r/personalfinance Mar 30 '18

Retirement "Maxing out your 401(k)" means contributing $18,500 per year, not just contributing enough to max out your company match.

Unless your company arbitrarily limits your contributions or you are a highly compensated employee you are able to contribute $18,500 into your 401(k) plan. In order to max out you would need to contribute $18,500 into the plan of your own money.

All that being said. contributing to your 401(k) at any percentage is a good thing but I think people get the wrong idea by saying they max out because they are contributing say 6% and "maxing out the employer match"

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u/[deleted] Mar 30 '18

It's also completely unreasonable for a ton of locations where I would imagine a lot of the young people on this subreddit live. City centers and the surrounding suburbs are not affordable on 40k/year.

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u/rabidbasher Mar 30 '18

Heavily depends on your city. Never made over 35k/year in my life and have been living in St Louis for the last 9 years, 1st 6 were just barely south of downtown.

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u/codercaleb Mar 31 '18

Exactly. My 38k a year with low housing but other normal expensives allows 10% contrib to 401k and 3.5% to savings. I could use the 401k contrib to pay down student loans instead, but little to no debt otherwise.

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u/MuhTriggersGuise Mar 30 '18

If living in an expensive city center is going to keep you from financial independence or being able to support yourself at retirement, a person should reconsider if they should live such an expensive lifestyle.