{ "media_type": "text", "post_content": "Just graduated college, my 401k isn’t being matched for the first year. What percent would you recommend putting in? Should I just wait till year 2 when I’m getting matched?", "post_id": "5bb664bb2887600017ffaa57", "reply_count": 15, "vote_count": 1, "bowl_id": "552d1d24dc1c586b09d2d051", "bowl_name": "Consulting" }

Just graduated college, my 401k isn’t being matched for the first year. What percent would you recommend putting in? Should I just wait till year 2 when I’m getting matched?

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I would personally contribute, at the very least, the minimum % to get the full match - even if you don’t get it in your first year, at least you’ll get used to contributing that amount. It’s always worthwhile to contribute what you can.

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Depends: Do you have debt? Save emergency cash, eliminate debt. Do you have 6-9 months of expenses saved in cash? If not, build your cash. No debt and have cash? Max 401k, max IRA, Max HSA, surplus to brokerage, in that order.

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If I could tell my younger self anything it would be what H1 said. Contribute to the limit and live on what’s left over and follow that formula throughout your career and you will be golden

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Third-ed what H1 and BA1 said. I wish I had contributed the max from the beginning. I could have afforded it but didn’t make the choice to. It’s hard to step down when you’re used to living at a certain level.

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My first year out I contributed What my “would be rent” of 1500 (I commuted). Compounding is your friend

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If you can afford it, contribute so you hit IRS max (I think 18,500 this year). You can reduce your taxable income and as K1 said, get used to making contributions

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Contribute at least the future match; go as high as 15% if you can. I know it’s steep and the pretax savings now is beneficial and you’ll have a nice nest egg down the road. Again, it is all determinant on your own personal situation

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Compounding/interest works both ways - debts can grow and drown you. BUT, Eliminating debt is a risk free return! Think from a net worth perspective: Lever 1: Assets Lever 2. Liabilities Both impact net worth. If you have debt, kill it!

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This ^

helpful

Minimum 15% at all times throughout your career. If you start from from the beginning, you’ll never miss it. As said above, the power of compounding is incredible. Go for regular pretax 401k for now. If you want Roth assets (for tax diversification, etc), open a Roth IRA.

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I always contributed to the fullest extent and then every raise or bonus I got I funneled 50% into mutual funds. Now, even after 2 divorces (female in a no fault state where spouse got half) I still have a good retirement nest egg. You never know what life will throw at you so just be ready

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Do you recommend roth 401k or pretax for someone in their early 20s? I just opted to put 15% into my roth 401k

Knowing IBM's match policy, put it into your own Roth IRA or something. It's not just that they don't match first year, IBM matches in a lump sum at the end of the year -- you would have to put into 401k entire second year, and it will be matched at the end. IF YOU LEAVE BEFORE COMPLETING SECOND YEAR there will be absolutely no match whatsoever

Should I invest in a 401k first or an IRA first?

I did 14% and 14% in each my first year-ish. Neat egg would technically be bigger if I did all pre-tax but I’m hoping to be in a bigger tax bracket so I did the ira as well

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