401K and health
#1
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Joined: Apr 2008
Posts: 14
401K and health
Just thinking about the future....
I will possibly be transferred to US in next 18 months.
The company has a very good 401k (so a colleague told me) & as someone in their mid thirties if I decide to stay and retire in the US will that give me enough to retire or is it like 'how long is a piece of string' question? do US citizens without 401K get state pension? I know answers to this depend on a lot of facts but let me say I earn $70K and pay maximum tax free contributions.
Also what do average income US citizens do about medical when they retire?
I will possibly be transferred to US in next 18 months.
The company has a very good 401k (so a colleague told me) & as someone in their mid thirties if I decide to stay and retire in the US will that give me enough to retire or is it like 'how long is a piece of string' question? do US citizens without 401K get state pension? I know answers to this depend on a lot of facts but let me say I earn $70K and pay maximum tax free contributions.
Also what do average income US citizens do about medical when they retire?
#2
Re: 401K and health
A good 401k is one where the employer gives a good matching contribution, so if you put 6% in they put another 9% in or something like that.My employer doesn't match at all so I don't bother, but my husband has something like the above.
How much your 401k is worth depends on what you put in it, what you put the funds in etc.
US citizens get Medicare (or Medicaid, can never remember which way round it is) and then supplement that as they can afford.
How much your 401k is worth depends on what you put in it, what you put the funds in etc.
US citizens get Medicare (or Medicaid, can never remember which way round it is) and then supplement that as they can afford.
#3
Re: 401K and health
arthur, a 401K is like a very fancy savings account. If you don't put anything/much/continuing in, you won't get much out at the other end.
The 'state pension' here is Social Security: www.ssa.gov
Medicare is the health plan for seniors.
PBS just ran a show called The Retirement Revolution that was very interesting, and explained how all these programs work.
The 'state pension' here is Social Security: www.ssa.gov
Medicare is the health plan for seniors.
PBS just ran a show called The Retirement Revolution that was very interesting, and explained how all these programs work.
#4
Re: 401K and health
You will also have to see if the US government lets you stay and retire. Wanting to and actually being able to do it could be 2 completely different things.
#5
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Joined: Mar 2007
Posts: 4,059
Re: 401K and health
The company has a very good 401k (so a colleague told me) & as someone in their mid thirties if I decide to stay and retire in the US will that give me enough to retire or is it like 'how long is a piece of string' question? do US citizens without 401K get state pension?
#6
Re: 401K and health
I doubt just a 401(k) will be enough. That kind of plan should just be part of your retirement savings portfolio. There are various other vehicles you should take advantage of as well. You can set up a regular IRA, Roth IRA, etc. It's good that you're thinking about this now. A word of caution about the 401(k), though. Check very carefully how the funds are invested. If the investment is largely in the company's own stock, be very careful. Take advantage of it, especially if there is a match, but you MUST diversify If the bulk of your retirement is in a single stock, and it tanks, you could lose much or all of your savings very quickly.
The thing to look out for is the tax penalty for taking the money out before you retire, especially if you move back to blighty as it'll be pretty crushing.
Worth continuing to contribute the NI too to get a full UK state pension, good value for money that.
#7
Re: 401K and health
Definitely see who manages the 401K fund....IRA is good, but you might as well max the 401K first as that lowers your taxable income and is before tax rather than afterwards, but IRA is worth doing if you can afford to, can't remember how much you can put in though off the top of my head.
The thing to look out for is the tax penalty for taking the money out before you retire, especially if you move back to blighty as it'll be pretty crushing.
Worth continuing to contribute the NI too to get a full UK state pension, good value for money that.
The thing to look out for is the tax penalty for taking the money out before you retire, especially if you move back to blighty as it'll be pretty crushing.
Worth continuing to contribute the NI too to get a full UK state pension, good value for money that.
#8
Re: 401K and health
I disagree actually Bob; I'd contribute up to the company match only in the 401k first, then I'd max a Roth IRA (pay tax now, not later; other big benefit is in a pinch/hard times you can withdraw your contributions early with no penalty); after that, (if there's owt left!) I'd then go back to the the 401k.
#9
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Joined: Mar 2007
Posts: 4,059
Re: 401K and health
I disagree actually Bob; I'd contribute up to the company match only in the 401k first, then I'd max a Roth IRA (pay tax now, not later; other big benefit is in a pinch/hard times you can withdraw your contributions early with no penalty); after that, (if there's owt left!) I'd then go back to the the 401k.
#10
Re: 401K and health
Just thinking about the future....
I will possibly be transferred to US in next 18 months.
The company has a very good 401k (so a colleague told me) & as someone in their mid thirties if I decide to stay and retire in the US will that give me enough to retire or is it like 'how long is a piece of string' question? do US citizens without 401K get state pension? I know answers to this depend on a lot of facts but let me say I earn $70K and pay maximum tax free contributions.
Also what do average income US citizens do about medical when they retire?
I will possibly be transferred to US in next 18 months.
The company has a very good 401k (so a colleague told me) & as someone in their mid thirties if I decide to stay and retire in the US will that give me enough to retire or is it like 'how long is a piece of string' question? do US citizens without 401K get state pension? I know answers to this depend on a lot of facts but let me say I earn $70K and pay maximum tax free contributions.
Also what do average income US citizens do about medical when they retire?
#11
Re: 401K and health
Definitely see who manages the 401K fund....IRA is good, but you might as well max the 401K first as that lowers your taxable income and is before tax rather than afterwards, but IRA is worth doing if you can afford to, can't remember how much you can put in though off the top of my head.
The thing to look out for is the tax penalty for taking the money out before you retire, especially if you move back to blighty as it'll be pretty crushing.
Worth continuing to contribute the NI too to get a full UK state pension, good value for money that.
The thing to look out for is the tax penalty for taking the money out before you retire, especially if you move back to blighty as it'll be pretty crushing.
Worth continuing to contribute the NI too to get a full UK state pension, good value for money that.
And unless his employer has a good health plan, he's in for a huge Health Insurance tab.
#12
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Joined: Mar 2008
Location: Santa Cruz, CA
Posts: 4,913
Re: 401K and health
But, of course, there is also state income tax which could be anywhere from 0% up to 9.3% for someone with a hypothetical income of $75,000 and not a whole lot of deductions.
As for health plans. yes he should definitely check into what his employer will be providing well in advance of accepting any offer of a transfer, but I have a hard time believing that any multi-national company (which this presumably is) wouldn't have a decent health plan for their US employees.
Similarly, while you should also check up on 401K matching contributions and any vesting requirements, none of the employers that I have worked for had any vesting period for the employer's matching contribution, but perhaps I have just been lucky ...
#13
Forum Regular
Joined: Dec 2006
Location: Atlanta
Posts: 66
Re: 401K and health
Just thinking about the future....
I will possibly be transferred to US in next 18 months.
The company has a very good 401k (so a colleague told me) & as someone in their mid thirties if I decide to stay and retire in the US will that give me enough to retire or is it like 'how long is a piece of string' question? do US citizens without 401K get state pension? I know answers to this depend on a lot of facts but let me say I earn $70K and pay maximum tax free contributions.
I will possibly be transferred to US in next 18 months.
The company has a very good 401k (so a colleague told me) & as someone in their mid thirties if I decide to stay and retire in the US will that give me enough to retire or is it like 'how long is a piece of string' question? do US citizens without 401K get state pension? I know answers to this depend on a lot of facts but let me say I earn $70K and pay maximum tax free contributions.
maximum contributions
3% inflation
employer matches 50% up to 6% contribution from you (3% from employer)
investment growth of 8%
salary growth of 4%
Then after 25 years you will have $897k in today's terms. This will get you $36k - $45k/annum (taxable) assuming you withdraw only 4 - 5% per year.
After 30 years it would be $1.237m, giving income of about $50k - $62k.
You can take more income if you like - you just might risk running out of money.
#14
Re: 401K and health
Social Security is 6.2% and Medicare is 1.45% so I am not sure where that "9%" came from ...
But, of course, there is also state income tax which could be anywhere from 0% up to 9.3% for someone with a hypothetical income of $75,000 and not a whole lot of deductions.
As for health plans. yes he should definitely check into what his employer will be providing well in advance of accepting any offer of a transfer, but I have a hard time believing that any multi-national company (which this presumably is) wouldn't have a decent health plan for their US employees.
Similarly, while you should also check up on 401K matching contributions and any vesting requirements, none of the employers that I have worked for had any vesting period for the employer's matching contribution, but perhaps I have just been lucky ...
But, of course, there is also state income tax which could be anywhere from 0% up to 9.3% for someone with a hypothetical income of $75,000 and not a whole lot of deductions.
As for health plans. yes he should definitely check into what his employer will be providing well in advance of accepting any offer of a transfer, but I have a hard time believing that any multi-national company (which this presumably is) wouldn't have a decent health plan for their US employees.
Similarly, while you should also check up on 401K matching contributions and any vesting requirements, none of the employers that I have worked for had any vesting period for the employer's matching contribution, but perhaps I have just been lucky ...
Seriously better to go for a State with no income tax. Then of course there is sales tax, except for certain States as well.
One thing for sure, he will have a much better tax situation than in Canada, (better deductions for kids, higher personal deduction, mortgage interest deduction etc.) but the Health Care costs could be a killer. This day and age even large companies are cutting back on health plans and requiring higher financial participation by the employee and with higher deductibles. But it is certainly something for him to investigate.