Savings Account Help !!!!

[03z06guy]

Hi there, I need some advice. Currently my wife and i (35 AND 37) make about 110k a year. We have one 401k with aprox 60,000, i have a pers retirement (i have 25 years to go) , a savings plan (just started aprox 1,000) along with a small military pension $600 a month. NO credit cards!! The usual house and car payments but thats it. My question is, we do not have any money in savings right now. My wife just got a bonus at work and i'd like to put it in a money money market account (savings). Does this sound good? If you were me what steps would you take towards retirement? I appreciate any advice! Thanks!

[disneysteve]

Welcome. First, I'm not sure what "pers retirement" is. Also, when you say "savings plan" can you explain what that means?

It sounds like you are saying that you have no savings outside of your retirement plans except for that $1,000 you just started. Is that right? If so, then you absolutely need to start an emergency fund and keep adding to it until you have 3-6 months worth of living expenses.

As for retirement, what % of income are you currently putting in?

[poundwise]

Originally Posted by 03z06guy

My wife just got a bonus at work and i'd like to put it in a money money market account (savings).

Online Savings Accounts

Originally Posted by disneysteve

Welcome. First, I'm not sure what "pers retirement" is.

Personal retirement (?)

[tripods68]

I think he is referring to PERS = Public Employee Retirement System, which is a Pension (Defined Benefit) similar to CalPERS here in California in which I am happy to be a member

[03z06guy]

My 1,000 savings plan is a local state growth savings plan (just like a 401k). A pers retirement is (public employees retirement system) it is a retirement program funded by the state (i do not need to contribute) for my retirement (i work for the state). Currently i am contributing $120.00 a month to my savings plan and my wife does like 5% to hers (her company matches plus puts in a yearend bonus every year) she has only had the 401k for 7 years and has aprox 60,000 in it. I also receive a small military pension check $600 a month. i guess i need to know, am i on the right path? Also, should we just put her bonus check in a reg. savings acct. or try something else? I am just looking for ideas. Thanks!

[03z06guy]

YES...... Thank you TRIPOD, that is exactly what i mean. I too am very happy to be in it as well. Any advice for me?? Basically i am trying to make 2 retirements (PERS and 401k). I am just wondering if you think i am on the right path and any advice on how to use my wifes bonus to benefit us.

[bjl584]

can you give us some more detailed info on your monthly expenses, debts, etc?

[03z06guy]

BJ, All we have for expenses are our house payment (2,000) and car payments (aprox. 1,000) We have NO credit cards so NO credit card debt. I think our biggest problem is eating out which we are working on. The rest is the regular utilities,garbage, gas bills. We live a pretty simple life with no real extras except our cars which are our choice of spoiling ourselves for our hard work. Thats about it.

[Ima saver]

You make a lot of money to have so little in savings. You should have 3-6 months in an emergency fund. Many on line banks are still paying 5% interest. You need to fund an emergency account and put 10% of your income into that right off the bat. Pay yourself first!

[tripods68]

Originally Posted by 03z06guy

YES...... Thank you TRIPOD, that is exactly what i mean. I too am very happy to be in it as well. Any advice for me?? Basically i am trying to make 2 retirements (PERS and 401k). I am just wondering if you think i am on the right path and any advice on how to use my wifes bonus to benefit us.

It seems you're in the right path, only debt is your car. You have plenty of options; either to pay off your car faster, or add more towards your wife's IRA, or build up your emergency fund. It seems you and your wife have excellent combined yearly incomes. I don't like to give you advice since I don't know all your financial situations. But I can tell you what we are doing.

I don't if you have kids or not. Of course, that would change things a lot. We have 2 young kids ourselves. Our goal is build our Emergency Fund about $30K in 3 years. We also try to max our retirement contributions a month no matter what. I put $1100 a month towards my 457 plan aside from my required 5% contributions to CalPERS. I also put in $3600 a year towards my ROTH IRA. Of course that vary every year. My wife (RN) puts in about $10K a year on her 403(b) with employer-match (100% on first 6% contribution). Our kids contribution 529 plan $100 a month per child.

I hope this helps.

Good luck Happy savings

[jIM_Ohio]

Originally Posted by 03z06guy

Hi there, I need some advice. Currently my wife and i (35 AND 37) make about 110k a year. We have one 401k with aprox 60,000, i have a pers retirement (i have 25 years to go) , a savings plan (just started aprox 1,000) along with a small military pension $600 a month. NO credit cards!! The usual house and car payments but thats it. My question is, we do not have any money in savings right now. My wife just got a bonus at work and i'd like to put it in a money money market account (savings). Does this sound good? If you were me what steps would you take towards retirement? I appreciate any advice! Thanks!

110k per year suggests a need of $2.75M needed to save for retirement. This assumes you spend most of what you take home.

You can make some assumptions like:
you will need only 80% of what you take home now in retirement (lowers amount needed to $2.2 M)
Social security will replace 15k per year of expenses ($1.825 M needed)
and as you read more, more assumptions can be made.

Progress:

the 60k saved now (age35) will compound, assume a 12% rate of return (aggressive and not highly likely, but I am proving a point)

60k age 35
120k age 41
240k age 47
480k age 53
960k age 59
1.92 M age 65-this is income of $76,800 in retirement

The likelihood of above happening is LOW.

Actions to take
1) keep investing. I would suggest a 10% savings level for starters, 20% would be better. Meaning set aside 20% of $110000 ($22,000 per year).

2) put some of the $22000 in a Roth IRA for each spouse (5k each, 10k total)

3) put remaining 12k into 401ks or other workplace retirement programs.

The goal should be to get chart above to look like this (using a 9% rate of return)

age 65 $2,000,000 saved (income of $80,000 per year in retirement)
age 57 $1,000,000 saved
age 49 $500,000 saved
age 41 $250,000 saved
age 33 $125,000 saved

You are both older than 33, so you can see you are slightly behind this more realistic chart. But you are 4 years away from age 41 goal, and need $190k to do this. $88k can come from the $22,000 you contribute each year. If the market helps you, you will be close to being on track in 4-6 years.

This was meant to get your attention, not scare you. HTH.