gave us to keep up with inflation does not help.
I’m “only” 30 and feel I’m playing catch-up. I haven’t contributed to a 401 in nearly 5 years. My last employer who did the 401k matched 100% up to 12% so that’s what I contributed. I should have never left that job for the lateral move job that had nothing but sub par health insurance that was ~800% more.
Anyways, starting 2023 I’m going to be in the game at 28%.
Anyways, starting 2023 I’m going to be in the game at 28%.
Don’t know how good your crystal ball is, but mine never gets better than a dull hazy mess.
But my rearview mirror of life sure is crystal clear. I got a good view of every mistake I ever made…
Good luck!
I love the catch up clause!! "They" allow us to save more money. OK pre tax money in a reg IRA, but still sweet deal.
Max it out, then save more.
Max it out, then save more.
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No, I don't, not sure if I am allowed.
But, when I grumble etc. about my co. benefits etc. (I think our benefits s***, compared to many other cos., but our salaries are higher than median salaries for same position other cos. imho), I say the one thing my employer gave me when I started in 2010, was the ability to max out my 401k to the IRS limit every year. I was not in a position to do that at the co. I came from. There was talk of being forced into deferred comp and out of the 401k, because the plan is lopsided where I work, thank goodness that didn't happen. That would be a death knell--imagine having ~ 20k extra taxable income added to our pay--it would be a tale of Jack and the Beanstalk. I guarantee there would be no means to force save that money and it'd be squandered. Hate to admit it, but forced savings for us common folk works.
But, when I grumble etc. about my co. benefits etc. (I think our benefits s***, compared to many other cos., but our salaries are higher than median salaries for same position other cos. imho), I say the one thing my employer gave me when I started in 2010, was the ability to max out my 401k to the IRS limit every year. I was not in a position to do that at the co. I came from. There was talk of being forced into deferred comp and out of the 401k, because the plan is lopsided where I work, thank goodness that didn't happen. That would be a death knell--imagine having ~ 20k extra taxable income added to our pay--it would be a tale of Jack and the Beanstalk. I guarantee there would be no means to force save that money and it'd be squandered. Hate to admit it, but forced savings for us common folk works.
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