I need advise. 18 years old and being in a 401(k)?

Question

I am an 18 year old soon to be college student. I recently, recent as in yesterday, was offered employment with US Bank. They offered me a job as a non-exempt 20 hour a week employee meaning I qualify to be a part of the companies benefits packages including 401 (k). I will only be making about $180 dollars a week a figured that if I could invest $40 a month into the plan that it would be an okay start. The company also does a 100% matching program so that after one year of me putting money into the plan they will match everything I have put into it. The 401 (k) is T. Rowe Price, I don't know if that makes a difference.

I plan on staying within the company but plan on moving up because I will be going to school for Business Finance and Economics and want to become a personal financial advisor.

Does anybody have any advise for me? I know the importance of saving for retirement at a young age so I really want to do this right. Any suggestions are highly appreciated. Thanks

Answer 1

The more you invest and the earlier you invest the better your financial life will be later. I am very proud that you are getting a start and only you know how much you can invest at this time, just remember, as you move up and make more to put more away!

good luck. you are on the right track!

Answer 2

Hi,

Anytime an employer will match, it is free money.  So if you can put in enough to get their full match, do it.  Now, if T Rowe are the funds you can choose from, you are in a very good spot.  I think they have some great funds.

Check out www.moneyrec.com for some user reviews on these funds and explain your situation and what specific funds are offered.  You will get help there.  The site is dedicated to investment Q&A.  Free to sign up.

Best of luck, you are on the right track!

Bunny

Answer 3

Well, im living in Texas and Texas law states you must be 21 or older to start up 401K plans. You need to check with  your employer if you are even eligible yet before you start trying to calculate this stuff

Answer 4

I doubt there is an age requirement (other than being 18).  

Many old pension plans didn't count anything until you were 22-25 as a way to avoid paying anything to women!

The habit of savings and the 100% match is what you are aiming for.

Your tax savings will be modest as you will be in the 10% tax bracket.  However, if it turns out that you leave, you can roll the money to an IRA...and if you need the money for school , the 10% penalty is waived if you use the money for education expenses.  (And if you are in school, chances are you would still be in the 10% tax bracket when you pay the income tax on it.)

Answer 5

HERE YOU GO!!

Nice job getting a position at a bank.  A bank job is the best job you can get (usually) in college because the pay is not bad, it is easy, and they have flexible hours.  

The big negative on the bank job is that banks do not pay well unless you have a high level position.  Take a look at any branch and you will see that generally the loan officer is the only one getting paid well enough and is also the only one with a college degree.

You are only 18 and a TON will change in your life.  You can go ahead and save money in your 401k if you can afford it but don't put too much away because there will be a ton of new expenses that you will need to pay for.  Moving, marriage, and so on.  

I am a contrarian here and I don't believe that putting $40 away a month will do much for you in the long term of things.

I will probably get thumbs down here but I am 30 years old, worked at 4 different banks over a span of 6 years, been in my career for 2 years, have a wife, a kid, and make $90,000 a year combined.  It still isn't enough to buy a house and I am glad that I did not lock my money up in retirement.