On Track with Retirement Savings?

[Lisidy]

I'm curious if my husband and I are on track with our retirement savings? Are we ahead or are we behind where we should be?

We are 33 and 32. We currently have $95,000 in retirement savings and we are putting away about 6.5% of our income each month. We plan to up that to 10-15%, but we have spent the last year and a half saving the down payment for our first home.

Any thoughts on where we are/where we should be? I appreciate the input!

[bjl584]

Is the entire $95K in retirement accounts like a IRA or a 401K? Or, is some of it in liquid savings or in a taxable brokerage account?

Do you have an Emergency Fund?

Having almost $100K in your early thirties is great, but you should strive to save 20% of your income.

Can you list your current debts and the rest of your budget?

[Lisidy]

Income (Net Monthly): $5,787

Expenses:
$1020 – Rent
$500 – Tuition (Graduate School)
$450 - Groceries
$401 – Student Loan Payments
$380 – Utilities (Water, Electric, Internet & Phones)
$294 - Car Payment
$250 – Gas
$200 – Pocket Money ($100 each)
$100 – Restaurants
$97 – Car Insurance
$50 - Entertainment
$18 – Renter’s Insurance
$200 – Irregular Expenses

Total Expenses: $3,960

Monthly Extra: $1,827

Debts: $57,957
$14,674 – Car Loan at 3.1%
$43,283 – Student Loans between 6 and 6.5%

For the past 3 years all of our extra money has been focused on paying off debt and saving a down payment for a home.

Once we close on our new home in August our PITI will be approximately $1,650.

We currently put 6.5% toward retirement savings (the minimum to get an employer match). We know it this should be higher, but we’ve been focusing on saving for a home.

I will finish a graduate degree in 2013 that will allow me to move into a middle management position in my industry. I can anticipate a salary increase from $40,000 to $60,000. I work in higher education admissions and positions are readily available.

The $95,000 we have in retirement savings is all in 401ks or IRAs.

We have approximately $10,000 in an emergency fund that will not go toward our down payment.

[disneysteve]

we are putting away about 6.5% of our income each month. We plan to up that to 10-15%

You should be investing 15% for retirement not counting any employer match, so at 6.5% I'd have to say you aren't exactly on track though that is certainly a good solid start and honestly puts you ahead of a great many of your peers. The fact that you've been paying down debt and saving for a home certainly explains why the savings rate has been lower and you are on track to increase that so that's good. Plus, once you get a 50% raise, you can really ramp up the savings if you can maintain your current lifestyle and not increase spending to match the higher income.

I think you are in good shape going forward.

[LivingAlmostLarge]

Great shape. Just budget the 15% asap and realize that once you get a home that is about 50% more than rent there will be lots of unexpected expenses that come up. To me that means you just have to make it a line item.

What's your gross income? A rule of thumb is something like 1x or 5x your gross by age 30. I can't remember though.

[disneysteve]

A rule of thumb is something like 1x or 5x your gross by age 30. I can't remember though.

It definitely isn't 5x. 1x sounds about right.

[Lisidy]

What's your gross income? A rule of thumb is something like 1x or 5x your gross by age 30. I can't remember though.

Our Gross income is $88,000 so I hope the rule of thumb is 1x by 30 and not 5x by 30 - that's a big difference.

[jpg7n16]

What's your gross income? A rule of thumb is something like 1x or 5x your gross by age 30. I can't remember though.

I have a book with big charts of ratios of investment assets to income based on age.

For age 30-35 considering no SS: (ratio of investable assets to income)
Very weak: .22-.33
Weak: .33-.50
Average: .44-.67
Good: .65-1.00
Strong: 1.09-1.67
Extra strong: 1.52-2.34

Given OP's income of $88k and retirement assets of $95k

95/88 = 1.08

OP's making good-strong progress towards retirement Good work!

Having said that, I don't feel 6.5% is enough to keep you there going forward. I like the plan to up to 10-15% initially. Try for 15-20% over time. Best of luck!

Found the book in a half price books a couple years ago: Amazon.com: Personal Financial Planning Cases and Applications (9781931629072): Books

[snshijuptr]

I used firecalc.com to calculate your chance of retiring at 65. If you pay off your mortgage and keep up your current level of savings, adjusted for inflation, you would have over an 80% chance of dying before you run out of money if you live to 100. Firecalc is an interesting worst-case-scenario retirement calculator. I recommend checking it out.

[cashrich]

I have a book with big charts of ratios of investment assets to income based on age.

For age 30-35 considering no SS: (ratio of investable assets to income)
Very weak: .22-.33
Weak: .33-.50
Average: .44-.67
Good: .65-1.00
Strong: 1.09-1.67
Extra strong: 1.52-2.34

Given OP's income of $88k and retirement assets of $95k

95/88 = 1.08

OP's making good-strong progress towards retirement Good work!

Having said that, I don't feel 6.5% is enough to keep you there going forward. I like the plan to up to 10-15% initially. Try for 15-20% over time. Best of luck!

Found the book in a half price books a couple years ago: Amazon.com: Personal Financial Planning Cases and Applications (9781931629072): Books

JPG -
Could you please post the other tenure and ratios as you did for 30-35.
how about 36, 37, 38, etc...

Thanks!

[jpg7n16]

JPG -
Could you please post the other tenure and ratios as you did for 30-35.
how about 36, 37, 38, etc...

Thanks!

Will I post the whole book? No. The charts are in 5 year increments, and can be found in the book I posted above. It's a good practical book with more than just retirement charts.

Having said that, for age 35-40 here are the ratios.

For age 35-40 considering no SS: (ratio of investable assets to income)
Very weak: .33-.52
Weak: .50-.77
Average: .67-1.03
Good: 1.00-1.55
Strong: 1.67-2.58
Extra strong: 2.34-3.61

[cashrich]

Will I post the whole book? No. The charts are in 5 year increments, and can be found in the book I posted above. It's a good practical book with more than just retirement charts.

Having said that, for age 35-40 here are the ratios.

For age 35-40 considering no SS: (ratio of investable assets to income)
Very weak: .33-.52
Weak: .50-.77
Average: .67-1.03
Good: 1.00-1.55
Strong: 1.67-2.58
Extra strong: 2.34-3.61

This information is good enough. Thank You!

[My Own Advisor]

I'm curious if my husband and I are on track with our retirement savings? Are we ahead or are we behind where we should be?

We are 33 and 32. We currently have $95,000 in retirement savings and we are putting away about 6.5% of our income each month. We plan to up that to 10-15%, but we have spent the last year and a half saving the down payment for our first home.

Any thoughts on where we are/where we should be? I appreciate the input!

Assuming you can put 10% more away per year for many years, you'll be in fine shape.

%95,000 with 7% ROR over the next 30 years should give you about $700,000 in retirement savings.

Contributions on top of that, you'll be fine.

My wife and I are trying to put away about $5,000 per year each over the next 20 years. If we keep that up, we'll be with you

Cheers!