My company let me invest 100% of my salary to 401K. Should I do it ?

Question

I don't have to worry about rent + food in the next few years. I think I should contribute 100% till I have some expenses?

Answer 1

How much is the company MATCHING? Max company matched contributions first. Then max your IRAs.

Plan out what you want to do in life and how much things will cost. Do you want to buy a house? Start a family? You can't touch your 401K until you retire (typically).

Answer 2

I have never heard of that before, It does not sound legal. I would check with the IRS first.

There are maximums.

You also have to consider your adjusted Gross Income, and that social security is based on your average income for 35 years, using the years of greatest income, if you do this, your social security might suffer upon retirement, but it may not matter because you saved so much...

I would consider putting some into a Roth IRA also, if you qualify. For tax free gains, put enough into the 401K so that you don't have to pay any taxes, and put $5000 per year into a Roth IRA. If you qualify that is...

Answer 3

That doesn't sound correct.  I think there is a limit how much you can contribute...somewhere near $14000/yr.

I would contribute 20% and build yourself an emergency fund.

Answer 4

You are restricted to $15,500 with an additional $5,000 per year catchup if over 50 in a 401k account.  Additionally you may invest up to $5,500 per year into an IRA account. Company matches are nice but should not determine how much you choose to put in on the top end only the minimum you contribute.  I recommend placing as much as you comfortably can into retirement because the more and earlier you do the better.  Also try to set aside a fund for six months of expenses in case any unforseen events occur.

Answer 5

There is an annual contribution limit to 401(k) plans - by law.

Answer 6

Wow! Go for it!

My Wife is restricted to the amount she can put in.

As the market sits at the moment and you have no expenses I'd do at least 80% of your income so you have some entertainment cash and have a checking account in cas the car breaks down or you need some emergency cash.

Don't do 100%, do 80%.

That is one heck of a start!

At this point in time, things can only get better as long as Obama isn't elected.

Answer 7

If they let you put in your entire salary into your 401k, you are not making a lot of money.

If I were in your shoes, I would max out the company match then invest the rest into emergency funds and a ROTH IRA (5k Max last I saw the reports a few weeks ago).

That is what I would do.