How many in pre-retirement make catch-up contributions to 401K

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.
I agree having the desire to save is like anything else, wanting to run, bike, exercise once a person is into the habit....it's all about habit. My wife just made a joke, she said she's going out to spend dad's money. I said under my breath, money that I don't have lol But she did give me the ultimate gift this XMAS, the gift of the family health care going onto her employer, at the cost of 1/3 of mine! :ROFLMAO:
 
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 agree with your game plan to contribute up to employer match, then max out Roth.

Over the last 20 years I’ve asked about 100 different people if they contribute to an IRA. As expected 95% had no idea what an IRA was and their 401K was the only retirement plan they contributed to…… which is still a very good way to save for retirement.

I convinced a colleague at work to open up and max out 2 Roth IRAs for him and his wife that’s a stay a home mom.
 
Fixed it for you.

You presume people with high incomes are good savers. Not always true.

You presume those with wealth got it from high income. Also, not true.

It takes decades to build wealth - and it can be done on a modest income.

If you understand money and investing.

Jealousy, envy, and “sour grapes” will not accomplish anything.

Anyone, and I mean anyone, can achieve wealth.

But it comes through discipline, applied over decades.

Class envy, and excuses,
will never work.

Forty years ago, my Dad told me, “People don’t plant to fail.”

“But they do fail to plan”
It’s not always just about one’s discipline. If you make $60K as a single income putting away 1/3rd plus additional catch up seems like a very tall order for even the most financially disciplined. There are other factors as well, such as in my company plan which will only allow up to 15% contribution but no more. Making 130K+ is the only feasible way be able to hit the max. In the case of that plan it’s absolutely a de facto bonus for the high earners only.
 
  • Like
Reactions: wtd
It’s not always just about one’s discipline. If you make $60K as a single income putting away 1/3rd plus additional catch up seems like a very tall order for even the most financially disciplined. There are other factors as well, such as in my company plan which will only allow up to 15% contribution but no more. Making 130K+ is the only feasible way be able to hit the max. In the case of that plan it’s absolutely a de facto bonus for the high earners only.
There are many factors.

But I invested - while making $60K and supporting a family of four on that one salary, while my wife stayed home with our two kids. Drove a 1970 Ford Fairlane, with roll up windows and no AC, to work. Saved me a car payment, which is how I carved out a bit of money to invest.

My “company” at the time, the USN, didn’t have a 401(k). And if I left before 20 years, there was no pension.

So, I did what I could within the constraints I was given.

Maxed out my non-deductible, traditional IRA at $2,000/year Maxed out the spousal IRA, a whopping $250/year for a non-working spouse. Invested in regular, taxable mutual funds.

Lost money. Paid taxes on the losses, not making that up. Learned some hard lessons. Played the hand I was dealt.

There are a lot of reasons that people fail to plan. Fail to prepare.

Most of them sound like excuses to me.
 
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.
Gov't is a business. They want dollars in the economy and they also need to tax earnings to keep the balance sheet closer to that black line but still deep in the red. the contributions are generous enough for the middle class.
There are other investment vehicles to consider outside of equities.

I was happy to see med term CD up above 4%. There are also some interesting muni bond vehicles out there.
 
Too young to do the catch up. Probably won’t need to though. I started investing young and never pulled out so I probably won’t need to do catch up unless I just want to stack more money.

I think balance and discipline are both important. What is the point of hoarder gobs and gobs of something you will never likely use? **ahem - oil hoarders** If you’re disciplined enough to invest over your entire working life and never touch it while also living below your means, what’s the likelihood you blow all your money in retirement. Not high I imagine. Invest and plan for the future, yes, but also have some fun. You can’t take all that money with you to the grave. So I’ll keep investing like I always have but probably never worry about the catch up.
 
@ATex7239 - I think we agree on much of what is posted. Of course there is a balance. Living like a miser is, well, miserable.

When I was in my early 30s, I scrimped and saved (the Fairlane was a heap, a hand me down used car with rust, drum brakes on all four corners, as well as lacking AC) to be able to invest.

But I didn’t live like a miser. Kids had decent clothes. We had a decent house.

I planned for the future while enjoying the present. I think that’s the point. I think that’s the only way to go.
 
There are many factors.

But I invested - while making $60K and supporting a family of four on that one salary, while my wife stayed home with our two kids. Drove a 1970 Ford Fairlane, with roll up windows and no AC, to work. Saved me a car payment, which is how I carved out a bit of money to invest.

My “company” at the time, the USN, didn’t have a 401(k). And if I left before 20 years, there was no pension.

So, I did what I could within the constraints I was given.

Maxed out my non-deductible, traditional IRA at $2,000/year Maxed out the spousal IRA, a whopping $250/year for a non-working spouse. Invested in regular, taxable mutual funds.

Lost money. Paid taxes on the losses, not making that up. Learned some hard lessons. Played the hand I was dealt.

There are a lot of reasons that people fail to plan. Fail to prepare.

Most of them sound like excuses to me.
Sounds like our early lives were very similar. I also was in the Navy and supported a family on a single income yet managed to invest early on. Except my beater was an old Dodge truck.

I’m not one for placating excuses but I’m also not the “just pull yourself by your bootstraps” type. Circumstances can affect outcomes. And often do. I understand maxing out is not feasible for everyone. But I also will not hear out someone who says they cannot invest while being frivolous with their money. Most are the latter from what I have seen unfortunately. I know too many high earners who spend it all. It’s sad really.
 
We took the company match in the 401K. It was 100% company match of 5% contribution. Then we maxed out two Roth IRA's for the wife and I. Then, we made more money and maxed out the 401K too.

So currently we max out the 401K, two IRA's, and then put what we can in a brokerage account with ETF funds.

Im not the best investor in the world but we did OK and plan to retire and travel the country in a bus size RV at age 55.
 
Not eligible to make catch up contributions but max out 2 401ks (ROTH), two ROTH IRAs, deductible contributions to 529s and a family HSA. As a couple have said, not easy but the payoff will be there later.
Agree. Too young to catch up. We max out my retirement, add some to my Roth 401k type account, max my wife’s voluntary 403B, and do a backdoor Roth for my wife. I had too much older IRA to make the tax penalty worthwhile since I have the other Roth through work. Also bought a lot of ibonds since the rate is elevated.
 
Fixed it for you.

You presume people with high incomes are good savers. Not always true.

You presume those with wealth got it from high income. Also, not true.

It takes decades to build wealth - and it can be done on a modest income.

If you understand money and investing.

Jealousy, envy, and “sour grapes” will not accomplish anything.

Anyone, and I mean anyone, can achieve wealth.

But it comes through discipline, applied over decades.

Class envy, and excuses,
will never work.

Forty years ago, my Dad told me, “People don’t plant to fail.”

“But they do fail to plan”
High income people can be terrible with money, but they also can make changes that people with far less income can't make to fix it. When 50%+ of Americans have no savings and the average American has a small retirement account it is a huge problem. Most are just trying to get by every month. Call it envy or reality.
 
While the term ”poverty level” may be a nebulous term at best, it is clear that it is easier to save when one’s income exceeds ones needs.

Problem is, one tends to convince themselves of an awful a lot of ”needs”.

Was perusing an article about homelessness this morning. Apparently there are different levels, not just down and out on the street. Anyhow. The article was focusing on a woman who was struggling to get by in LA. Shocking. She could crash at a relativives house whenever, but the “stress” would get to her at times so she would hit up a hotel. Occasionally she just sleeps in her SUV… which she still is making payments on… not some 20 year old clunker, like from a BHPH but a 2018… my interest in the article waned after reading that far.

Maybe I am just being judgmental.

Life is hard but sometimes we sure seem hellbent on making it harder.
 
High income people can be terrible with money, but they also can make changes that people with far less income can't make to fix it. When 50%+ of Americans have no savings and the average American has a small retirement account it is a huge problem. Most are just trying to get by every month. Call it envy or reality.
I can give a perfect example of why "most are just trying to get by"

Myself and my coworker. We both make the same wage, close to 60k annual, and live in the same community, but my wife chose to stay home and not work, and his wife works full time, so his household income is much larger then mine.

I have a paid for house, older paid for vehicles, and a healthy retirement well above what the employer provides, and about 2 years worth of expenses in a liquid savings account. .

My co worker, has a negative net worth. Very little equity in house, 2 car payments and owes more than they are worth, Bought a new side by side last year and took out a 6 year loan, 3 credit cards maxed out and pay the minimum each month. He complains almost daily about the higher income people.
 
High income people can be terrible with money, but they also can make changes that people with far less income can't make to fix it. When 50%+ of Americans have no savings and the average American has a small retirement account it is a huge problem. Most are just trying to get by every month. Call it envy or reality.
We agree that it’s a huge problem.

But it’s a problem because people don’t save. The only barriers are ignorance and discipline.

Addressing it through education, improving financial literacy, would be helpful.

I would feel a lot more empathy for those “just trying to get by” if they didn’t have newer cars than I do. Most folks “just trying to get by” have atrocious spending habits, and make big financial mistakes.

If someone “just trying to get by” is driving a 20+ year old Ford, with roll up windows, no AC, no power steering, and drum brakes, like I did, decades ago, in order to have enough money to invest, then I would have a lot more empathy.

Most Americans “just trying to get by” actually have incredible wealth, and live in incredible luxury, compared with the rest of the world.

They have bought the message that they “deserve” or “need” those luxuries, and the pernicious lie that their failure to exercise financial discipline isn’t their fault.
 
Last edited:
Like most, I'm somewhere in the middle. Have enough saved for an emergency but I don't deny myself what I want. I don't judge anyone how they save or spend their money, and have no patience for lectures. Scrimp and save and be poor now, or spend it all and be poor later. Debt can be good or bad. Doesn't matter to me. None of us know when our time will come and you can't take it with you.

That said, will likely make catch up contributions over the next 10 years.
 
we did OK and plan to retire and travel the country in a bus size RV at age 55.
Remain positive, but always know that plans can go awry through no fault of your own. I attempt to not be that person that dwells so much on the future that I miss living today (with imperfect success). EDIT: I also think that it is misguided to obsess about wealth accumulation vs. balance and moderation.
 
Last edited:
you can't take it with you

My 81 year old mother, who is best described as a "spendthrift" and whose grand plan for retirement was to get half of my dad's 401K in the divorce and then mismanage it to the point where she only has SS to live off of...

...tells me that when she wants to "borrow" money from me and I refuse to give her any.

She pulls in $3300 a month in SS (that's before the recent increase, and most of which is from my dad's contribution--when he passed away, she was entitled to survivors benefits) and constantly whines that it isn't enough despite her house being paid for.

"You can't take it with you" certainly describes her approach to money management. The results speak for themselves.
 
Unfortunately many high earners don’t have a financial safety net and live a lifestyle they should NOT be living. They feel the good times will never end.

All it takes is a job loss, company downsizing, political ’restructuring’ at workplace, recession, etc….. and these high earners are out the door and in big trouble.


Most young folks starting in any career field (and not living at home with parents) don’t make lots of money starting out so it’s understandable not to fund a 401K or IRA. As they start making more money and get established they need to contribute to get employer match in 401K / 403B.

Then a decade later when they are making good money (and not living in parents basement) they can max out their retirement contributions and live a conservative spending lifestyle. Hopefully they marry someone with the same financial goals and interests.
 
My 81 year old mother, who is best described as a "spendthrift" and whose grand plan for retirement was to get half of my dad's 401K in the divorce and then mismanage it to the point where she only has SS to live off of...

...tells me that when she wants to "borrow" money from me and I refuse to give her any.

She pulls in $3300 a month in SS (that's before the recent increase, and most of which is from my dad's contribution--when he passed away, she was entitled to survivors benefits) and constantly whines that it isn't enough despite her house being paid for.

"You can't take it with you" certainly describes her approach to money management. The results speak for themselves.
Sorry to hear it. Disagreement over money is unfortunately a big cause of family strife.
 
Back
Top