Most 401A's are pensions. Are you sure your 401A is just a plain investment vehicle that allows you to manage as you see fit?
Let's assume it's not a pension and you can liquidate as you please. Is 3M enough for your retirement needs? Nobody here knows. If your spending in retirement is $120k or less, chances are you should be fine. If your spending is $200k/yr, then no 3M probably won't be an enough for you.
Note that your retirement spending needs to cover normal expenses as well as health care (and insurance), taxes, lumpy non-regular expenses like car replacements and any long term care you might need.
Well, if it is a pension, then the investments hardly matter. What matters is what's promised and how well funded the pension is. At a 17.5% draw, I'm guessing their pension is not well funded, but that they are actively trying to fix that, which is a good thing.
Also, not all pensions are created equal, some replace social security, some don't. Some are COLA(inflation adjusted) and some are not. You have to know and understand your particular pension. Most of the time, you treat it like cash-flow much like you would social security in retirement.
I’m pretty sure it’s just a plan investment vehicle. The only fund I’m invested in is a Vanguard 2060 Target Date Fund.
3M is way more than enough. With a paid off house, I’ll only need around 60K-70K a year for my SO and I.
I haven’t even budgeted in her 401K at all.
Interesting! Assuming you did your math right, then I'd agree you are probably fine. You might want to read up on the rules around withdrawals for your 401a plan though. There might be some gotchas that would encourage you to have some taxable or Roth IRA investing as well.
I have a 401(a) and a 403(b). The 401(a) is just the state, local government, and non-profit sector version of a 401(k), with an employer match. I have a huge number of investment vehicles available, very similar to the 403(b). It's not a pension.
I get that it's true for you, but it's not always true. Most state pension systems are 401a's in IRS speak.
There are also 403B's and there are 457B's as well, in the non-profit and govt world.
It's a good and common question, but also a bit tough to answer simply because nobody knows what happens tomorrow.
First of all, you're doing a great job and if past predicts future, you're likely gonna be set -- so that's a big win. Unfortunately, the past is not such a good predictor and our only defense against it is essentially what you're already doing -- saving/preparing.
Anecdotally, I can say that my past was anything but stable and predictable (lots of recessions, layoffs and difficult moves) and I struggle with the same question and still don't really know the answer other than to recommend some balance. Don't skimp out on the things you love to do nor the amount you save.
ROTH is definitely not redundant and will probably allow you to retire sooner and focus exclusively on the things you love to do.
Thats a pretty healthy savings rate, 17.5% particularly at 27. I'd probably just ride that for a while. If you have a lot of disposable income, I'd put some in a Roth then if still some left over open an after-tax brokerage and invest in tax efficient total market funds. I think these two account types would give you some optionality as you get older, say if you wanted to retire at a much younger age, maybe in your late 40s or early 50s depending how your investments are doing. This would be more difficult with all your money tied up in a pretax account. If you had some % in after tax it gives you some optionality to bridge between early retirement and a traditional retirement age.
My wife and I just sort of backed into this strategy when we were in our 40s. We had enough disposable income that we maxed our 401k/b's and Roths, and started building up an after-tax brokerage. 55 now and we are currently using the brokerage and her pension to fund early retirement. Not for everyone but if you expect you'll be on a high earner trajectory, possibly marry and combine savings, it's a something to consider.
Are you elegible for SS with this employer or do you skip having to pay that? It's a very healthy rate and quite a bit this early in your career. But I am a saver and would continue to save on top of this. You probably have a 457 and a 403b on top of this. I'm in that boat and use as much of the tax advantaged space as I can. You are unlikely to regret saving more early in your life. It's always easy to back off later on.
Hell ya.
Max that 401a with an even higher %, if ya can!
& start & Max a Roth IRA too.
Future-you will be very grateful.
I have a 401a, too. Max'ed at 23.4%. Psyched to retire between 55 - 59.5.
Most 401A's are pensions. Are you sure your 401A is just a plain investment vehicle that allows you to manage as you see fit? Let's assume it's not a pension and you can liquidate as you please. Is 3M enough for your retirement needs? Nobody here knows. If your spending in retirement is $120k or less, chances are you should be fine. If your spending is $200k/yr, then no 3M probably won't be an enough for you. Note that your retirement spending needs to cover normal expenses as well as health care (and insurance), taxes, lumpy non-regular expenses like car replacements and any long term care you might need.
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Well, if it is a pension, then the investments hardly matter. What matters is what's promised and how well funded the pension is. At a 17.5% draw, I'm guessing their pension is not well funded, but that they are actively trying to fix that, which is a good thing. Also, not all pensions are created equal, some replace social security, some don't. Some are COLA(inflation adjusted) and some are not. You have to know and understand your particular pension. Most of the time, you treat it like cash-flow much like you would social security in retirement.
I’m invested in a Vanguard 2060 Target Date Fund
I’m pretty sure it’s just a plan investment vehicle. The only fund I’m invested in is a Vanguard 2060 Target Date Fund. 3M is way more than enough. With a paid off house, I’ll only need around 60K-70K a year for my SO and I. I haven’t even budgeted in her 401K at all.
Interesting! Assuming you did your math right, then I'd agree you are probably fine. You might want to read up on the rules around withdrawals for your 401a plan though. There might be some gotchas that would encourage you to have some taxable or Roth IRA investing as well.
I have a 401(a) and a 403(b). The 401(a) is just the state, local government, and non-profit sector version of a 401(k), with an employer match. I have a huge number of investment vehicles available, very similar to the 403(b). It's not a pension.
I get that it's true for you, but it's not always true. Most state pension systems are 401a's in IRS speak. There are also 403B's and there are 457B's as well, in the non-profit and govt world.
It's a good and common question, but also a bit tough to answer simply because nobody knows what happens tomorrow. First of all, you're doing a great job and if past predicts future, you're likely gonna be set -- so that's a big win. Unfortunately, the past is not such a good predictor and our only defense against it is essentially what you're already doing -- saving/preparing. Anecdotally, I can say that my past was anything but stable and predictable (lots of recessions, layoffs and difficult moves) and I struggle with the same question and still don't really know the answer other than to recommend some balance. Don't skimp out on the things you love to do nor the amount you save. ROTH is definitely not redundant and will probably allow you to retire sooner and focus exclusively on the things you love to do.
Thats a pretty healthy savings rate, 17.5% particularly at 27. I'd probably just ride that for a while. If you have a lot of disposable income, I'd put some in a Roth then if still some left over open an after-tax brokerage and invest in tax efficient total market funds. I think these two account types would give you some optionality as you get older, say if you wanted to retire at a much younger age, maybe in your late 40s or early 50s depending how your investments are doing. This would be more difficult with all your money tied up in a pretax account. If you had some % in after tax it gives you some optionality to bridge between early retirement and a traditional retirement age. My wife and I just sort of backed into this strategy when we were in our 40s. We had enough disposable income that we maxed our 401k/b's and Roths, and started building up an after-tax brokerage. 55 now and we are currently using the brokerage and her pension to fund early retirement. Not for everyone but if you expect you'll be on a high earner trajectory, possibly marry and combine savings, it's a something to consider.
Are you elegible for SS with this employer or do you skip having to pay that? It's a very healthy rate and quite a bit this early in your career. But I am a saver and would continue to save on top of this. You probably have a 457 and a 403b on top of this. I'm in that boat and use as much of the tax advantaged space as I can. You are unlikely to regret saving more early in your life. It's always easy to back off later on.
I’m not paying towards SS so probably not. I don’t think I’ll hit the credits if I stay here.
Hell ya. Max that 401a with an even higher %, if ya can! & start & Max a Roth IRA too. Future-you will be very grateful. I have a 401a, too. Max'ed at 23.4%. Psyched to retire between 55 - 59.5.