How much to put in 401k?

Question

I plan on opening a 401k at work when the store I work at gets ready for the annual benefits enrollment. New benefits kick in starting first pay period of next year. I'm just not sure what % I should put in. I'll be 30 in October. I'm single and have no kids. I rent an apartment but want to be a homeowner someday. I don't have a lot of debt, just a credit card, I'm paying for my braces through Care Credit (it's like a credit card company for medical and dental expenses), and have a student loan on deferment due to being in school again. I can put up to 50% of my income in but i know I can't afford to put in THAT much. Problem is I don't know how much my company will match because, according to the benefits' website "The contribution is a percentage of your annual eligible pay and can vary from year to year." I also want to open a Roth IRA with my bank as well.

Answer 1

Most companies allow employees to enroll 401k at any time. Invest up to the matching point. If you are planning buying a home on the near future you'll be better off investing on an IRA. 401k plan will allow you to borrow your money but you will have to pay the money back unless this is a plan from a former employer. You can take out up to $10k  from your retirement account for the down payment of you home.

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Good Luck

Answer 2

only put in what the company will match -- in your case that will be hard since you can not determine it = suggest starting out with 5% and also put 5% in the roth ira!!! good luck!!!

Answer 3

These are my suggestions.

(a) Put 10% of your income into the 401k plan. If your employer ends up matching some of your contributions, I don't think it is a problem to include the match in your target. For example, if you get a 3% match, put in 7% of your own money which makes for a total of 10% with the matching funds. But in any case, put in as much as your employer matches if he or she will actually do so even if that comes out to be more than 10% of your income. All your contributions are tax deductible.

(b) Put 5% into an IRA. The contributions to the IRA may be tax deductible, but that depends on your adjusted gross income. In most cases you can take the money out of an IRA without paying penalties for "hardship withdrawals". Buying your first primary residence almost always qualifies as one of those withdrawals. So, in case you cannot save enough money for a down-payment in other savings accounts, you can take some money from your IRA account. - Whenever it comes down to takes, it is a good idea  to talk to a tax expert about the exact tax implications in your case. Even a bank officer may be able to help you, if she or he knows more details than you provide in your question.

If you can save even more money, I suggest you pay off  your care credit and then save money for a down payment. Maybe you can allocate another 5% of your income to those goals. (For free  tools to set up financial goals and such click on the link below which leads to a website that is in beta-testing at the moment. Sign up as a beta-tester and get personalized answers to your financial situation and goals.)

If you save all that, you will be on top of the heap in the US as far as saving is concerned.

Answer 4

You're getting started, that's the important thing.  The other answerer gave good advice.  Put in at the very least what the company will match, and then put the rest in the Roth.  If you are not maxing either out, increase contributions to each a little every year, or at least everytime you get a raise.  Good thing about the Roth is you can get at your contributions if you need to for the downpayment on that house you want.  Get the house as soon as you can possibly afford it.