retirement?

[wikiwiki]

Just learned of DH's promotion and 12% increase so we are working out what to do with the extra $.

I bumped his retirement to 12% from 11%, plus he gets 3% employer match (does that equate to 15% total or does employer match not count in the retirement %?)
DH is 37, has $80k in retirement currently, I am 34 and have $25k - not a lot but I only worked full time a few years before becoming a SAHM. Now I work part time and contribute 10% to mine.

What kind of shape are we in?

[bjl584]

I would not count the company match as part of savings. You can count it toward retirement just not as a percentage of what YOU are saving if that makes sense.

Mid 30's with around $100K puts you a little behind, but the good news is that you have plenty of time to save and invest.

How much do you make a year combined? Do you have Roth IRA's? What sort of debts do you have?

[wikiwiki]

Yearly income combined is 110k
200k mortgage
10k car loan

We both have Roths

[bjl584]

I have head that you should have 1 to 1.5 times your annual income saved by your early 30's. By that standard you are a bit behind, but the facts that your husband just got a raise and that you now work part time needs to be accounted for. So, as I said earlier, a little behind but doing quite well and plenty of time to get caught up.

[wikiwiki]

Ok... we will aim to get his 401k to 14%. (so hard to balance that and paying for all the kid things too...) We want to get rid of my car loan and also save to replace his aging car.

He is a little behind because he didn't start working full time till age 27 - finished college later than others due to illness.

Given what we have in there now, what % should we aim for to get us in better shape?

[jpg7n16]

Given what we have in there now, what % should we aim for to get us in better shape?

I would start here:

AARP Retirement Calculator - How to Retire, Plan for Retirement

Run through the numbers and see what you come out with. Please let us know what you find.


Also, how are you invested? $80k in retirement -- as in $80k in CDs at the bank? or $80k in a target date fund? or $80k in your company stock?

Each of which puts you on a different trajectory going forward.

[BMEPhDinCO]

If you didn't work much, and he hasn't been working for more than 10 years, then I'd say you are in better shape than people are saying.

I would keep the 401k at 12% right now. Then I'd put in the max for RothIRAs for both of you (that's $10k for the year). Then go ahead and bump up the 401k if you can. Ideally, you should be aiming for putting in 20% of your income for retirement. Plus another 5-10% for savings. Then live off the other 70%. If he's making $110k gross, that means $10k into Roths, $12k into 401k - by bumping it up to 12%, you are hitting or beating that $12k so if you can keep the Roths maxed too, it'll really help with catching up.

If he's bringing in around $89k after taxes - $13,200 (12% 401k) - $10k (Roths) - $10k (health insurance, etc), - $8250 (7.5% to savings - new car, house expenses, gifts, travel, medical, etc) =

~$56,500 to live off of - this equals $4,700 a month. You should be able to do this quite easily, perhaps even putting the $700 a month into paying off the car loan faster (done in around a year with the other savings from above) and still live off $1k a week.

I assumed you have two children, btw.

Good luck!

[UnknownXV]

I would not count the company match as part of savings. You can count it toward retirement just not as a percentage of what YOU are saving if that makes sense.

Mid 30's with around $100K puts you a little behind, but the good news is that you have plenty of time to save and invest.

How much do you make a year combined? Do you have Roth IRA's? What sort of debts do you have?

I think it's important to keep things in perspective though. A lot of people in their 30s don't have anything saved at all, even people older. Of course 100k is not enough to retire, but as you point out there is still plenty of time to go.

We're talking six figures. Maybe I am a bit biased here as I am only 22 years old, but I can't think of six figures as any sort of small figure.

I'm just saying it's important to value and admire your own achievements so far, to constantly validate to yourself that you're doing very well. It's important to stay motivated instead of looking at that pot of gold as a potential spending spree.

Although, to be fair, that figure is split for two. I think the first question to ask is how much do you folks believe you'll need to retire, and at what age do you want to do so ideally?

[jpg7n16]

We're talking six figures. Maybe I am a bit biased here as I am only 22 years old, but I can't think of six figures as any sort of small figure.

When you're talking retirement, you're talking income replacement. A lump sum of assets (invested appropriately) can effectively last the rest of your life around a 4% withdrawal rate. So when you think of a sum of money in terms of the income it could provide, it's a realistic picture of retirement readiness.

A $100k lump sum in a proper portfolio could generate maybe $4-5k/year. How ready are you to retire with a $5,000/year salary?

Likely still have a long way to go. At normal ret age (65-ish), there may be pensions, SS payments, annuities, rental income, etc. so your portfolio may not need to generate the full income, but that's a good way to think about it.

[UnknownXV]

Yeah I agree, they definitely still have a ways to go, but for their age, they are doing well. I know a few people personally almost in their 30s who have a negative net worth. That's scary.

Anyhow, I don't want to hijack the thread. Just remember to celebrate how far you've come even if you still need to go further.

[wikiwiki]

Just ran the numbers - it shows that with our current situation--
Me: 20k/yr, 10% to retirement, $26k saved
Spouse: 90k/yr, 12% to retirement, $70k saved
retire at 65, we'll have 2.2m then

Seems ok but probably need more. DH is invested mostly in a target fund.

We have 3 kids, age 7 and under. Could we keep retirement at the 12% now and bump it up later when DH earns more? We have other things we'd like to do with the extra money now. (ie replace car, travel with kids to visit grandparents, save in general)


AARP Retirement Calculator - How to Retire, Plan for Retirement

Run through the numbers and see what you come out with. Please let us know what you find.


Also, how are you invested? $80k in retirement -- as in $80k in CDs at the bank? or $80k in a target date fund? or $80k in your company stock?

Each of which puts you on a different trajectory going forward.[/QUOTE]

[sblatner]

In my opinion, you need to be careful to not save too much for retirement in accounts you can't touch especially with three young children. Putting money in Roths is okay as you can pull the money out in an emergency (as a last resort).

I didn't see where you say how much you have saved outside of retirement or if you have an emergency fund.

We are in our 40s with two teenagers. We think of retirement with a three-pronged approach. Roths, 401ks and liquid savings. We have three savings accounts - an emergency fund, an account to pull from when we need extra cash (like for trips, car repairs since I really don't want to touch the emergency fund, etc.) and a savings account for retirement. There is nothing wrong with saving cash in a regular account for retirement (not an emergency fund). I really feel better having cash outside of retirement. You never know what the future holds.

[jpg7n16]

There is nothing wrong with saving cash in a regular account for retirement (not an emergency fund). I really feel better having cash outside of retirement. You never know what the future holds.

If by "cash" you mean "taxable savings properly invested" - then I agree.

If by "cash" you literally mean cash/savings account earning pretty much 0% - then I don't agree. You're missing out on so much value there.


I would have the EF money in cash equivalents, and the remaining taxable retirement savings in something attempting to generate higher returns.

[sandrark]

I'm concerned that you are focusing on your DH's retirement, and not yours. As a SAHM, you're already behind the curve in terms of SocSec, and you're compounding the problem by putting most of it in his accounts.

I'd make sure that you have as close to equal contributions for BOTH of your retirement accounts as possible.

So that means ROTHs to the max for you both; and then whatever it takes to get you up to a similar savings rate for you both - maybe 50% of your part time income, instead of 10, for example.

You are actuarially likely to live longer, and you cannot skimp on your savings in this area.

[sblatner]

If by "cash" you mean "taxable savings properly invested" - then I agree.

If by "cash" you literally mean cash/savings account earning pretty much 0% - then I don't agree. You're missing out on so much value there.


I would have the EF money in cash equivalents, and the remaining taxable retirement savings in something attempting to generate higher returns.

When I say cash, I mean non-retirement accounts. Something you can get to if you need it (i.e., college, illness, vacation) without paying any penalties. Some in a savings account earning 0%, some invested. I think is is smart to have accounts that are after-tax so you aren't paying taxes on everything you need in retirement.