Retirement investing...

[supton]

Okay, if I get a free match for a poor performing fund, why not just invest in a better fund? I'd only give up $3500/year max in match, and if the fund underperformed popular funds like VFIAX, what did I gain myself except pretax deduction, which again may or may not be worth it, depending. That is what my hangup is.

It grows, just not as well. But it still grows.

Then when you change employers you gain the potential of rolling into a better fund.

For all I know, you might want to look into rolling into a Roth once vested--there's a tax implication, but if you are convinced that it's under-performing that much, you might be able to go that route.

In the end, it's free money. Giving up a 5% match is like working 2 weeks a year for free.

 

[SC Maintenance]

Okay, if I get a free match for a poor performing fund, why not just invest in a better fund? I'd only give up $3500/year max in match, and if the fund underperformed popular funds like VFIAX, what did I gain myself except pretax deduction, which again may or may not be worth it, depending. That is what my hangup is.

There is the match of 50% to start, so your already that far ahead. Then there is a tax advantage - in your case it sounds almost certain you will be in a lower tax bracket in the future. Also the higher performing fund might be higher volatility, and everyone including Goldman Sachs is predicting only marginal returns for the next few years, although you never know.

I agree, not putting in enough at least to get the maximum match is foolish. My company doesn't do any match, unfortunately.

 

[ecotourist]

Continue investing and retire early.

Most people I talk to in healthcare really don’t do a good job planning for retirement, it’s just something that will eventually happen to them. No real retirement map planned out.

More than a few older physicians are dead broke. They made a lot of money in their career and spent it all (cars, jewellery, travel, alimony). That's not a good retirement plan.

When I was still in my 30s I traveled to Ottawa and met with the VP of MD Management (a Canadian organization that specializes in investments and retirement planning for physicians and their families). He told me that my wife and I were already in better shape than an older physician he had just talked to who was hoping to retire but had no significant deploy-able assets. He had made a lot of money in his career but it was all gone. He had nothing he could sell either - travel memories, fur coats and leased cars aren't worth a lot. I had a few of those physicians working for me later in my career too - the "really needs to retire but has no assets" group.

Retirement preparation doesn't just happen. Making a lot of money doesn't do it either. Investing early and often, and not spending everything you make is a start.

 

[Pablo]

with that sizable amount speaking with an advisor or Fisher Investments would be wise, they'll put you on track for a stream of retirement income.

He is thinking he wants that much. Doesn’t have yet

Fisher I don’t recommend

 

[ET16]

Taxes are an important consideration, too.

https://smartasset.com/retirement/retirement-taxes

 

[factorytuned2012]

He is thinking he wants that much. Doesn’t have yet

Fisher I don’t recommend

I gotcha. Fisher may not be for everyone I know of several it works for. I am not promoting any one fiduciary just referencing.

 

[andrew_j]

That's what one of our MDs basically just told me. They also clarified that our salary match for 401k is only 50% match up to 6% up to 3500/year, max, so that's kindof what I expected. Trash. He did say exactly what you said about 401k though. I may forego the Roth in lieu of the 401k, as I cannot afford to max the 401k AND Roth. Should one be a priority, or mix and match?
I do have an individual brokerage already.

Take the free money first . My wife and I do it and it adds up well. You can definitely mix. We also do Roth.

$3500 is great addition from 0…..401k is slow steady if youth on side. My first 5 years into 401k age 21-26 ($5k/year) with some profit sharing and rollovers is the vast majority of my retirement balance 25 years later.

I cannot fathom why anyone would not take it except if they get over their heads in consumer debt.

 

[Ws6]

It grows, just not as well. But it still grows.

Then when you change employers you gain the potential of rolling into a better fund.

For all I know, you might want to look into rolling into a Roth once vested--there's a tax implication, but if you are convinced that it's under-performing that much, you might be able to go that route.

In the end, it's free money. Giving up a 5% match is like working 2 weeks a year for free.

We get 3% match on 6%, capped at 3500, so its just not very motivational to me IF the fund isn't great.

 

[IveBeenRued]

Cool story.

During the span of this thread:

-I opened a Roth IRA and will max it for 2024.
-I researched my company's 401k match (50% up to 6% for $3500 annually), funds (which I will look further into), and verified that I am fully vested and have an active account ready for funding if I choose to.

I guess that's zero progress to you. Maybe you think I should be able to time travel and fund these in the past? Tell me, what exactly do you think I could accomplish more than this over the weekend, becuase I'd sure like to do more, so tell me...

Don’t let him get to you. Remember, you, me, and many others in our age bracket are in what is called “the lost generation”. It’s a subset of the millennials. We came out into the workforce when companies were dumping talent left and right causing hyper competition for entry level positions which caused a massive driving down of wages. I remember going to one interview and it was me with a degree against a bunch of boomers with a degree and 10-15 years of experience. When they asked for my salary requirement, I said $75K. The manager laughed and said “I can get any one of those other guys in here for half that because they have a mortgage, kids, and the sweet smell of desperation”. Needless to say, I walked out. I ran into the cocky a-hole boomer that got the job at a conference a few years ago back. I was bumping up against $200K and he was “about to break six figures”.

You’ve already done the hardest part; saving the first $100K. We’ve all (well, most of us) have seen you make very rapid, incremental progress on your journey in the short amount of time that this thread has been here. Keep up the good work and remember, the biggest thing is consistency and not reacting to market swings, positive or negative. OMG, sector XXX has gone up 200% in the past month; don’t jump on the bandwagon wagon after it’s already left. Conversely, “sector YYY is seeing its worst quarter in ZZ years”; don’t react and make an unrealized loss into a realized loss.

 

[4WD]

More than a few older physicians are dead broke. They made a lot of money in their career and spent it all (cars, jewellery, travel, alimony). That's not a good retirement plan.

When I was still in my 30s I traveled to Ottawa and met with the VP of MD Management (a Canadian organization that specializes in investments and retirement planning for physicians and their families). He told me that my wife and I were already in better shape than an older physician he had just talked to who was hoping to retire but had no significant deploy-able assets. He had made a lot of money in his career but it was all gone. He had nothing he could sell either - travel memories, fur coats and leased cars aren't worth a lot. I had a few of those physicians working for me later in my career too - the "really needs to retire but has no assets" group.

Retirement preparation doesn't just happen. Making a lot of money doesn't do it either. Investing early and often, and not spending everything you make is a start.

I have a handicapped daughter - so we ride around allot looking for parking at the big medical complexes … There is a huge section for doctors right up front - only about 1/5 of it used by a few MB’s and Lexus’s etc … They worked hard for that degree and enjoy the fruits - but this parking thing feels like something else …

 

[RhondaHonda]

Okay, if I get a free match for a poor performing fund, why not just invest in a better fund? I'd only give up $3500/year max in match, and if the fund underperformed popular funds like VFIAX, what did I gain myself except pretax deduction, which again may or may not be worth it, depending. That is what my hangup is.

Just dump it all in the S&P 500 fund or whatever they have that is similar with low expenses. It’s going to generally track the market. You don’t need to hit home runs, just get the money in and get the match. Time and being consistent will only help. I’m a couple years older and wish I had maxed my 401k when I was a young employee. The beauty is its pre-tax and comes right out of the paycheck so you don’t miss it. It’s an effortless way to invest and the company match is gravy. If you put $769 of your paycheck to the 401k (assuming paid bi-weekly) you’ll get to the max annually with the $3,500 employer contribution added in. The next dollars should go to a Roth or HSA (if eligible) before going to a brokerage account.

What are you going to do for healthcare at 50 when you retire?

 

[supton]

We get 3% match on 6%, capped at 3500, so its just not very motivational to me IF the fund isn't great.

Ah, that may change the value then. What was the names of the holdings? You can google them and find their 1/2/5/10 year growth rates. Pick a number that might reflect their % of yearly growth going forward. Then pull out a spreadsheet and do say monthly compounding. If you put in 6%, get 3% match, what do you have after 5-10-15 years?

Where it gets a bit more work is figuring out if you take that 6%, pick a different fund, then reduce your 6% by what you'd lose to taxes (22%?), then what you would have after 5-10-15 years. The money in a non-tax advantaged fund will get taxed at what, 10 or 15%? something like that, whatever capital gains is. Whereas your 401k is ordinary income. So not quite so trivial to compare. But each time you go through the exercise, you can try to add one more feature, so as try to take a better guess.

I suspect you're still better off doing the 6% to 401k, then Roth, then decide if you want to go back and max out 401k. I suspect not--your desire to leave ASAP means needing to get money in a non-tax advantage bucket, so doing 401k for match then Roth then brokerage I think is best path--but I'm not an advisor and I'm not going to run a spreadsheet with your numbers. I also think the future is unpredictable and there's a chance you may find a job that is simply better and you may find you wish to stick with that well past 50.

 

[99Saturn]

We get 3% match on 6%, capped at 3500, so its just not very motivational to me IF the fund isn't great.

You're 39 right? getting $3,500 a year starting this year and every year after and compounded at 8% is around $66K at age 50. At age 60 it would be $194K. That's 13% of your goal ($500K) at age 50.

 

[SC Maintenance]

We get 3% match on 6%, capped at 3500, so its just not very motivational to me IF the fund isn't great.

Doesn't need to be your only investment.

Lets say you put in $2000, then they put in $1000. It does nothing, at the end of the year you have $3000 on $2000 investment.

Even if you put it in a money market for 4% your $3000 makes $120. So at the end of year 2 you have $6120 on a $4000 investment.

Year 3 is $9360 on a $6000 investment.

Rinse / repeat. Hard to beat.

 

[factorytuned2012]

this is how my employer contributes to our deferred comp plan "401k,457(b)".. we also get the state retirement system. 1st column is years of svc, 2nd is employee contribution and 3rd is employer. for state retirement employees contribute 9% and gain 4% interest annually while the employer contributes 18.56% to the state retirement.

 

[Ws6]

Don’t let him get to you. Remember, you, me, and many others in our age bracket are in what is called “the lost generation”. It’s a subset of the millennials. We came out into the workforce when companies were dumping talent left and right causing hyper competition for entry level positions which caused a massive driving down of wages. I remember going to one interview and it was me with a degree against a bunch of boomers with a degree and 10-15 years of experience. When they asked for my salary requirement, I said $75K. The manager laughed and said “I can get any one of those other guys in here for half that because they have a mortgage, kids, and the sweet smell of desperation”. Needless to say, I walked out. I ran into the cocky a-hole boomer that got the job at a conference a few years ago back. I was bumping up against $200K and he was “about to break six figures”.

You’ve already done the hardest part; saving the first $100K. We’ve all (well, most of us) have seen you make very rapid, incremental progress on your journey in the short amount of time that this thread has been here. Keep up the good work and remember, the biggest thing is consistency and not reacting to market swings, positive or negative. OMG, sector XXX has gone up 200% in the past month; don’t jump on the bandwagon wagon after it’s already left. Conversely, “sector YYY is seeing its worst quarter in ZZ years”; don’t react and make an unrealized loss into a realized loss.

I'm not worried about him, I was just stating that I have done quite a bit since this thread began, on a weekend no less, after having surgery, while working full time. He's a lightweight compared to what I deal with quite often. I just wanted to explain to others who have contributed, that yes, a lot has happened during this thread as it wasn't just a mental exercise, and to thank them/show action based on advice.

Sure, my $100K isn't "much", but you have to look at the big picture. I bought 13 acres on the river with a nice home. I only owe another $250K or so on it, at a fixed 4%. That right there is why I don't have more than $100K, I secured the housing first. All of my hobbies and assets? Could be liquid if I wanted. Except cars. My car is a dead weight around my neck financially, but I love it, so it's money well spent. I'm on target for my age, in MY book, as I got all of the expensive stuff out of the way by and large, and in retirement I won't spend much at all, as all that's handled, or rather, will be by then.

I hit up a refi to add the new land on the right which really "fences in" my "bowl", hence the 4% instead of lower. I don't have PMI though, and I guarantee you the estate is worth well over 2x what I have in it, at present. So not all of my moves have been toward stacking cash, but rather mitigating expenses by buying my forever home/vacation home all in one go, early on. Now? That would cost too much to consider. Got my foot in the door when I knew the market was right, back in the 20-teens.

 

[Ws6]

Doesn't need to be your only investment.

Lets say you put in $2000, then they put in $1000. It does nothing, at the end of the year you have $3000 on $2000 investment.

Even if you put it in a money market for 4% your $3000 makes $120. So at the end of year 2 you have $6120 on a $4000 investment.

Year 3 is $9360 on a $6000 investment.

Rinse / repeat. Hard to beat.

You're not wrong. I'll look more into it.

 

[Ws6]

Just dump it all in the S&P 500 fund or whatever they have that is similar with low expenses. It’s going to generally track the market. You don’t need to hit home runs, just get the money in and get the match. Time and being consistent will only help. I’m a couple years older and wish I had maxed my 401k when I was a young employee. The beauty is its pre-tax and comes right out of the paycheck so you don’t miss it. It’s an effortless way to invest and the company match is gravy. If you put $769 of your paycheck to the 401k (assuming paid bi-weekly) you’ll get to the max annually with the $3,500 employer contribution added in. The next dollars should go to a Roth or HSA (if eligible) before going to a brokerage account.

What are you going to do for healthcare at 50 when you retire?

I'm not sure what I'll do for healthcare. I'll consider maybe finding a low stress job that I enjoy that has legit benefits.

Part of my concern with the Large Cap SP500 fund they have is it's literally only 1.5 years old. That just seems super odd, but then, I am not an authority on such things.

 

[SC Maintenance]

I'm not sure what I'll do for healthcare. I'll consider maybe finding a low stress job that I enjoy that has legit benefits.

Part of my concern with the Large Cap SP500 fund they have is it's literally only 1.5 years old. That just seems super odd, but then, I am not an authority on such things.

Is it a weighted index? If so it shouldn't really matter. If its actively managed then I understand your concern. You have a ticker for it?

 

[factorytuned2012]

https://search.brave.com/search?q=SCHD

this is one in my portfolio that performs well.