New RN (almost), 401k, and Retirement

Jules A, MSN · Feb 23, 2015

I am way impressed!! I didn't get my act together until I was in my late 20's but made huge strides in that time largely buying and living in less than pretty homes, paying off the mortgages very early and investing in rental properties. We also max our Roth IRAs out every year. I contribute to my 403b and 401k whatever my employers will match. I have always worked 1 main job with at least 1 or 2 PRN positions for the increased pay rate. I also work weekends and holidays which results in a significant increase in my base salary. If I can afford health insurance I will retire between 60-62 as I have no desire to hang around to the point where people are saying "yeah back in her day Jules was a really good clinician".

It helps if your relationships are with people who are liked minded with regard to finances but the absolute best advice I can offer is to work hard and live just a little below your means.

wanderlust99 · Feb 23, 2015

As a new grad, I spent way too much on rent. Yes I had a killer apartment and it was fun to live in but I could have purchased a condo or townhouse with what I was paying. I didn't listen to my parents either and didn't start thinking about retirement until age 30.

So don't do that and you'll be a step ahead of many!

dah doh, BSN, RN · Feb 23, 2015

I started saving for retirement later because I saved for the down payment for my house instead. Although I don't regret it, hindsight says I could have done both.

My hubby started early in his retirement savings so he has twice as much saved for his retirement. I figure I'll sponge off him since he lives in my house ðŸ˜‰!

We max out our 403b/401k and max out our IRA's. We also have an emergency fund and savings in other places. We live well below our means, but can afford to splurge whenever we want.

As for a new young person, look at trying to max out your retirement accounts but if you can't afford it, then contribute up to the company match because that's "free" money if you stay long enough to be vested (usually 5 yr). Also max out a Roth IRA if you can because you can borrow against it if necessary. The percentage of salary you contribute depends on your goal amount of contribution per year divided by #of pay periods (usually 26). Both my hubby and I contribute a higher percentage than I described above so we max out by October/November.

If my hubby had his way, he'd retire by 50, but we probably will work until all the kids are done with college.

Good Luck in your retirement savings!

Ruby Vee, BSN · Feb 23, 2015

Greetings.
I am a 23 year old BSN student set to graduate in Dec. As soon as I land a job, one of my biggest financial obligations will be to fully fund my 401k and start using a Roth because I have been taught that if I begin early, the money that I invest can grow exponentially more than it would if I were to wait until I was 30 to start saving..
I want to know what you all do for your 401k and retirement?
I just have a few questions regarding your 401K/Retirement plans, and I would greatly appreciate all responses.
1.)How much does your employer match?
2.) How old are you? OR How old were you when you began saving?
3.) Is your 401k your only source of retirement savings, or are you investing in other options?
4.) What percentage of your pay do you contribute?
5.)What age would you like to retire?
Also any financial advice you have for a childless, new RN with very minimal financial obligations would be greatly appreciated (Hindsight is 20/20, right?)
-Thanks

Good questions -- I was 30-something when I started saving for retirement, and probably didn't save what would be considered "enough" by most financial planners. Most financial planners, though, focus on "maintaining your present standard of living."

Another question you should be asking yourself is "What would I like my standard of living to be when I retire?" The idea that you should maintain the six bedroom house you had when you were raising your five children, keep all three SUVs and the antique car collection and maintain your golf club memberships into retirement isn't for everyone. You can have a very nice retirement without maintaining your same standard of living.

I'm planning to retire when I'm 60, sell everything I own and run off to sail the world in a sailboat. It won't take much money to maintain that standard of living.

ThatBigGuy · Feb 23, 2015

Check out the book "The Total Money Makeover" by Dave Ramsey. It'll give you the guidelines you need to build wealth throughout your life. You can find them at used bookstores or even your nearest public library.

One of his points is to invest 15% of your income towards retirement. You match your employer's max in your 401k, fill up your Roths, then invest the rest of your 15% in growth stock mutual funds. There are plenty of mutual funds that have averaged 10% or more long term.

The math is incredible. If you earn $50,000 a year for the rest of your life with no raises, and you invest 15% ($7500) per year, from age 25 to 65, at a nominal 10% rate, you'll have almost $4 MILLION. If this is half wrong, you'll still have $2 million.

If you get raises throughout your career and keep that 15% investment figure, you're looking north of $5 million. That's a pretty nice way to retire. Can you imagine living in a mansion, driving BMW's and '69 Shelbys, and vactioning on white sandy beaches? Or starting a foundation to help impoverished individuals all over the world? Or starting a scholarship grant with you favorite college to pay tuition for 10 deserving students a year?

So start off by enrolling in your company's 401k up to the match. Then take some time and research your next move, whether it's Roth or whatever. Do some reading, attend a class. Find a trustworthy financial adviser with the heart of a teacher, not a salesman.

If you start in your 20's, there is basically no reason for you to not retire a multi-millionaire with just a little bit of foresight and planning.

Jules A, MSN · Feb 23, 2015

Check out the book "The Total Money Makeover" by Dave Ramsey. It'll give you the guidelines you need to build wealth throughout your life. You can find them at used bookstores or even your nearest public library.
One of his points is to invest 15% of your income towards retirement. You match your employer's max in your 401k, fill up your Roths, then invest the rest of your 15% in growth stock mutual funds. There are plenty of mutual funds that have averaged 10% or more long term.
The math is incredible. If you earn $50,000 a year for the rest of your life with no raises, and you invest 15% ($7500) per year, from age 25 to 65, at a nominal 10% rate, you'll have almost $4 MILLION. If this is half wrong, you'll still have $2 million.
If you get raises throughout your career and keep that 15% investment figure, you're looking north of $5 million. That's a pretty nice way to retire. Can you imagine living in a mansion, driving BMW's and '69 Shelbys, and vactioning on white sandy beaches? Or starting a foundation to help impoverished individuals all over the world? Or starting a scholarship grant with you favorite college to pay tuition for 10 deserving students a year?
So start off by enrolling in your company's 401k up to the match. Then take some time and research your next move, whether it's Roth or whatever. Do some reading, attend a class. Find a trustworthy financial adviser with the heart of a teacher, not a salesman.
If you start in your 20's, there is basically no reason for you to not retire a multi-millionaire with just a little bit of foresight and planning.

Although I'm all about being financially responsible and savvy I happened upon a message board of Dave Ramsey's teachings and personally found the climate to be a bit over zealous and many of the posts I read were odd, imo. While $5 million today spread out over 20+ years would make for a very comfortable retirement it is not going to buy mansions, BMWs, '69Shelbys, foundations and scholarships for 10 students. It will be even less impressive 40+ years from now.

2k15NurseExtern4u, BSN, RN · Feb 23, 2015

THIS is why i lovvveeee AllNurses! So much wisdom and experience.

classicdame, MSN, EdD · Feb 23, 2015

does not matter what your employer matches - anything they put in is free money. The closer I got to retirement the more I put in. It is now around 20%. My employer will match up to 6%. I started an IRA >20 years ago and then 401k about 15 years ago. That, plus SS, will be enough. Has to be

Meriwhen, ASN, BSN, MSN, RN · Feb 23, 2015

Greetings.
I am a 23 year old BSN student set to graduate in Dec. As soon as I land a job, one of my biggest financial obligations will be to fully fund my 401k and start using a Roth because I have been taught that if I begin early, the money that I invest can grow exponentially more than it would if I were to wait until I was 30 to start saving..

You are incredibly wise to start investing in your retirement now. A lot of people your age--and older--do little to nothing for their retirements.

I want to know what you all do for your 401k and retirement?

At any job I have, I sign up for the retirement plan (401k/403b, retirement savings, whatever). I contribute up to 10% of my earnings.

1.)How much does your employer match?

Varies on the plan and the employer: anywhere from no matching to dollar-for-dollar.

2.) How old are you? OR How old were you when you began saving?

I'll answer the latter: 25 was when I signed on for my first 403b, but I really didn't start investing/saving on my own until 27.

3.) Is your 401k your only source of retirement savings, or are you investing in other options?

Hell no. In addition to my 403b, I have two employer-based retirement savings plans, both a Roth AND a traditional IRA, a stock portfolio. If I stay with one employer for 15 years, I will get a pension from them...though given that it's a per-diem job and I don't work a lot of hours with them, it'll be a small pension. I also will get a percentage of my better half's military pension when he dies.

4.) What percentage of your pay do you contribute?

6-10% of my pay. In addition, I put in about $1000/month for my non-employer retirement plans.

5.)What age would you like to retire?

70 or until I'm no longer having fun at work.

Also any financial advice you have for a childless, new RN with very minimal financial obligations would be greatly appreciated (Hindsight is 20/20, right?)

Immediately pay off any debt you do have, and try not to accumulate further debt. Live within your means, maybe even a bit below them. Guard your credit score/rating with your life because it drastically affects your future--even a "small" thing such as one missed payment dings your credit score for 7 years. Treat saving for retirement like a bill: work it into your budget and "pay" it monthly. Save massively NOW, before the kids and house.

-Thanks

No problem :)

llg, PhD, RN · Feb 23, 2015

Great that you are thinking about starting young. Continue to educate yourself ... and keep saving and investing.

I was always a saver and started as a new grad. However, after 2 years of working, I took my savings and invested it in graduate school. So I really didn't start "saving for keeps" until i was 26. The next time I went to grad school, I didn't touch my retirement savings. However, while in grad school getting my PhD while in my late 30's, I had a minimal income for 4 years and did not contribute.

In my current job, my employer contributes 4% of my salary. (And with a PhD, my salary is fairly good for the cost of living around here.) I contribute the maximum allowed by law and have done that for several years. Currently that is somewhere around $23K -- I forget the exact figure. I also max out my Roth IRA. I am currently 59 years old and have about $1.1 million in retirement savings. I will make my last mortgage payment on March 1st.

I have some non-retirement savings, but not a lot ... only about $50K. That is what should grow over the next few years as I will no longer be paying a mortgage.

I am hoping to phase into retirement, but am not sure that will be possible. I hope to work until I am 65 either full time or part time to get good health insurance from an employer. And I hope to not have to take Social Security until I am at least at full retirement age, which for me is just past 66. I don't want to be poor when I am old.

JoseQuinones · Feb 24, 2015

My advice? Do plan for the future but diversify. If you think the politicians are going to keep their promise not to get their dirty hands all over your 401 (k) money someday soon, you trust them a lot more than I do. There's no harm in having some money in a Roth and some in other investment accounts, but I would never feel comfortable parking all my money in one place where the IRS can just help themselves to it. Per Forbes: Watch Out: Your 401(k) Is Being Targeted - Forbes

Don't forget Obama - who should know better - just dropped a plan to start taxing college savings plans. Yeah. Do you really think it will end there? Per TIME Magazine: Obama Drops Effort to Tax College Savings Plans.

So for a secure retirement, keep your expenses low, your debt burden lower, and invest in real assets that can be sold, if necessary. But most importantly, don't put everything in one basket. I'm not saying go all Glen Beck, invest in gold and a nuclear bomb shelter, and prep for the zombie apocalypse. But the people who truly have comfortable retirements are those that have a couple sources of income, like say a pension and a couple rental properties, that pay them as they go. A stash of money will always dribble away eventually.