Often times company matches are offered to get lower comped employees to participate to avoid problems with anti-discrimination rules (allowing higher comped employees to contribute more). If given employees will participate without the match its typically not offered.
Yup, 415© limit is $54k this year. Just went up.
^ interesting.
H and I met with our financial guy Don last week. We were pleasantly surprised on the combination of our assets and how things will draw down. Since we have LTC insurance, most likely later health care dollars spent won’t be as great. Don even said if something happens to H’s job, we can afford the insurance premiums and not having his income.
Right now our ‘ship’ is stable. Motto for today is to enjoy the gift of every day, and can enjoy it a bit better with the feeling of financial security.
Since my current PT job won’t move the needle on my high earning years for SS, I pretty much know my SS monthly.
As soon as we retire, Don said to use SS, as the other assets can be passed down. Also to change H’s work 401k to an IRA because the regulations/flexibility is more favorable for the asset holder.
I am not putting any energy/thought into what could happen with ROTH or some of the other future tax ideas floating around. The thing seniors have going for it is a powerful gathering of voters in AARP
We did convert $$ to ROTH from IRA in some recent years, in part to simplify our holdings and also have the ROTH assets be the last to be used (if even used) in retirement.
At my company, you can get to 54K when they add up all the contributions. Your own 401K contribution (before and after tax), the companies contribution, and if our sick bank is maxed out, they put the excess in the 401K. So you have to be careful not to go over, or it could limit the companies contribution. That would be a nasty surprise. They changed something over the years, I think we used to be able to contribute only 10-15% of our income, but now it is 50% (up until the legal limits).
In part because we had kids later, so we were DINKs (dual income no kids) we maxed out 401k contributions. ROTHs showed up after first child was born, and I didn’t get to setting up a ROTH or funding the first couple of years we were eligible - due to the time value of money, that was a ‘mistake’, but one can’t do everything ‘right’ but will still come out OK. We had to reduce our contribution to H’s 401k (down to where we got any match money, which was 4%) but by then, we had a pretty healthy amount there that was doing well with the investments.
The time value of money is something we are passing on to our DDs. Even though our early years had smaller income, we almost lived like college students except we got into our own home early.
Being smart in investments, and being comfortable with the risk level you are at. We can do riskier things with our ROTH and 401k because we have the other conservative investments and income stream.
@SOSConcern, Social Security calculates a 35-year average wage out of 40 years of working, and if there are years where you had no income, the lowest five years are dropped from the average, and any other years with no income are counted as zeros in the average.
For example:
EE worked 25 years at $30k/year = $750,000
EE had 15 years at $0 income
Total: 40 years, $750,000
SS will drop lowest five years so denominator is 35.
Average earnings will be based on $750,000 divided by 35 years
Note that you still have 10 years of zero income in the average.
So, even if you are making a small amount now compared to previous years, it will still increase your benefit. The bend points in the Social Security formula give higher benefits to the first dollars earned rather than the last, so even a small income will accrue proportionally higher benefits.
Social Security also indexes your earnings over your working life and translates them into nearly current dollars. Indexing on prior years’ earnings stops when the employee reaches age 60.
The Social Security projections they send you annually assume that your last year of reported earnings remains constant until you become eligible for benefits. If you haven’t had earnings for a while and have been getting those statements, they have been assuming zero future earnings. Now having income will increase the benefit.
Here are some explanations about calculating average wage for SS and indexing:
https://www.ssa.gov/oact/cola/awifactors.html
https://www.ssa.gov/oact/ProgData/retirebenefit1.html
(former pension administrator here…)
@CountingDown that is good to know. I am enjoying the work I have been in since Feb and providing a great service to my employer and our patients/residents - but not working too many days to have it defray from my QOL. Have to work hard and work fast. Employer is valuing me more as it is difficult to find competent/hard working nurses when the demand is going up and the supply is shrinking in our area. One nurse that started with me found a job with 12 hour shifts and today is her last day (for FT, IMHO that is the way to go) and another that started after me just got fired - was definitely a slacker and non-performer.
On SS, our financial guy was talking about the highest 40 quarters of salary history. So it will be good to see some incremental increase from my currently stated SS number (which is half of what H’s is) which is above the $1000/month ‘average’.
Ummm…I see how both of these benefit Don, not so much how they benefit you.
Postponing social security is a great way to insure against outliving your money. If you have enough to get you through to age 70, your SS amount really gets bumped to keep you going past that. It’s not just about the break-even point. If you die early, well, too bad. But if you live long, the extra money can really help. But if you do that, less money for Don to manage now.
Also, it depends on what the investments in your 401K are, but think hard before rolling the money over - there are some legal protections that 401Ks have that IRAs don’t have, which may depend on state laws.
^ This is the eternal debate - take SS now and save my own money for later and possibly having more to leave my heirs, or spend my money first so I get a bigger SS check and possibly have more income when I am very old.
There is no right answer, it all depends on the assumptions you use to try to decide and what your long-term goal is. If you “crowd-source” the question, almost half of people start collecting at 62. Only around 3% wait until 70.
Can you expand on this? What protections are you talking about?
Just a small aside on SS. I’ve worked part time nearly my entire career AK (after kids). Ranged from 1/4 time to 3/4 time. My SS is still only about 1/2 of my spouse, which I would receive had I not worked at all, so future part-time work really won’t help. Oh well. It still allowed us to save more, and definitely kept me sane and involved 
NRE, think ERISA protections for 401(k)s. Like your spouse cannot name anyone other than you as a beneficiary of the 401(k) without you agreeing to it. Also, creditor protections may differ for the two.
https://www.irahelp.com/slottreport/how-safe-creditors-your-401k-money-if-you-roll-it-ira
Not a lawyer here, so take it with a grain of salt… 
^^^Yes, BunsenBurner is correct; surviving spouse automatically gets the 401(k) unless that spouse specifically waives that right (and it must be notarized/witnessed by a plan administrator). With an IRA, the accountholder can name anyone – no guarantee it will be the spouse.
401k plans are protected in bankruptcy; IRAs are not.
And while we are at it, if your spouse is lucky enough to have a traditional pension, DO NOT sign away your rights to a joint & survivor annuity without serious consideration with someone who has NO interest in making money off the lump sum payment. I once had a client who retired so she could take care of her ailing husband. She opted for the single life annuity to get more money each month, and because her husband was not expected to live very long. Her husband signed off on it. She died three weeks later, having never gotten a payment and her husband was left without a survivor benefit to pay for his care. He lived for several years. I begged her not to waive the J&S, but she was determined. Was the most upsetting incident in my career.
My rule is that spouses waive nothing and we got for low-cost funds. Retirement issues are one area where DH completely agrees and defers to me. We don’t have an investment advisor. Maybe that’s a mistake, but having worked for someone who worked on commission for pension funds and annuities, I have seen the back end of the operation and prefer to stay away from it. YMMV. DH and I like to sleep at night. Then again, some of you probably do much better on investment returns than I do.
^^Hmm, we expect to both waive our survivor benefits to get full payment on our pensions. Since we both have the same pension amount and the other person doesn’t need survivor benefits to get by, it seems unnecessary. Plus, we both intend to live a long time…as if we have any say about it. 
@busdriver11, your and your H are in an enviable position with equalized benefits, so waiving would make sense, assuming you’ve run the numbers and are comfortable with them. We’re more lopsided, esp since I have not been able to contribute to my 401(k) over a chunk of my working life.
My dad and FIL were sole providers, so the J&S was something I really pushed them on. As it turns out, both of our moms passed first, but had it been the other way around, our moms would have had Social Security and nothing else, so I felt the J&S was good insurance against that kind of financial catastrophe (both for them and for the children who would have to kick in financially to keep our moms afloat).
Our retirement plan is in the form of a profit sharing trust, which is considered community property. DH could not leave the entire account to anyone else. At least half would automatically be mine, regardless of his feelings about it.
I have the max survival benefit, 55% of H’s pension. It should work OK, as someday I will get SS and we have some rentals that we are cash flow positive. H is over a decade older than me, so it’s likely I should survive him (even with my chronic health issues), especially as my folks are both alive and pretty healthy and his died long ago.
We live in a community property state, but IRAs and real estate can be separate property depending on what kind of money went in there. In WA, the character of the property follows the $$ - if separate property $$ were used to buy a house, that house might remain separate property even if the spouse lived there and contributed to its upkeep and mortgage payments. There are some sad court decisions, for example, one case where an elderly woman was forced out of her family home because her hubby left the house to his kids from a prior marriage in his will, and the court determined that the home was his separate property.
The reason it makes sense for us to use SS right at retirement is that the time value of our assets will grow faster than the amount we would get from SS if waiting until 70. Plus if we died fairly young, we would have tapped down retirement funds and never having drawn any or much SS.
Our ‘full SS’ is beyond 65 years because we were both born in 1956 - I believe it is 66, or 66 and 10 months, something like that.
We didn’t go over all the differences in 401k versus IRA, but for us it will probably also make sense to deal with the IRA. This 401k has about half of our retirement assets (and is growing based on the funds I have them invested in - one of the funds went up over 10% first quarter of this year). We also have our ROTHs in fairly aggressive investments because we have others in conservative (annuities). Don give me guidance on selecting from the investment choices based on what is going on with the markets, but we have fees with Prudential (not with our financial guy Don - we didn’t move it under him). We did move money from the 401k to purchase an annuity. We also purchased annuities from H and my IRA funds.
I believe we got steered right on on more conservative investments, and our risk profile is something we are comfortable with.
Our next step is to set up some of the legal aspects beyond our will (which we have in our state). However not sure if we will stay in our state after retirement.
Yes, some situations are more complicated than us. We have a long marriage and two children - both are responsible and ‘worthy’ for equal share in our estate.
Most attorneys are smart enough to set up things in a decent way - the problem is when people don’t update their will to current circumstances.
H has a lot of longevity in his family, while I don’t. But I am determined to hang in there, including my current regime of swimming 3X a week, one mile breast stroke each time.
“Most attorneys are smart enough to set up things in a decent way - the problem is when people don’t update their will to current circumstances.”
Nope. My estate planning prof says she has seen a fair share of poorly written wills. If your estate is simple, it probably will not matter much. It is only when complex issues arise, will interpretation becomes important.
Oh - she also told us that if you have RE in a state like HI where probate is a PIA, make it into a non-probate asset by putting it into a trust or, if you are renting it, consider an LLC.
And the last tip - annuities SUCK.