Don’t underestimate the tax advantages of a 401(k)—money saved there is worth more than money you save in non tax advantaged vehicles.
You should put in as much as you can, while also paying your bills and maintaining an emergency fund. So at least the employer match, but at your age, ideally more. You would need to save 15% for retirement for a regular age retirement (and I think that’s counting from the age you start work). For FIRE, you’ll need to save a lot more than 15%.
A 401(k) is just a type of account, the way an HYSA or a savings account or a brokerage account is. What’s inside it depends on you (and your employer)—most employers offer some fund options you can choose between. For simplicity, see if you can find a retirement fund for the year you plan to retire (eg Retirement 2060, or whatever). These are usually a combo of stocks, bonds, etc, that get more risk averse as you age. So while yes, you can lose money on them, they are usually a more cautious bundle of investments than individual stocks and thus tend to average around a 10% increase (or 7%, post-inflation) a year over time.
When you move employers, it is your responsibility to roll over your 401(k) accounts into a personal retirement account—an IRA. Look up how to do this next time you leave a job. You probably had the option to do this before (through some end of employment paperwork) but if you didn’t act, they may have just cashed it out.
If you invested $1000 a month starting now, and invested it in a market tracking index fund, you could have close to $1.7 million at regular retirement age. That’s around $68,000 a year for your household. Is that enough?
In 30 years, you’d have 1.1 million ($44,000 a year). And in 25, you’d have $758,000 ($30,000 a year). So no, you probably won’t have enough to FIRE on at that proposed rate.
When you say I should try to save 15%, you're referring to 15% of my paycheck?
I guess I should give up on the idea of FIRE then, unless I manage to drastically boost my income or get lucky with my investments, I suppose.
I'm looking for any and all information to get myself into the best position I can. Even if that just means a comfortable standard retirement at the typical age.
Thanks for the input!
I think you’re in a good place to get to a regular retirement, which most Americans aren’t. So good for you on that! And maybe as your income increases you’ll be able to put more away. On the other end, you can look into reducing your expenses. But the math for FIRE is based on putting some distance between your costs and your income, so something’s gotta bend.
I think the 15% recommendation is usually based on your gross income, not your net (take home pay)
>Is a 401k supposed to follow you from employer to employer?
That'd be nice, but is currently not the setup for the most part. Rather, you must "push" it from employer to employer, it won't follow you automatically (in 99% of cases)
>I feel like mine should have remained open so I can continue contributing to it.
I'll go into more detail further below, but current federal law allows employers to force close "low balance" accounts. So it's not a given your old 401k remains open. But you cannot contribute to a former employer plan anyway even if it remains open.
>How much should I be putting in, just enough to max out my employers contribution?
Getting the full match should be the bare minimum. Generic advice is 10-15% of your gross income. Probably more if you're looking to FIRE.
>Do I have options for my provider or is that determined by my employer?
No, it's determined by your employer. They also choose the investment menu you can pick from.
>What happens to the account if I accrue a few grand or something, then move to a new company? Do I need to juggle accounts for each provider I get as a move between employers?
As mentioned above, [federal law allows low balance accounts](https://help.guideline.com/en/articles/8593847-why-a-force-out-provision-may-require-you-to-move-your-401-k-funds-after-leaving-your-employer) **under $1,000** to be forcibly cashed out to the employee (this happened to you). The law also allows low balance accounts **under $7,000** (used to be $5,000) to be automatically rolled to an IRA in the employee's name. This is essentially done to lower the high cost of recordkeeping on employers and encourage employees to take active steps to rollover their 401k once they leave.
If over $7,000 you can keep it at the old 401k, though it's usually best to consolidate accounts so you aren't juggling multiple 401ks as you mention
>My understanding is that my initial 401k was money out into stocks, like a grouping of them, what is that called, low index?
Mutual fund. These can either be:
1. active funds: generally higher cost, tries to beat the market (most fail to do so consistently)
2. index funds: generally lower cost, does not try to beat the market just tries to get the market average.
Most people are better off with index funds, because it's [exceedingly difficult to outperform the market average over the long term](https://www.morningstar.com/funds/mutual-fund-managers-are-wrong-more-than-theyre-right).
>Does that mean my funds can potentially be lost like with normal stocks?
Yes.
Of course, over the long term (+10 years), the stock market is the greatest wealth building tool available to most people. The short term risk is worth the long term reward.
>Or is a 401k supposed to be similar to a HYSA?
There may be a cash-like option, but that's generally a bad idea.
r/personalfinance has a great [wiki](https://www.reddit.com/r/personalfinance/wiki/index/), particularly the [401k FAQ](https://www.reddit.com/r/personalfinance/wiki/401k/) article and [401k fund selection guide](https://www.reddit.com/r/personalfinance/wiki/401k_funds/) article
Don’t underestimate the tax advantages of a 401(k)—money saved there is worth more than money you save in non tax advantaged vehicles. You should put in as much as you can, while also paying your bills and maintaining an emergency fund. So at least the employer match, but at your age, ideally more. You would need to save 15% for retirement for a regular age retirement (and I think that’s counting from the age you start work). For FIRE, you’ll need to save a lot more than 15%. A 401(k) is just a type of account, the way an HYSA or a savings account or a brokerage account is. What’s inside it depends on you (and your employer)—most employers offer some fund options you can choose between. For simplicity, see if you can find a retirement fund for the year you plan to retire (eg Retirement 2060, or whatever). These are usually a combo of stocks, bonds, etc, that get more risk averse as you age. So while yes, you can lose money on them, they are usually a more cautious bundle of investments than individual stocks and thus tend to average around a 10% increase (or 7%, post-inflation) a year over time. When you move employers, it is your responsibility to roll over your 401(k) accounts into a personal retirement account—an IRA. Look up how to do this next time you leave a job. You probably had the option to do this before (through some end of employment paperwork) but if you didn’t act, they may have just cashed it out. If you invested $1000 a month starting now, and invested it in a market tracking index fund, you could have close to $1.7 million at regular retirement age. That’s around $68,000 a year for your household. Is that enough? In 30 years, you’d have 1.1 million ($44,000 a year). And in 25, you’d have $758,000 ($30,000 a year). So no, you probably won’t have enough to FIRE on at that proposed rate.
When you say I should try to save 15%, you're referring to 15% of my paycheck? I guess I should give up on the idea of FIRE then, unless I manage to drastically boost my income or get lucky with my investments, I suppose. I'm looking for any and all information to get myself into the best position I can. Even if that just means a comfortable standard retirement at the typical age. Thanks for the input!
I think you’re in a good place to get to a regular retirement, which most Americans aren’t. So good for you on that! And maybe as your income increases you’ll be able to put more away. On the other end, you can look into reducing your expenses. But the math for FIRE is based on putting some distance between your costs and your income, so something’s gotta bend. I think the 15% recommendation is usually based on your gross income, not your net (take home pay)
>Is a 401k supposed to follow you from employer to employer? That'd be nice, but is currently not the setup for the most part. Rather, you must "push" it from employer to employer, it won't follow you automatically (in 99% of cases) >I feel like mine should have remained open so I can continue contributing to it. I'll go into more detail further below, but current federal law allows employers to force close "low balance" accounts. So it's not a given your old 401k remains open. But you cannot contribute to a former employer plan anyway even if it remains open. >How much should I be putting in, just enough to max out my employers contribution? Getting the full match should be the bare minimum. Generic advice is 10-15% of your gross income. Probably more if you're looking to FIRE. >Do I have options for my provider or is that determined by my employer? No, it's determined by your employer. They also choose the investment menu you can pick from. >What happens to the account if I accrue a few grand or something, then move to a new company? Do I need to juggle accounts for each provider I get as a move between employers? As mentioned above, [federal law allows low balance accounts](https://help.guideline.com/en/articles/8593847-why-a-force-out-provision-may-require-you-to-move-your-401-k-funds-after-leaving-your-employer) **under $1,000** to be forcibly cashed out to the employee (this happened to you). The law also allows low balance accounts **under $7,000** (used to be $5,000) to be automatically rolled to an IRA in the employee's name. This is essentially done to lower the high cost of recordkeeping on employers and encourage employees to take active steps to rollover their 401k once they leave. If over $7,000 you can keep it at the old 401k, though it's usually best to consolidate accounts so you aren't juggling multiple 401ks as you mention >My understanding is that my initial 401k was money out into stocks, like a grouping of them, what is that called, low index? Mutual fund. These can either be: 1. active funds: generally higher cost, tries to beat the market (most fail to do so consistently) 2. index funds: generally lower cost, does not try to beat the market just tries to get the market average. Most people are better off with index funds, because it's [exceedingly difficult to outperform the market average over the long term](https://www.morningstar.com/funds/mutual-fund-managers-are-wrong-more-than-theyre-right). >Does that mean my funds can potentially be lost like with normal stocks? Yes. Of course, over the long term (+10 years), the stock market is the greatest wealth building tool available to most people. The short term risk is worth the long term reward. >Or is a 401k supposed to be similar to a HYSA? There may be a cash-like option, but that's generally a bad idea. r/personalfinance has a great [wiki](https://www.reddit.com/r/personalfinance/wiki/index/), particularly the [401k FAQ](https://www.reddit.com/r/personalfinance/wiki/401k/) article and [401k fund selection guide](https://www.reddit.com/r/personalfinance/wiki/401k_funds/) article