Retirement Savings

[CanuckInUSA 0]

I recently started a new full time job with Computer Associates. One of the things I am pondering is how much of my pre-tax income should be automatically put away each paycheck into a Retirement Savings account. I do have some retirement savings (about 100k right now), but the so called experts claim that I will need much more (and they're not wrong 100k won't last that long). I have low expenses (when I'm not jumping) since I have a very small debt on a nice modest home I'm back living in (and no other significant consumer debt). Anyway I can choose anywhere from 2% to 15% to be automatically deducted from each paycheck. I've currently selected the 10% option, but I'm wondering if the upper end 15% is doable. My current mind set is that what I don't see each paycheck can't be spent each paycheck.

Obviously there are many sides to this coin. My short, medium and long term requirements for $$$ could change (especially once winter is over and I'm jumping again). So while I'm not in a bad position at age 43 (100k in retirement savings and close to 400k tied up in a house), retirement isn't that far off and it sure would be nice to be finacially independent sooner in life rather than later. So is 10% a good number? Opinions? Ideas? Fret not, I will do what I need to do to stay airborne ... once the ####ing weather warms up here in the frozen north.

Try not to worry about the things you have no control over

[nathaniel 0]

Quote

I recently started a new full time job with Computer Associates.

Speaking as a former client of CA, I'm so sorry...

If it's a 401k, the maximum is $15000 for the year of 2006, and the maximum annual contribution goes up over time. Depending on your means, you should try to hit that number for the maximum tax benefit.

What you put into your 401k comes out of what you pay taxes on
now, and presumably you'll have less IRS taxable income when you eventually draw out of your 401k....so there's an overall tax benefit to you to maximize it.

My advice is to do what your parents did; get a job, sir. The bums will always lose. Do you hear me, Lebowski?

[TheAnvil 0]

I think there are a ton of variables that go into such a calculation, with a major contributor being your age. 10-15% sounds about right to me, but that's with only the scant info you've provided and I'm admittedly no expert. THe fact that you're even thinking about such a thing means you're on the right path, I'd suspect.

Vinny the Anvil
Post Traumatic Didn't Make The Lakers Syndrome is REAL
JACKASS POWER!!!!!!

[jceman 1]

Quote

Quote

I recently started a new full time job with Computer Associates.

Speaking as a former client of CA, I'm so sorry...

If it's a 401k, the maximum is $15000 for the year of 2006, and the maximum annual contribution goes up over time. Depending on your means, you should try to hit that number for the maximum tax benefit.

What you put into your 401k comes out of what you pay taxes on
now, and presumably you'll have less IRS taxable income when you eventually draw out of your 401k....so there's an overall tax benefit to you to maximize it.

As a former CA associate, you have my sympathies.

The above info is good, but remember, that max includes CA's matching contribution, so you need to take that into account when figuring your own contribution rate.

Faster horses, younger women, older whiskey, more money.

Why do they call it "Tourist Season" if we can't shoot them?

[nathaniel 0]

Also this was a topic recently on Iwillteachyoutoberich.

Good blog.

http://www.iwillteachyoutoberich.com/

My advice is to do what your parents did; get a job, sir. The bums will always lose. Do you hear me, Lebowski?

[rmsmith 1]

Look at the Roth IRA. An IRA that hasn't been taxed yet is a huge liability given the direction of this country and its obese population. The second best thing for your future is to stay in shape with regular exercise and a good diet. --Warm blue skies!

[CanuckInUSA 0]

Thanks for some of the comments.

Despite what my username appears to say, I am no longer in the USA and 401K and Roth IRAs do not apply here. My contributions are in something called an RRSP or Registered Retirement Savings Plan (very similar to a 401k) so it is tax sheltered.

Anyway it's time to start putting some money away. How much? Well that will depend. Something is better than nothing.

Try not to worry about the things you have no control over

[smiles 0]

hey,

I put $20,000. retirement savings (or RRSPs) into down payment on house- (first time home owner)-
- figure that investment was worth it 5 yrs. ago.

SMiles

eustress. : a positive form of stress having a beneficial effect on health, motivation, performance, and emotional well-being.

[CanuckInUSA 0]

Hopefully you bought something far enough away from one of the BC rivers. You guys have just been getting pummelled with the wet stuff these last few weeks. I gave up the wet for the cold as I'm in Alberta now (I did visit Abbotsford about 3-4 times last summer, but I don't know if you would remember me since I didn't talk about DZ.COM while I was there).

But yes, real estate can be a good investment if you buy at a good time. In '93 I bought a house in Calgary for 145k and now it's worth somewhere in the 400k range. That's a sizeable chuck of my retirement right there.

Try not to worry about the things you have no control over

[robr 0]

Quote

Quote

If it's a 401k, the maximum is $15000 for the year of 2006, and the maximum annual contribution goes up over time. Depending on your means, you should try to hit that number for the maximum tax benefit.

The above info is good, but remember, that max includes CA's matching contribution, so you need to take that into account when figuring your own contribution rate.

Is that a CA specific max? At least for the US, the IRS limits you to contributing a total of 15,000 of your own dollars to 401ks, and a total of 44,000 including employer match and profit sharing (if you believe wikipedia).

[CanuckInUSA 0]

Quote

Is that a CA specific max?

I'm just going on what the CA benefits web site says (keep in mind that I only started working there a few days ago). I do remember them mentioning matching contributions up to a certain level, but I have a lot on my plate right now with this new job and I might be confusing something.

Oh and to all those who criticized CA, that's okay. Technically I'm working for CA now, but in reality I'm working at a seperate company that was bought out not long ago by CA and since they want to revamp their product, they needed to hire a bunch of new developers like yours truly. Hey it won't all be bad. After all I am being paid to learn to work with some Micro'smurf technologies. But the beurocracy of CA does appear to be excessive. So time will tell.

Try not to worry about the things you have no control over

[smiles 0]

ya, we had a wind storm-
loads of rain-

No big deal- last storm to blow down trees was in 83.

Fraser River needs work as gets higher every year from all the silt washed down from interior- then add all the rain.

Abbotsford d.z. is in the flats. I am up the hill-bought for $160k in 2001- can sell now for over 400k---
retirement savings better in a house than RRSPs.

Pollution in Abbotsturd sucks major (blows out to the valley from Van. and sits here) other than that I feel like I am living in the country with huge park in my backyard- lots of privacy & gardening. DZ 5 min. down the hill.

Drive to ferry at horseshoe bay Van.- to Langdale- then up the coast to Smugglers Cove -Sechelt

(ferry 40 min. --drive 1 1/2 hr.)
This is where I plan to retire.

SMiles

eustress. : a positive form of stress having a beneficial effect on health, motivation, performance, and emotional well-being.

[Remster 24]

Hey Steve,

you probably know that, but the max amount you can put into your RRSP is based on your past incomes, and past RRSP contributions. Do you know what you last canadian tax return assesment came back as? There whould be a form in there that tells you how much RRSP contribution you have earned, and used, to date (again, sorry if you know that already).

If you have a big chunck of unused contributions from your previous stay in Canada, and can afford putting that money asside, figure how much that represent in % of your salary, and max it out.

Remember: you also need to figure out if you have unclaimed contributions (ie, you put money in a RRSP, but havent deducted it from your income) that will also go againsts your unused contributions when you do declare them). You DO NOT have to declare any contributions you make: you can wait until you make more money to get a bigger tax break.

And put your money away sooner rather then later: the interest / profit you make on your RRSP account is tax free until you take it out, even if you dont declare the deductions right away.

PM me if this isnt clear.

Remster

[Gawain 0]

Quote

Look at the Roth IRA. An IRA that hasn't been taxed yet is a huge liability given the direction of this country and its obese population. The second best thing for your future is to stay in shape with regular exercise and a good diet. --Warm blue skies!

What he said, plus, you might consider diversifying out of your 401K with some excess %. Say, put 10% into your CA 401K, let them match it, etc. Use the other 5% into something else. My sister has been working with someone from UBS, has been very happy with the performance, and she's been pestering me to do the same.

I don't have as much savings as you (less than half), but thankfully I'm 100% debt free (that could change if I buy a house).

Good luck CanukUSA...it's nice having "high-class" problems huh?

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[JohnRich 4]

Contribute whatever you can afford. The more the better. And if things change, you can always alter the contribution amount in the future. That money will come in VERY handy for you some day in the future.

[freeflir29 0]

I tend to put in whatever it takes to get the highest company matching. I don't qualify for ANY company matching at the moment so I put in 10%. However I am about to knock that down to only 2%. I'm going to use the excess to pay down my house loan. I think you need to hedge your bets but I like to keep a significant amount of my retirement in real estate. Lately real estate has been making more money than my 401K.............by a LONG shot!

[WeakMindedFool 0]

As much as you can...and then some. I have 2 Roths (mine and wifeys) a traditional IRA, a 457 and a PERS safety retirement plan. I want to retire young and have money to burn. If you force yourself to live within a reduced budget you soon get used to it and it will no longer seem reduced. It always hurts when I take on a new investment but very quickly the amout of money I have each month becomes the norm. I also let my wife take care of the finance cause I am an idiot.

Faith in a holy cause is to a considerable extent a substitute for lost faith in ourselves.
-Eric Hoffer -
Check out these Videos

[jonstark 8]

Put in as much each week as you can to maximise any matching contributions. BUT... Find out the maximum you can save each year and don't reach that max too early in the year and have to forego the remaining weeks of company match. The plan is to reach the max in late Dec then you have gotten 50-52 weeks of match. Get there too early and you lose out on free money.

jon