Author Topic: Convinced my firend to open 401k  (Read 3521 times)

mbk

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Convinced my firend to open 401k
« on: March 11, 2015, 10:40:30 PM »
My close friend, though a high-income earner for the last 6-7 years, has hardly any savings. I have been gently urging him to fund a retirement account. Finally this month he opened solo 401k and started putting 4.5k/month into it. He was veering towards stocks/expensive mutual funds based on others' advice, but in the end I made him put all his contributions into total stock market index fund at Fidelity.  Happy to share the story here.

Candace

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Re: Convinced my firend to open 401k
« Reply #1 on: March 12, 2015, 09:51:42 AM »
Wonderful job. Feels good, doesn't it?

Congratulations.

Middlesbrough

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Re: Convinced my firend to open 401k
« Reply #2 on: March 12, 2015, 10:09:27 AM »
I have talked to our current student intern enough that I convinced him to contribute 15% of his pay to his 401(k) to get the full company match when he comes on full time in another department. It feels good to help people get free money!

mandy_2002

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Re: Convinced my firend to open 401k
« Reply #3 on: March 12, 2015, 10:57:34 AM »
I am so glad that I had people like you in my life.  One of my engineering professors told us that we were basically going from very little (or nothing) per month to over $60k per year.  You can save much of that and not even notice it out of college.  Another who I worked with as an intern said pretty much the same thing.  If you never see it, you never miss it.  I ended up maxing out about 3 years out of college, but put over $10k every year before that. 

mbk

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Re: Convinced my firend to open 401k
« Reply #4 on: March 12, 2015, 06:20:29 PM »
Yep it feels very good.
In the last few years his life style has inflated a lot.
He works in tech sector and I always feel skills of tech people may become redundant any minute. With the tax savings, I bet he won't miss most of the money diverted into the 401k.

rpr

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Re: Convinced my firend to open 401k
« Reply #5 on: March 12, 2015, 06:23:20 PM »
My close friend, though a high-income earner for the last 6-7 years, has hardly any savings. I have been gently urging him to fund a retirement account. Finally this month he opened solo 401k and started putting 4.5k/month into it. He was veering towards stocks/expensive mutual funds based on others' advice, but in the end I made him put all his contributions into total stock market index fund at Fidelity.  Happy to share the story here.

Great job. But there is usually a maximum limit of $18K per year. Some plans do allow extra contributions beyond the $18K but your friend needs to check the plan documents.

mbk

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Re: Convinced my firend to open 401k
« Reply #6 on: March 12, 2015, 06:32:34 PM »
I am so glad that I had people like you in my life.  One of my engineering professors told us that we were basically going from very little (or nothing) per month to over $60k per year.  You can save much of that and not even notice it out of college.  Another who I worked with as an intern said pretty much the same thing.  If you never see it, you never miss it.  I ended up maxing out about 3 years out of college, but put over $10k every year before that.

I did the same thing. I graduated college 4 years ago, but we live still like students. Me working in universities/research labs also helped. My mom and most of the relatives think that I am still in college. Most of the relatives who visit us get the impression we are just scraping by. And I don't contradict it at all. Most of them don't even know that we have $100k+ savings.

Recently a funny thing happened. One of my wife's cousins came to stay with us for a few days. Her husband instructed her not to take any public transit while staying with us. So my wife couldn't show her San Franciso. Earlier my wife would get offended knowing that, but now she is laughing.

mbk

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Re: Convinced my firend to open 401k
« Reply #7 on: March 12, 2015, 06:36:20 PM »

Great job. But there is usually a maximum limit of $18K per year. Some plans do allow extra contributions beyond the $18K but your friend needs to check the plan documents.
I think solo-401k limits are higher. He contributes both as an employee and as employer.

rpr

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Re: Convinced my firend to open 401k
« Reply #8 on: March 12, 2015, 06:40:54 PM »

Great job. But there is usually a maximum limit of $18K per year. Some plans do allow extra contributions beyond the $18K but your friend needs to check the plan documents.
I think solo-401k limits are higher. He contributes both as an employee and as employer.
You are right. I missed the word solo.

rocketman48097

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Re: Convinced my firend to open 401k
« Reply #9 on: March 16, 2015, 10:13:35 AM »
Awesome.  I have been urging people I liked, to up their contributions for years.  So far, everyone has been receptive and done it, either started one up or increased their contributions, after I floored them with how much I contribute (which is always more). 

For people I don't really care for, I don't talk about it.  They can suffer later in life without any savings.