Estimated take home pay?

[ldiot]

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I'm trying to calculate bi-weekly take home pay.

Say you make 120k/year, are single, and contribute 5% to 401k. Any estimates of what your bi-weekly check would be after taxes and 401k?

I'm coming up with $2,850 assuming taxes are 35%, with the 5% 401k contribution, does that seem about right?

 

[Momus]

5-6k/4 weeks depending on how much you contribute to 401k for avg rph working 40h/w.

 

[pezdispenser]

Yep that's about right but your taxes are high.

Federal 18-20%
State?
Social Security 6.2%
Medicare 1.45%
=26% + state

You can use this calculator to work it out exactly: http://www.paycheckcity.com/calculator/salary/

The baseline number of W-4 federal allowances is 2 for a single person: 1 for the standard deduction and 1 for the personal exemption. State allowances I don't know.

When you add deductions at the bottom, note that:
- 401k is exempt from federal, but not FICA. State and local I don't know.
- Health insurance and FSA are exempt from federal and FICA.

 

[awval999]

Came in to post paycheck calculator. Saw that pez beat me to it.

Take home pay is all relative. I play with my W-4 withholdings to have very little tax return. I'm also married which effects the tax brackets positively in my case (can be negative in some cases).

 

[Sine Cura]

35% is close depending on whether your state has income tax. I pay 33% in taxes early in the year. I also have set up my W-4 and the California equivalent (DE-4) to pay ~97-98% in income tax through withholding.

 

[mentos]

You should be maxing out your 401k if you can.

 

[dblock05]

You're a fool if you only contribute 5% to your 401k.

I take home around 2915$ every 2 weeks and make approx. 130k before taxes and put 500 in my 401k per paycheck. Plus insurance.

 

[trailerpark]

You're a fool if you only contribute 5% to your 401k.

I take home around 2915$ every 2 weeks and make approx. 130k before taxes and put 500 in my 401k per paycheck. Plus insurance.

Do you have student loans? I only contribute 6% because that's the limit my job matches up to.


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[Momus]

Do you have student loans? I only contribute 6% because that's the limit my job matches up to.


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Doesn't matter, max it out still. Once the year is over, your 18k space of tax advantaged account to compound every yr to hide gains/dividend from IRS for 40 yrs disappear forever.

 

[trailerpark]

But I have many loans and Dave Ramsey already told me not to do the 401k match at all, but I disobeyed and did up to the company match.


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[WVUPharm2007]

Max your GD 401k like the man said. Jesus.

 

[Lnsean]

kewlll

 

[ldiot]

You should be maxing out your 401k if you can.

You're a fool if you only contribute 5% to your 401k.

I take home around 2915$ every 2 weeks and make approx. 130k before taxes and put 500 in my 401k per paycheck. Plus insurance.

Personally I only want to contribute up to the match until my loans are paid off, then increase it to the max contribution. I'd rather get the guaranteed "return" on my loans which is significant, some of them over 6%. Maybe if I can consolidate to a very low fixed rate it would be worth taking another look at.

I disagree with Ramsey when he says not to even take the match. Some of his recommendations are based more on human behavior rather than numbers so I understand where he is coming from but don't take the advice (more progress on the debt = more motivation = more likely to continue).

 

[deleted205891]

Numbers are right if you are in a high-tax state, but don't forget to also deduct insurance from that amount, if your employer does not pay for it. For me that's a deduction of about 175 or so a month.

 

[Dred Pirate]

salary 136k - max out 403b, max out hsa - take home is $2650 every two weeks

ya - max out that 403b - no matter what dave ramsey says - that is tax protected money

 

[gwarm01]

Dave Ramsey provides advice to help people who aren't great with numbers stay motivated with their loan payment strategy. The advice isn't that great when you look at the numbers. Doesn't he recommend paying off your lowest balance loans first, even if you have other loans with higher interest rates? The whole thing is set up to make you "feel" like you are making progress, but you will end up paying more in the long run.

That said, I only do 10% into my 403b. I'm getting the max employer contribution this way, but I know I should be putting more in.

 

[Dred Pirate]

Dave Ramsey provides advice to help people who aren't great with numbers stay motivated with their loan payment strategy. The advice isn't that great when you look at the numbers. Doesn't he recommend paying off your lowest balance loans first, even if you have other loans with higher interest rates? The whole thing is set up to make you "feel" like you are making progress, but you will end up paying more in the long run.

That said, I only do 10% into my 403b. I'm getting the max employer contribution this way, but I know I should be putting more in.

very well said - his belief is that the "feel" you get one you see the loans paid off - gives you more motivation to help you, hence, you get to the goal faster

 

[Dred Pirate]

Damn dude. 136K with only 40 hours per week?!

That includes a bonus (about 1.5 weeks worth of pay) shift diff, (15% second shift) and 56 hours OT for the entire year - so 41 hours per week - we pay our clinc specs well

 

[Momus]

Damn dude. 136K with only 40 hours per week?!

That's avg retail staff pay in CA. 65/hr.. But, ofc it's retail and it's CA.

 

[Mad Jack]

I'm trying to calculate bi-weekly take home pay.

Say you make 120k/year, are single, and contribute 5% to 401k. Any estimates of what your bi-weekly check would be after taxes and 401k?

I'm coming up with $2,850 assuming taxes are 35%, with the 5% 401k contribution, does that seem about right?

Just use this tool: http://www.paycheckcity.com/calculator/salary/

Takes out all of the guesswork.

 

[6GodPharm]

I take home roughly $4,800 biweekly. I have 5% 401k and health insurance. Everything else is loans and other spending money. I do work roughly 100-107 hours per paycheck tho. I can get as high as $5300 and as low as $4200 per paycheck after 401k and health insurance.

 

[gwarm01]

49/50 states aren't California.

Can you cite references?

 

[sosoo]

ya - max out that 403b - no matter what dave ramsey says - that is tax protected money

u mean tax delayed money? they will get taxed at the end.. its either tax now or later. but u will get taxed.

 

[Dred Pirate]

u mean tax delayed money? they will get taxed at the end.. its either tax now or later. but u will get taxed.

true - tax deffered is the proper term - but it is growing tax free - unless you can put your money into a roth -you are better off doing a 403b vs letting it sit in a savings

 

[ldiot]

The more money that you have in your 401k the less valuable the tax savings are. For example, someone retiring with 300k in their 401k can take out 15k a year for 20 years and pay virtually no taxes. Someone with 3 million must take out 150k a year and will be paying essentially the same in taxes, so at that point they might as well just put the money in a Roth or in their pocket as they make it. Obviously this is very simplified and ignores growth that you will have in retirement but it's just to illustrate a point. It's another reason why I would prefer to only contribute up to the company match while I'm paying off my student loans, I would still be able to reach a balance high enough to make it "break even" in terms of taxes by just contributing the max after my loans are paid. Hopefully this makes sense. Once I get near the "break even" number I would just start pushing money into a Roth instead. Not to mention the money saved on student loan interest and debt free lifestyle may be a good enough argument on it's own.

 

[Dred Pirate]

The more money that you have in your 401k the less valuable the tax savings are. For example, someone retiring with 300k in their 401k can take out 15k a year for 20 years and pay virtually no taxes. Someone with 3 million must take out 150k a year and will be paying essentially the same in taxes, so at that point they might as well just put the money in their pocket as they make it. Obviously this is very simplified and ignores growth that you will have in retirement but it's just to illustrate a point. It's another reason why I would prefer to only contribute up to the company match while I'm paying off my student loans, I would still be able to reach a balance high enough to make it "break even" in terms of taxes by just contributing the max after my loans are paid. Hopefully this makes sense. Not to mention the money saved on student loan interest and debt free lifestyle may be a good enough argument on it's own.

agree with getting the max until your student loans are paid off - get out of debt asap - this we agree on - But on the first part I disagree with you - if you want to retire you want to have more than 300k in your 401k/403b - yes - you may have a bunch in taxable accounts - but they simply won't grow as fast - as you are paying taxes all along the way - and (in theory) you are going to be in a lower tax bracket when you retire than when you are earning - thus - the advantage of tax deferred plans - no all of this may be thrown out the window at the whim of our government - but that is a topic for a different thread

 

[ldiot]

agree with getting the max until your student loans are paid off - get out of debt asap - this we agree on - But on the first part I disagree with you - if you want to retire you want to have more than 300k in your 401k/403b - yes - you may have a bunch in taxable accounts - but they simply won't grow as fast - as you are paying taxes all along the way - and (in theory) you are going to be in a lower tax bracket when you retire than when you are earning - thus - the advantage of tax deferred plans - no all of this may be thrown out the window at the whim of our government - but that is a topic for a different thread

It was just example to illustrate a point (the tax savings potential of the 401k is dependent on it's balance). I don't plan on putting money in a taxable account unless I plan on spending it before retirement and need liquidity. Another side point is that in theory paying of debt is also "tax sheltered" gains because technically I am not paying taxes on all of the money I am saving in interest, which you didn't necessairly disagree with but other posters overlooked this imo.

I was just using the example to illustrate a point. It's hard to explain what I'm saying but eventually you can reach a point where your 401k balance is too high. Say for example you have 10 million in your 401k and make 50k a year. Would you put money in your 401k? Of course not because you'd actually be paying more taxes. There is a certain crossover point where the 401k balance gets too high to make it worth contributing too. My entire point is that even if I only contribute 5% while paying off my loans and then increase my contribution to the max later I would STILL be able to reach that "crossover" point before I retire, which is an argument that can be used to defend paying off debt as opposed to contributing to the max from day 1 because I am losing no tax savings potential (due to that fact that I can still reach that "crossover point"). I am also not losing the ability to have tax sheltered gains because I already argued that the money I save in student loan interest is not taxed, so technically paying off student interest is "tax sheltered" gains.

 

[rxdawg21]

It was just example to illustrate a point (the tax savings potential of the 401k is dependent on it's balance). I don't plan on putting money in a taxable account unless I plan on spending it before retirement and need liquidity. Another side point is that in theory paying of debt is also "tax sheltered" gains because technically I am not paying taxes on all of the money I am saving in interest, which you didn't necessairly disagree with but other posters overlooked this imo.

I was just using the example to illustrate a point. It's hard to explain what I'm saying but eventually you can reach a point where your 401k balance is too high. Say for example you have 10 million in your 401k and make 50k a year. Would you put money in your 401k? Of course not because you'd actually be paying more taxes. There is a certain crossover point where the 401k balance gets too high to make it worth contributing too. My entire point is that even if I only contribute 5% while paying off my loans and then increase my contribution to the max later I would STILL be able to reach that "crossover" point before I retire, which is an argument that can be used to defend paying off debt as opposed to contributing to the max from day 1 because I am losing no tax savings potential (due to that fact that I can still reach that "crossover point"). I am also not losing the ability to have tax sheltered gains because I already argued that the money I save in student loan interest is not taxed, so technically paying off student interest is "tax sheltered" gains.

If you have a high enough 401k balance to pay more in taxes in the future (at the current rates) then count your blessings as the stock market had a great return. I currently max my account out and with my employee match that is around 23,400 at the moment. I already have 68k in my 401k from previous years/investing in 401k while in school. I have been out <5 years. Unfortunately I didn't max my 401k out my first 1.5 years due to company restrictions on starting your 401k and switching jobs. At a projected 6% growth with a 2% pay raise every year (my pay right now is on the lower end due to working at the VA) I'll have 2.6ish million dollars by the time I'm 57 and ready to retire (govt retirement age after 30 years). I think 6% is a moderate goal as future returns are expected to be diminished over the next decade or two. Only time will tell. Granted ill have a pension that will be about 30% of my salary that will bump up my taxes some but I don't consider 2.5 million to be all that wealthy in 2047 dollar amount terms. However, if I waited 5 years after retiring to touch my 401k it would grow to 3.47 million at 6% growth (probably be lower growth due to more conservative profile however). It will benefit me to save enough in taxable/pension to live as long as possible without touching or barely touching the 401k.

 

[Momus]

It was just example to illustrate a point (the tax savings potential of the 401k is dependent on it's balance). I don't plan on putting money in a taxable account unless I plan on spending it before retirement and need liquidity. Another side point is that in theory paying of debt is also "tax sheltered" gains because technically I am not paying taxes on all of the money I am saving in interest, which you didn't necessairly disagree with but other posters overlooked this imo.

I was just using the example to illustrate a point. It's hard to explain what I'm saying but eventually you can reach a point where your 401k balance is too high. Say for example you have 10 million in your 401k and make 50k a year. Would you put money in your 401k? Of course not because you'd actually be paying more taxes. There is a certain crossover point where the 401k balance gets too high to make it worth contributing too. My entire point is that even if I only contribute 5% while paying off my loans and then increase my contribution to the max later I would STILL be able to reach that "crossover" point before I retire, which is an argument that can be used to defend paying off debt as opposed to contributing to the max from day 1 because I am losing no tax savings potential (due to that fact that I can still reach that "crossover point"). I am also not losing the ability to have tax sheltered gains because I already argued that the money I save in student loan interest is not taxed, so technically paying off student interest is "tax sheltered" gains.

This is a wrong assumption, you will always pay lower taxes overall in trad 401k as you withdraw them because the contribution in 401k comes from your highest bracket since our tax is progressive. The only way I see you pay higher at the end is if the gov decides the highest tax bracket you are in right now becomes your lowest tax bracket in retirement. Is it likely? Maybe... But, I don't see that happening right now. There also ways to avoid more taxes by moving your ass to NV, TX, FL as you withdraw the money during your retirement and the flexibility to convert to Roth IRA from IRA anytime you please WHEN it's advantageous to you (gov dropped the highest bracket to 25%). It's really no brainer to max 401k/403b/IRA first.

More info: https://thefinancebuff.com/case-against-roth-401k.html

Don't be the dumb idiot that think prepaying taxes (with Roth/investing in after tax money account) is good. You can have both max out however (I do max both (with backdoor roth) since I'm going to invest a lot more after tax money anyway and I need my gains/dividend to be sheltered) but IRA/trad 401k wins out to shelter your money IF you have to choose one or the other and can't afford to max both.

edited: typing on phone sucks

 

[BMBiology]

The more money that you have in your 401k the less valuable the tax savings are. For example, someone retiring with 300k in their 401k can take out 15k a year for 20 years and pay virtually no taxes. Someone with 3 million must take out 150k a year and will be paying essentially the same in taxes, so at that point they might as well just put the money in a Roth or in their pocket as they make it. Obviously this is very simplified and ignores growth that you will have in retirement but it's just to illustrate a point. It's another reason why I would prefer to only contribute up to the company match while I'm paying off my student loans, I would still be able to reach a balance high enough to make it "break even" in terms of taxes by just contributing the max after my loans are paid. Hopefully this makes sense. Once I get near the "break even" number I would just start pushing money into a Roth instead. Not to mention the money saved on student loan interest and debt free lifestyle may be a good enough argument on it's own.

That is a fair point but that there are ways to minimize your tax liability.

You have to retire early and slowly convert your 401 k to ROTH IRA. Since you are not working, you are not going to pay much tax on the conversion.

The problem? Most people can't retire early. They spend, spend and spend. They can't stop working so they end up making good money but they also end up paying a lot of taxes.


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[TheBlaah]

It was just example to illustrate a point (the tax savings potential of the 401k is dependent on it's balance). I don't plan on putting money in a taxable account unless I plan on spending it before retirement and need liquidity. Another side point is that in theory paying of debt is also "tax sheltered" gains because technically I am not paying taxes on all of the money I am saving in interest, which you didn't necessairly disagree with but other posters overlooked this imo.

I was just using the example to illustrate a point. It's hard to explain what I'm saying but eventually you can reach a point where your 401k balance is too high. Say for example you have 10 million in your 401k and make 50k a year. Would you put money in your 401k? Of course not because you'd actually be paying more taxes. There is a certain crossover point where the 401k balance gets too high to make it worth contributing too. My entire point is that even if I only contribute 5% while paying off my loans and then increase my contribution to the max later I would STILL be able to reach that "crossover" point before I retire, which is an argument that can be used to defend paying off debt as opposed to contributing to the max from day 1 because I am losing no tax savings potential (due to that fact that I can still reach that "crossover point"). I am also not losing the ability to have tax sheltered gains because I already argued that the money I save in student loan interest is not taxed, so technically paying off student interest is "tax sheltered" gains.

I understand your point, but you have to know its is near impossible to reach that "crossover" point. Personal yearly contribution is already maxed at 18k a year anyways. With employer contribution, that'll reach ~20k. The only way you're reaching 10 million 401k is if you started maxing out 401k at the age of 15, or you're averaging a 10% return. You're either ignoring or not taking into account inflation of money as well as inflation of income brackets.

You can use this site to get an estimate: http://www.calculator.net/401k-calculator.html

Basically, you might consider 5 million to be your "breakpoint", where you're annual return is equal in value to your current income. You might come close, but like Momus said, tax is progressive. You're taking money that would be fully taxed ~25-30% (marginal tax rate), and converting that into an average or effective tax rate around 10-20%.

 

[ldiot]

Of course you are taking money out of your highest tax bracket, but you are putting it into the same tax bracket if you're 401k balance is large enough to have already filled the lower tax brackets in retirement. I guess what is more debatable is whether your not you can reach that "cross-over point" in the first place. Also I should be clear I'd never put money into a roth when I have 401k space UNLESS I have already reached that "cross-over" point, aside from right now since I'm still a student and pay only 10% in taxes anyways.

Though if I'm honest we will probably be a socialist nation by the time I retire with a tax rate of 70% for the "rich" anyways (aka anyone who actually saved).

 

[owlegrad]

Of course you are taking money out of your highest tax bracket, but you are putting it into the same tax bracket if you're 401k balance is large enough to have already filled the lower tax brackets in retirement. I guess what is more debatable is whether your not you can reach that "cross-over point" in the first place. Also I should be clear I'd never put money into a roth when I have 401k space UNLESS I have already reached that "cross-over" point, aside from right now since I'm still a student and pay only 10% in taxes anyways.

Though if I'm honest we will probably be a socialist nation by the time I retire with a tax rate of 70% for the "rich" anyways (aka anyone who actually saved).

Sure we will probably go from having the lowest taxes of any industrial nation to having the highest. Seems very likely to me too.

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