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Message
re: Can you save too much??
Posted on 5/27/16 at 12:58 pm to The Easter Bunny
Posted on 5/27/16 at 12:58 pm to The Easter Bunny
quote:
I would agree with most in this thread, max 401(k) and Roth IRA.
I disagree with this - and I say that because I did it. I regret that in my 20s I "tied up" so much money in accounts I couldn't touch for 35-40 years. Now the majority of my net worth is untouchable without paying a crippling penalty and tax. In hindsight I'd still max Roths but drop 401k's and keep that in regular accounts instead.
2
Posted on 5/27/16 at 1:26 pm to LSUTOM07
quote:
-Married couple mid 20's -$150k combined salary/year -Future compensation growth expected -Anticipating 25 years to save for retirement -3 month emergency fund in place -No house -No student loans -3,500/Month Mandatory Expenses (Rent/Utilities/Cars/Food/etc.) -50/50 roth to traditional retirement account split
Downvote subtle brag thread.
Posted on 5/27/16 at 1:27 pm to Cold Cous Cous
To be fair, OP is at 90% percentile in household income so he may be able to afford to do it compared to others.
Posted on 5/27/16 at 1:34 pm to Teddy Ruxpin
I'm always amazed when people plan to retire at 45-50 but all their savings goes into accounts that they can't draw from at that age?
Posted on 5/27/16 at 1:41 pm to nolaks
quote:
I'm always amazed when people plan to retire at 45-50 but all their savings goes into accounts that they can't draw from at that age?
it would be very difficult to retire at 50 based only off retirement investments. Even if you are dropping 47k per year, in 20 years, you are only looking at 2M (with 7% interest).
Posted on 5/27/16 at 2:03 pm to Teddy Ruxpin
quote:
To be fair, OP is at 90% percentile in household income so he may be able to afford to do it compared to others.
He can afford it, sure. I could afford it too. I'm not saying it was a bad decision, but I now think it wasn't the best decision.
If we're still on td.com in the 2060s I'll probably switch back to thinking it was a great idea.
Posted on 5/27/16 at 2:04 pm to LSUTOM07
Max out both of your Roth401k (that's 18k annually each)
then max out Roth IRA (that's 5500 annually each)
total 47k towards retirement per yr. That would be very impressive if you can do this.
-If no Roth 401k, then both max out Traditional 401k (18k x2)then max out Roth IRA
*This is assuming you can afford to max out 401k and IRA's. If you can't afford to max out both, and you only have a Trad. 401k then contribute % amount to reach match amount in Trad. 401k, then max out Roth IRA, then go back and put whatever % more after maxing out Roth into Trad. 401k.
The name of the game is to max out your Roth (after-tax) retirement accounts
Other considerations:
Emergency Fund: 6 months of expenses in a savings account
Monthly savings for down payment on home
Term life insurance policy while you're young, no kids, and in good health = cheaper
The list could go on and on.
I would also have a travel savings account (or whatever interests you) set an amount and contribute that amount each month, have some fun
then max out Roth IRA (that's 5500 annually each)
total 47k towards retirement per yr. That would be very impressive if you can do this.
-If no Roth 401k, then both max out Traditional 401k (18k x2)then max out Roth IRA
*This is assuming you can afford to max out 401k and IRA's. If you can't afford to max out both, and you only have a Trad. 401k then contribute % amount to reach match amount in Trad. 401k, then max out Roth IRA, then go back and put whatever % more after maxing out Roth into Trad. 401k.
The name of the game is to max out your Roth (after-tax) retirement accounts
Other considerations:
Emergency Fund: 6 months of expenses in a savings account
Monthly savings for down payment on home
Term life insurance policy while you're young, no kids, and in good health = cheaper
The list could go on and on.
I would also have a travel savings account (or whatever interests you) set an amount and contribute that amount each month, have some fun
Posted on 5/27/16 at 2:11 pm to Tiger4life306
quote:
The name of the game is to max out your Roth (after-tax) retirement accounts
This is misleading if not flat out untrue.
Posted on 5/27/16 at 2:17 pm to notsince98
quote:
This is misleading if not flat out untrue.
It's not for a couple in their 20s unless you believe the tax rate is going to decrease in 25+ years LOL
Posted on 5/27/16 at 2:24 pm to notsince98
quote:
This is misleading if not flat out untrue.
To be fair, at $150k married filing jointly, it's a little tricky. Normally I'd max 401k first at higher income levels to save on taxes. On the other hand, they're young, with increasing incomes, and Roth phase out starts at $194k.
He'd have to get out his calculator and play with different scenarios, but it's not a no-brainer to me. Unless the back door Roth remains in play, then that changes things a bit. But there seems to be talk that this might be going away.
Posted on 5/27/16 at 2:32 pm to nolaks
quote:
I'm always amazed when people plan to retire at 45-50 but all their savings goes into accounts that they can't draw from at that age?
Roth contributions are as accessible as the money in your checking account, and with no penalties. 25 years of contributions can easily last 5 years. 55 is not 45-50 but it's not 65 either. Anyway most people planning an early retirement have substantial taxable accounts too.
Posted on 5/27/16 at 3:33 pm to Tiger4life306
quote:
Emergency Fund: 6 months of expenses in a savings account
If you have 3 months and a roth, you are probably ok.
quote:
Monthly savings for down payment on home
Definitely!
quote:
Term life insurance policy while you're young, no kids, and in good health = cheaper
sure its cheaper, but if you can rack up 200-300k in savings before you have kids, then no need for life insurance IMHO.
Posted on 5/27/16 at 3:57 pm to Cold Cous Cous
I've made my "hobby" to invest cash here and there. So I have a couple auto transfers for anything from $25 to $100 week going into taxabe accounts that makes this kind of a non issue for me personally.
Thing is, many people don't make that much money and probably can't really retire before 60 so I can see why they'd lock it up til 60.
Posted on 5/27/16 at 4:15 pm to Teddy Ruxpin
quote:
I've made my "hobby" to invest cash here and there. So I have a couple auto transfers for anything from $25 to $100 week going into taxabe accounts that makes this kind of a non issue for me personally.
Thing is, many people don't make that much money and probably can't really retire before 60 so I can see why they'd lock it up til 60.
I think its a great idea to invest some outside of maxing out your accounts, but not being able to touch is actually the good part.
BTW, CCC, you can withdraw your roth principal penalty free.
My portfolio is like 40% retirement account / 30% investment accounts / 20% property / 10% other random investments.
This post was edited on 5/27/16 at 4:16 pm
Posted on 5/27/16 at 4:28 pm to LSUTOM07
No house note and no student loans but your monthly expenses are $3,500? Seems high to me.
Posted on 5/27/16 at 5:01 pm to LSUTOM07
Find out your take home pay first.
Posted on 5/27/16 at 6:37 pm to Hawkeye95
quote:
quote:
Emergency Fund: 6 months of expenses in a savings account
If you have 3 months and a roth, you are probably ok.
quote:
Term life insurance policy while you're young, no kids, and in good health = cheaper
sure its cheaper, but if you can rack up 200-300k in savings before you have kids, then no need for life insurance IMHO.
Getting real nit picky here... I like better safe than sorry when it comes to an emergency fund. He didn't say what his profession was. So we don't know if his or her industry is cyclical/affected by the market.
Also by having 6 rather than just 3 months for an emergency you can draw off that incase of any unexpected expenses that come up. And yes, you could still do that with a Roth as well but I don't think that's a good habit to get into.
As for insurance, to each his own. Again, on this I'm probably more on the conservative side than you
Posted on 5/27/16 at 9:36 pm to GCTigahs
quote:
No house note and no student loans but your monthly expenses are $3,500? Seems high to me.
Just off the top of my head..
1200 apartment
750 combined car notes
180 combined car insurance
400 food
100 cable & internet
115 cell phones
100 Work parking
100 electricity
30 gym
150 combined gas
35 dry cleaning
30 hair cut
Posted on 5/27/16 at 9:38 pm to Cold Cous Cous
quote:
I regret that in my 20s I "tied up" so much money in accounts I couldn't touch for 35-40 years.
This is one of my concerns as I have considered other investments such as rental properties and/or starting my own business. If I ever choose to do so, I may need access to more funds than Roth IRA contributions.
Posted on 5/28/16 at 9:08 am to LSUTOM07
Food is on the low end for a young couple.
I'm on the high end as a single guy around $600 because I don't bring my lunch to work.
I'm on the high end as a single guy around $600 because I don't bring my lunch to work.
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