September 14, 2009
I am 23 years old and planning for retirement. Young and confused! HELP PLEASE?
Well, I just started my first real job less than a month ago and the agency that I work for offers a savings retirement plan through Fidelity. Is it a smart move for me to go ahead and set up a plan right now? It’s all confusing to me! The economy doesn’t seem stable at all and worries me a bit. I have a former employer based 401k with Vanguard that I have that I didn’t know about not until few months ago which I received from a bonus of some kind. Should I roll that over to Fidelity? Also, my employer offers only Fidelity, Lincoln, and Valic. My agency will contribute 25% on the first 6% of total pay I contribute on a pretax basis, I make about 85k/ year. How much should I contribute per month if I do decide to follow through? Someone..please help with all the info you can give..thanks!!!
12 months/1000 hours before “100% vested.” Only about $250.00 in the Vanguard account.
Actually, 5 years to be fully vested..sorry.
One more thing..my company does not offer 401k’s but 403b’s. Does that make any difference???
Sienna
Comments on I am 23 years old and planning for retirement. Young and confused! HELP PLEASE?
Deon
It is absolutely the smartest move you could make to start a retirement plan early. Do it. Roll over the 401k from Vanguard. Figure out ALL your yearly expenses, everything, food, rent, bills, every last thing, then add it up, out of what’s left put $500 a year into a CD, $100 into a savings account, put half of what’s now left into your plan, and use the other half to invest. Invest in something that will only do better with time such as Coca-cola, or Phillip Morris, or Pfizer. Talk to your Bank, or to Fidelity once you have an account and ask them for other Ideas, the more you save and the better you plan the quicker you can retire. set a goal for the age you want to retire at, do your best to meet it. Good luck and Godspeed.
Leslie
How much do you have in your 401k with Vanguard?
You are very young to be thinking so criticaly about your 401k, however that is very good!!
I would deffinately do the 6%. Also, make sure you look, but more often than not, you will have to be at your place of employment for a period of time before you are fully “vested”.
In other words, you might have to work there for a few years before you can be terminated and keep the 25% that your company contributed.
Optimaly, (and i’m sure Fidelity has suggested this to you) you should contribute anywhere from 10% - 25% of your pay into your 401k. Not many can afford to do this so don’t stress if you can’t it is just a suggestion.
With being so young, you should look to see if your company would offer the same benefit for a ROTH IRA. In a ROTH IRA you are taxed on the money you put into it for the first time. However, when it is time for retirement you do not pay ANY taxes when taking it out so for instance: You put in $100,000 into a ROTH IRA. Fifty years later you make $300,000 on top of that. When you put the $100,000 in you were taxed on it. However, you made $200,000 with that IRA. So when you pull it out you are not taxed on the $300,000 which means less tax period.
With a 401k you will not be taxed for the $100,000. Instead, they tax you when you take it out for $300,000. (they make much more money that way) thats why the government suggests 401k’s.
Good luck in your future investments!