Are you anywhere near your benchmark retirement savings goals?

[Petunia 100]

Actually, there is a limit to the total an individual can contribute to an employer 401k, an individual IRA and a SEp/Simple IRA. The total for all cannot exceed your income or $51,000.

The 51k limit is for employer plans. Traditional and Roth IRAs are not employer plans.

[corn18]

The 51k limit is for employer plans. Traditional and Roth IRAs are not employer plans.

That's true.

If you have a job with a 401k plan and you contribute $17,500 and your employer matches with $12,500, then all of that counts against the max SEP or SIMPLE IRA contribution you can make as a self employed contributor (if you own the business, you are the employer). You can only do $21,000 in the SEP/SIMPLE ($51,000-$30,000).

[JoeP]

Just dial back your living expenses and that multiplier doesn't need to be so large. We're on track to have between 10-12x by retirement age.

I've said this before: We plan on retiring to a location that has a much lower cost of living, yet still has access to niceties such as museums, art galleries, auditoriums, sports, etc. Our dollars will go much further.

[Petunia 100]

Just dial back your living expenses and that multiplier doesn't need to be so large. We're on track to have between 10-12x by retirement age.

I've said this before: We plan on retiring to a location that has a much lower cost of living, yet still has access to niceties such as museums, art galleries, auditoriums, sports, etc. Our dollars will go much further.

Do you have an area in mind?

[JoeP]

Do you have an area in mind?

Nothing specific, but the general area is one of the Carolinas.

[Retired To Win]

... I'm scared of retirement but excited to pay less taxes.

Don't be scared. Instead, make a plan to financially defend your retirement.

Here is a blog post on how I approached that.

My Six Lines of Financial Defense:

http://retired-to-win.savingadvice.com/2014/04/29/my-six-lines-of-financial-defense_108598/

Cheers!

[LivingAlmostLarge]

Yes substantially more than our income and expenses. Income we're about 3x and expenses I don't like 10x?

[bennkar]

I agree that you need to look at your future expenses, not your current income.

As for me, I'm currently at 5X of current income, of which 1.5X is "Roth"-ified, a paid off house and car, a pension that is vested at 20% of current income (if it goes down, the Feds will have probably collapsed as well - so I consider it safe) and should reach 40% by retirement day, and then I am expecting something from SocSec (maybe not 100%, but 70-80%? of estimated benefits). If I spent lots maybe I would be concerned to hit 10-20X, but really I should only need 5X my current earnings.

So I'm stuck in no-mans land right now. I have enough to retire with the pension, but can't get at it (for 9 years). If I leave before then, it won't get it for 17 years. And when I do get it, I will have more than enough. There are worse problems in life I know... but it is a pain for now.

[humandraydel]

8x final income is probably fine and somewhat close to 25x expenses.

Assume 100k salary:

100k
-20k 401k deduction
-3k other savings (529, HSA, etc)
-8k SS/medicare tax
-10k Federal income tax
-4k state income tax

=55k net income

Assume $20k social security income and you need to replace 35k of income with retirement savings. With a tax efficient strategy you can replace $35k of net income with $40k of gross income.

25 x 40k = 1 million....fairly close to the 800k from 8 x final salary of 100k.

[bigdaddybus]

I too disagree with the article. 8x is too low. I have 5x now at 36. I'm shooting for more in the 20 to 25x range.

Agreed. Agreed. We have 7x now at 40. Agreed.

[ua_guy]

I have no idea.

I'm not 35 yet but I'll be on track to have between 1x-1.5x my salary in my own account by that time hits, somewhere 100k-150k. Same for my significant other. So that puts us right around $300k combined at age 35.

At this pace, we'll be on track to deposit another million spread between our two accounts by the time we retire, assuming no return and only contributing a $17,500 annual max for the next 30 years.

Are we on track? To hell if I know. Anyone care to guess?

[QuarterMillionMan]

I have no idea.

I'm not 35 yet but I'll be on track to have between 1x-1.5x my salary in my own account by that time hits, somewhere 100k-150k. Same for my significant other. So that puts us right around $300k combined at age 35.

At this pace, we'll be on track to deposit another million spread between our two accounts by the time we retire, assuming no return and only contributing a $17,500 annual max for the next 30 years.

Are we on track? To hell if I know. Anyone care to guess?

ua_guy it looks good, especially at your age but are you on track? With my rudimentary calculations it doesn't seem like it. Assuming as you put it, no returns meaning not taking into account losses or gains, or inflation, or changes in tax codes, etc. Also, at age 50 the IRS would allow "catch up" contributions but leaving that out for simplicity of extrapolation. At age 35 you'd have about $150,000 (that is great I'm 48 with the same amount). Contributing $17,500 max for 30 years equals, $525,000. At age 65 you will have, $150,000 + $525,000 = $675,000. Then say you draw out 4% per year of that total ($675,000 x .04 = $27,000 per year) for the next 25 years (65 thru 90), at $27,000 per year times 25 years equals $675,000, so at age 90 your balance would revert to zero. This simple calculation doesn't also take into account drawing from a ROTH, or Social Security, pension, or other retirement vehicles.

[ua_guy]

ua_guy it looks good, especially at your age but are you on track? With my rudimentary calculations it doesn't seem like it. Assuming as you put it, no returns meaning not taking into account losses or gains, or inflation, or changes in tax codes, etc. Also, at age 50 the IRS would allow "catch up" contributions but leaving that out for simplicity of extrapolation. At age 35 you'd have about $150,000 (that is great I'm 48 with the same amount). Contributing $17,500 max for 30 years equals, $525,000. At age 65 you will have, $150,000 + $525,000 = $675,000. Then say you draw out 4% per year of that total ($675,000 x .04 = $27,000 per year) for the next 25 years (65 thru 90), at $27,000 per year times 25 years equals $675,000, so at age 90 your balance would revert to zero. This simple calculation doesn't also take into account drawing from a ROTH, or Social Security, pension, or other retirement vehicles.

The nebulous picture starts to look a little bit better if we add back in common assumptions, at least I hope so.

I have a difficult time rationalizing all of it. This model requires that you stuff away a significant portion of your salary for a future promise of return that rides on the backs of corporations AND politicians AND good health.

And, we have to realize that the majority of Americans can't actually make this model work. The notion of an employee-funded retirement that is backed by a market of speculation is pretty ridiculous. Especially considering the shift of burden to the employee in this model AND considering wages have stagnated and buying power is so diminished.

I'll step off my soap box now.

[QuarterMillionMan]

For me at age 65 if I keep maxing out at $17,500 without the catch up provision my annual withdraw at 4% would come to $16,000 a year. That would put me at poverty level. I'm saving like a mad-man to avoid this outcome.

[EconDiva]

Nothing specific, but the general area is one of the Carolinas.

Nice..I was born/raised in SC and am thinking Costa Rica, Thailand, heck...maybe Puerto Vallarta? Somewhere I can retire on less so I can retire sooner. But it's 20 years away so who knows lol