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?)
2.) How old are you? OR How old were you when you began saving?
23. I'm 27 now FWIW. I have nearly 60k in retirement savings. I was 23 when I started saving.
3.) Is your 401k your only source of retirement savings, or are you investing in other options?
I have two jobs that provide me pensions as well along with social security (whether or not we'll get what we're promised is a different story).
4.) What percentage of your pay do you contribute?
10%..A total of 15% with match. I did this in the most aggressive funds possible. Last year for instance, I received a 23% return on investment (ROI). Unheard of. The market is cyclical though, and of course it will not and cannot sustain at that rate.
One good thing about my employer is I can transfer my money into however many different funds however frequently I want in order to maximize returns. I followed the market closely for awhile, but It kind of got stressful and old so I just put my money in a lifecycle fund which is still very aggressive.
5.)What age would you like to retire?
Well, the plan was as soon as feasible, but I ended up getting married and now have a strong desire to attend CRNA school. This might set me back a bit, but I'm sure the return on education in the overall long run will be worth it. If I'm lucky enough to get into anesthesia school, I'm going to do my best to resist cashing out the 401k lol. It is NICE to have the option though.
6.) Also, any financial advice for you have for a childless new RN with very minimal financial obligations?
What I did was set some money aside into a savings account as soon as I got paid. This is called paying yourself first. THEN, I paid my bills. THEN, I blew the remainder of my money on whatever I wanted to. Enjoy the freedom you have while you have it. I did this, and I was able to save without feeling like I was depriving myself.
ALSO, read Dave Ramsey or Suze Orman books, or download an audiobook onto your iPod. I personally like Dave Ramsey, and his books were life changing for me, but either school of thought will help you better your overall financial situation. Good luck and enjoy it. Come here to California if you want to be paid what you're worth as a RN :)
If that's what you think the purpose of investing is, then you missed the point.
OP, I think it's fantastic you're thinking about planning for your financial future already. I didn't get my act together until I was in my 40s; I wasted a lot of money on "stuff," and really don't have much to show for it.
If investing 15% sounds undoable, start off by contributing the least amount you need to have to get your employer to match. Then increase your contribution incrementally; I did this by increasing my contribution every two or three months. I did this until I was at 13%. I would have continued, but I became seriously ill and had to retire on disability.
The thing is, I didn't miss that money because it was out of my paycheck before I got paid. I could budget my money while knowing that my retirement was being taken care of.
Planning for retirement isn't about mansions, expensive cars, or setting up foundations. It's about having enough money to maintain your lifestyle when you're no longer working. It's about having enough money for the unexpected.
OP, the important thing is to start saving whatever you can. Saving anything, even say 5%, is still that much extra for retirement. I started saving what I could--which to be honest was about $20 a month when I started--and like OCNRN63, I increased the amount I could save once debts were paid down and my salary went up.
Of course, I wish I could have done things differently--if I knew then what I knew now, I'd have avoided the debt and credit problems in the first place!
If that's what you think the purpose of investing is, then you missed the point.
.
Could you clarify? That I post I don't like atmosphere of that financial Evangelist guru, is somehow me missing the point of investing? I'm totally confused.
Specializes in Nurse Leader specializing in Labor & Delivery.
Could you clarify? That I post I don't like atmosphere of that financial Evangelist guru, is somehow me missing the point of investing? I'm totally confused.
I think she was referring to this:
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.
The point of retirement is not to be able to buy mansions, BMWs and Shelbys.
And I disagree, I think $5million for retirement WILL be impressive 40 years from now.
The point of retirement is not to be able to buy mansions, BMWs and Shelbys.
And I disagree, I think $5million for retirement WILL be impressive 40 years from now.
Thanks for clarifying is it possible you both missed the post I was quoting where someone said with 5 million dollars they would be able to purchase those things? I have no intention of doing any more than living a relatively simple life.
As for the amount 5 million will be worth in 40+ years I can only speculate but I have also read that in 1975 what was 1 million dollars is equivalent to 4.4 million now so while 5 million isn't anything to sneeze at it might not be as impressive in 40+ years as it sounds today.
I have been told that in the next 15 years someone in my salary range will need about 2 million dollars to retire. I just used CNNs calculator and it came up with 1.7 million.
Thanks everyone. A lot of you have mentioned things that are extremely helpful and also have raised further questions in my mind. I will graduate with roughly 20k in student loan debts and since I will be living at home with my mother, it is my hope that at some point I can funnel a great majority of my earnings into paying off my student loans as fast as possible because I much prefer to live a debt free life. However, I'm confused as to how to approach my finances, should I focus on establishing a 6-8 months emergency plan first AND THEN focus on paying off student loans asap, AND THEN focus on the 401k since I am so young?? What order would you suggest considering I have no outstanding expenses, no other debt, and will basically continue the poor college student lifestyle even after I graduate.
If u have access to iheartradio, u should download "Dave Ramsey " show. He will teach you everything you want to know about managing your money and investing. Hope that helps!
My savings are abysmal. I have a CD with 3k in it that is an emergency fund. My employer also matches 6% contributions to 401k so I am putting in 6%, but they don't start putting money in it until you hit one year (they will retroactively match all contributions to that point), and you lose the money if you don't stay for at least three years. I don't see myself staying for three years, so I won't get that money. I am planning on going back to school before then, and you can't work through CRNA school.
I had a decent sum of cash on hand last year, but it all went into a down payment for a house. At least I own real estate now, and I'm paying less for my mortgage than I would to rent a place, but I'm still not saving yet. The game plan is to pay off this house fast, which I am accomplishing by putting extra money towards the principal every single month, and I will keep it for a rental investment and buy another one, and another one. I plan on tying my money up in real estate because houses are always worth something, unlike savings that fluctuate with the stock market.
If becoming a CRNA works out, I plan on being able to retire earlier because I will make vastly more money and throw much more into savings per year. If that never materializes, I will probably work until I have to start drawing Social Security to max out the payment.
There is one thing that isn't addressed by this plan, and that is quality of life. I think it's important to remember that you are not ever guaranteed your health. My dad has balance issues and has had strokes. He can't really walk for very long. He has problems with diarrhea from his medications, so long road trips and going on flights are just about out of the question. He is very nearly housebound. They CAN'T go places and do fun things.
One thing I hear my parents saying all the time is that they wish they'd taken more vacations and done more when they were younger, had money coming in, and were healthy enough to do it. It sucks to get old and debilitated, and not even have the good memories of the things you did to look back on later. Can you imagine being old and housebound, and you have a full bank account but only memories of working all of the time? So, there needs to be a balance. Save, but also do the things you want to do so you can at least have those experiences to look back on later.
I didn't start working as a nurse till I was almost 30 and then started putting 6% in a 403B as we had a pension at the time. When I started setting money aside for retirement it was actually because I knew I could take out a loan. I took a loan out first for a needed car and years later for a down payment on my first home. Then I stopped contributing to the 403b for almost ten years, sorry to say, due to the increased costs of being a homeowner. I worked overtime for the first year and then burned out and stopped.
But I have to say buying a home really opened my eyes about finances. I did lots of research on the home buying process and personal finance in general. I was fortunate to have a new home buyer consultant provided free by my employer that guided me thru the whole process. First we went over my credit score around 620 ok at the time, not great and she went over my budget and made a plan for saving money, paying off credit card debts and getting pre approved. I have other friends who bought a home on their own and ended up in predatory subprime mortgages because of poor credit, lack of financial knowledge and shady brokers!
I think most people are lacking in personal finance knowledge because it is not commonly taught in high school or college. Take the time to learn about personal finance. I recommend Personal Finance for Dummies by Eric Tyson, it is a very comprehensive book. I like Suze Orman, and while Dave Ramsey is good for those who have debt; I prefer taking a more flexible approach to debt management that is advocated by Liz Weston. She has several books Deal with Your Debt and Your Credit Score are two great ones. Our credit score determines the price we pay for any loans from credit cards, auto and home and even insurance and sometimes whether or not you are chosen for a job!
I'm back on track with retirement and am also funding a Roth IRA precisely because I can use it as an emergency fund without penalty in a worse case scenario. My credit is immaculate last credit score 840!
It is great that you are interested in saving for retirement and it is much easier to do when you are single and before you own a home or have a family. So as you know if you start in your 20's you have time on your side and if you need to cut back or stop saving for retirement you will be better off than others who started in the 30's or later and kept contributing!
I like the 50/30/20 budget proposed by Senator Elizabeth Warren in her book All Your Worth. You keep essential expenses down to 50%, 20% for savings and debt repayment and 30% for everything else ie fun! I suppose 30% savings would be better, but a person may feel deprived and give up. Keeping expenses down to 50% helps you weather a storm whether job loss or personal illness.
If you choose to consolidate your student loans you will be locking in the current low rates while extending your repayment period. Student loan repayment needs to be a priority and it is better to choose income based repayment vs putting your loan into deferment or forbearance if you have money problems.
Lastly one shouldn't rush into home ownership. It is better to save up for a down payment, get your finances and credit score in order and be committed to owning your home for many years. If you aren't ready to settle down it is easier to rent and save more money while your expenses are less. Also if you need to move for a job it is much easier when you don't have a house that needs to be sold or rented out. Buying and selling a home costs money and houses don't always appreciate. In fact they can depreciate as they did during the economic crisis of 2009!
Especially now while you are young and healthy you should consider high deductible health insurance and fund the HSA to the full amount. You can save $3300 a year and it will rollover and grow till you need it. It is entirely pretax, not even social security taxes are taken out of it and remains tax free if used for medical bills. If you are lucky and don't need medical care it will function as a retirement account for your health insurance and medical bills in the future. However most people will have medical bills whether from health problems or need for surgery or when pregnant so it makes sense to save up the money now while you're young. If you need prescriptions check out the $4 generics offered by Walmart, Target, or Kmart. Costco is the cheapest choice for other meds as they have a fair, flat mark up on all their meds. Health insurance is so expensive now and there are thousands in out of pockets. I would prefer regular insurance but since the flexible savings account is use it or lose it, I switched to the high deductible. I don't like having to play a guessing game on what medical bills I might have and worrying about losing money. I decided I would rather keep my money than give it to my employer in higher premiums. Worse case scenario I pay the same for either insurance, but have a chance of saving money and paying less to my employer for health insurance!
Thanks everyone. A lot of you have mentioned things that are extremely helpful and also have raised further questions in my mind. I will graduate with roughly 20k in student loan debts and since I will be living at home with my mother, it is my hope that at some point I can funnel a great majority of my earnings into paying off my student loans as fast as possible because I much prefer to live a debt free life. However, I'm confused as to how to approach my finances, should I focus on establishing a 6-8 months emergency plan first AND THEN focus on paying off student loans asap, AND THEN focus on the 401k since I am so young?? What order would you suggest considering I have no outstanding expenses, no other debt, and will basically continue the poor college student lifestyle even after I graduate.
I would say pay your regular student loan monthly payment, contribute up to the employer match for your 401k (if they put in 6% then put in 6%), and build up your emergency fund. Once the emergency fund is full then split that savings between Roth IRA and extra student loan payments (if you were saving $500 a month for your emergency fund, once that's full then put $250 extra toward student loans and $250 in a Roth). That would be my suggestion.
I also agree with Calivianyna to take time for vacations while you are young and healthy. Traveling, hobbies and having fun making good memories with family, friends and loved ones are important, as life is about more than just work and the future! I've been fortunate to have done a lot of traveling in my youth and have been to Europe twice as well as traveled extensively in the US and Canada. I plan to go to Alaska on a cruise tour one of these days, but am content working on my house and garden for now.
RNDude2012
112 Posts
1.)How much does your employer match?
5% of Salary
2.) How old are you? OR How old were you when you began saving?
23. I'm 27 now FWIW. I have nearly 60k in retirement savings. I was 23 when I started saving.
3.) Is your 401k your only source of retirement savings, or are you investing in other options?
I have two jobs that provide me pensions as well along with social security (whether or not we'll get what we're promised is a different story).
4.) What percentage of your pay do you contribute?
10%..A total of 15% with match. I did this in the most aggressive funds possible. Last year for instance, I received a 23% return on investment (ROI). Unheard of. The market is cyclical though, and of course it will not and cannot sustain at that rate.
One good thing about my employer is I can transfer my money into however many different funds however frequently I want in order to maximize returns. I followed the market closely for awhile, but It kind of got stressful and old so I just put my money in a lifecycle fund which is still very aggressive.
5.)What age would you like to retire?
Well, the plan was as soon as feasible, but I ended up getting married and now have a strong desire to attend CRNA school. This might set me back a bit, but I'm sure the return on education in the overall long run will be worth it. If I'm lucky enough to get into anesthesia school, I'm going to do my best to resist cashing out the 401k lol. It is NICE to have the option though.
6.) Also, any financial advice for you have for a childless new RN with very minimal financial obligations?
What I did was set some money aside into a savings account as soon as I got paid. This is called paying yourself first. THEN, I paid my bills. THEN, I blew the remainder of my money on whatever I wanted to. Enjoy the freedom you have while you have it. I did this, and I was able to save without feeling like I was depriving myself.
ALSO, read Dave Ramsey or Suze Orman books, or download an audiobook onto your iPod. I personally like Dave Ramsey, and his books were life changing for me, but either school of thought will help you better your overall financial situation. Good luck and enjoy it. Come here to California if you want to be paid what you're worth as a RN :)