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Started By
Message
Starting my first job. Need advice.
Posted on 8/31/22 at 3:43 pm
Posted on 8/31/22 at 3:43 pm
Starting my first career job after graduating two weeks ago. I’m starting a little later than most after switching careers, so I’m stressed about not having any money saved for retirement yet. I’m 29, got married in April.
Wife’s been working for a couple years and makes ~$65,000 and has a good bit saved up from living with her parents first couple years out of school. We have a 5 year old and just found out another is due in April.
Mortgage/insurance: ~$1200
We will split all bills now that I’m done with school.
No car note.
I’ll pay my student loans: ~$500 a month
Job notes: $85,000 base with bonus/incentives +other opportunities to make more
1% match 401K
High deductible HSA plan
I guess my biggest question is how much to put in 401K/HSA knowing another baby is on the way and I have no retirement savings yet. I know most say contribute to match, but 1% isn’t nearly enough. Do I put as much away now and scale down if I need to once the baby comes? Contribute 1%, + build HSA, and do a Roth? Or what’s the best strategy here? I’m new to this and figured this was the best place to come for solid answers.
Wife’s been working for a couple years and makes ~$65,000 and has a good bit saved up from living with her parents first couple years out of school. We have a 5 year old and just found out another is due in April.
Mortgage/insurance: ~$1200
We will split all bills now that I’m done with school.
No car note.
I’ll pay my student loans: ~$500 a month
Job notes: $85,000 base with bonus/incentives +other opportunities to make more
1% match 401K
High deductible HSA plan
I guess my biggest question is how much to put in 401K/HSA knowing another baby is on the way and I have no retirement savings yet. I know most say contribute to match, but 1% isn’t nearly enough. Do I put as much away now and scale down if I need to once the baby comes? Contribute 1%, + build HSA, and do a Roth? Or what’s the best strategy here? I’m new to this and figured this was the best place to come for solid answers.
13
Posted on 8/31/22 at 3:48 pm to HermanBoone
Max out the HSA first. I would try to put at least 5% in your 401k. See where that falls with bills and stuff. With the possibility of recession coming, try to be cashflow heavy. You never know what is going to happen.
This post was edited on 8/31/22 at 3:50 pm
Posted on 8/31/22 at 3:49 pm to HermanBoone
People are going to have a lot of questions.
$150,000 income - $X,XXX expenses = some of your starting point.
That 1% match is crap. At least contribute 1% of your salary, if you have to do that to get the match. What percent of your wife's gross does she save for retirement?
Where do you live? Is schooling free? Daycares definitely are not. Will your wife continue to work? Does she have enough PTO/Sick time to cover the 12 weeks of maternity leave?
$150,000 income - $X,XXX expenses = some of your starting point.
That 1% match is crap. At least contribute 1% of your salary, if you have to do that to get the match. What percent of your wife's gross does she save for retirement?
Where do you live? Is schooling free? Daycares definitely are not. Will your wife continue to work? Does she have enough PTO/Sick time to cover the 12 weeks of maternity leave?
This post was edited on 8/31/22 at 3:50 pm
Posted on 8/31/22 at 3:54 pm to HermanBoone
Do you have an emergency fund? I'd work on that before throwing everything into the HSA or 401k, though it wouldn't hurt to at least contribute a few percentage points into those at the same time.
Posted on 8/31/22 at 4:02 pm to TheWiz
quote:
What percent of your wife's gross does she save for retirement? Where do you live? Is schooling free? Daycares definitely are not. Will your wife continue to work? Does she have enough PTO/Sick time to cover the 12 weeks of maternity leave?
Up to 5% to match for hers. We live in rural south LA so COL is not high. Son is in private school. Wife will definitely continue to work and has enough to cover paternity leave for the full 12 weeks.
Posted on 8/31/22 at 4:04 pm to wheelr
quote:
Do you have an emergency fund? I'd work on that before throwing everything into the HSA or 401k, though it wouldn't hurt to at least contribute a few percentage points into those at the same time.
She has about 6-7 months saved up. I’m gonna start on my own as well. I wasn’t working while in school.
Posted on 8/31/22 at 4:06 pm to HermanBoone
make sure she is saving for retirement. max out both (you and her) your tax incentivized retirement vehicles. You'll be fine.
Posted on 8/31/22 at 4:12 pm to wheelr
Priorities....
1. Life Insurance.. you didn't say anything about it... you each need probably $1MM of cheap as dirt term insurance.
2. Emergency fund... that comes 2nd. ^ month living expenses. Many of us believe hard times are coming and you need a fund for that.
3. 401 K - depending on answers to other expense questions, you should try 5% ... that plus 1% match (which does suck) would give you a 6% saving rate... you each need a 12-15% savings rate to properly save for retirement...so half way there is at least a start.
1. Life Insurance.. you didn't say anything about it... you each need probably $1MM of cheap as dirt term insurance.
2. Emergency fund... that comes 2nd. ^ month living expenses. Many of us believe hard times are coming and you need a fund for that.
3. 401 K - depending on answers to other expense questions, you should try 5% ... that plus 1% match (which does suck) would give you a 6% saving rate... you each need a 12-15% savings rate to properly save for retirement...so half way there is at least a start.
Posted on 8/31/22 at 4:15 pm to wheelr
quote:
Do you have an emergency fund? I'd work on that before throwing everything into the HSA or 401k, though it wouldn't hurt to at least contribute a few percentage points into those at the same time.
Agree with this. Get an emergency fund set up first. You probably wont get a good match from your company on 401k for a year or two anyway. Your wife will probably be out of work after 2nd child is born for a few months. If she goes back to work you will have daycare cost. The economy for the next year or two maybe bad so best save just in case. Good luck!
This post was edited on 8/31/22 at 4:16 pm
Posted on 8/31/22 at 4:21 pm to TooSober
quote:
3. 401 K - depending on answers to other expense questions, you should try 5% ... that plus 1% match (which does suck) would give you a 6% saving rate... you each need a 12-15% savings rate to properly save for retirement...so half way there is at least a start.
They are used to living without his income as it is right now. Now is the time to start maxing it out so they dont have to adjust to living on less income later.
Posted on 8/31/22 at 4:23 pm to HermanBoone
1) dont stress... I wasn't at $0 but the "switch didn't flip" for me until about 32 to where income went up and I could actually contribute more than a few grand a year.
2) congrats on the kid. That is awesome
3) I like the HSA advice because it is tax free income, growth, and use. Put a smaller amount (i.e.~ $3k- $4k) to the 401k and put everything else available into the HSA. Store/backup all medical receipts. If you are desperate for cash, that is your source of funds. Take higher deductibles on personal insurance and throw that savings into the HSA.
4) once the HSA is maxed, I would pivot to the 401k. Others on this board prefer IRAs. There is nothing wrong with that either.
5) lock in your expenses. If you are buying your next car, work to pay cash or put a large enough down to keep monthly payment the same. If you are buying your next home, work to put the down-payment large enough to keep your $1200 payment.
As your pay goes up, max out your retirement.
My wife and I w-2 about 200k now, but our installment loans are the same that we could afford waiting tables.
We went from about $30k saved for retirement at age 32 to around $500k now at 44.
A conservative estimate trends us to $2M at age 63.
Matching growth from the past 10 years, I could hit at 58.
Do the small things now that help. But as income improves, stay aggressive towards funneling it to your goals.
2) congrats on the kid. That is awesome
3) I like the HSA advice because it is tax free income, growth, and use. Put a smaller amount (i.e.~ $3k- $4k) to the 401k and put everything else available into the HSA. Store/backup all medical receipts. If you are desperate for cash, that is your source of funds. Take higher deductibles on personal insurance and throw that savings into the HSA.
4) once the HSA is maxed, I would pivot to the 401k. Others on this board prefer IRAs. There is nothing wrong with that either.
5) lock in your expenses. If you are buying your next car, work to pay cash or put a large enough down to keep monthly payment the same. If you are buying your next home, work to put the down-payment large enough to keep your $1200 payment.
As your pay goes up, max out your retirement.
My wife and I w-2 about 200k now, but our installment loans are the same that we could afford waiting tables.
We went from about $30k saved for retirement at age 32 to around $500k now at 44.
A conservative estimate trends us to $2M at age 63.
Matching growth from the past 10 years, I could hit at 58.
Do the small things now that help. But as income improves, stay aggressive towards funneling it to your goals.
Posted on 8/31/22 at 4:41 pm to HermanBoone
Max the HSA it’s triple tax advantaged. Save your receipts. At 65 you can use that money for anything doesn’t have to be health related.
Open a Roth IRA and max it.
Contribute whatever you can to the 401k and up it with every annual raise. With such a shitty match I would focus on maxing HSA and Roth first.
Open a Roth IRA and max it.
Contribute whatever you can to the 401k and up it with every annual raise. With such a shitty match I would focus on maxing HSA and Roth first.
This post was edited on 8/31/22 at 4:43 pm
Posted on 8/31/22 at 4:46 pm to HermanBoone
Max your HSA.
Match any company 401K to start
Match any company 401K to start
Posted on 8/31/22 at 4:52 pm to HermanBoone
Both of you should do at least the “match” although 1% is sad; the 5% and s generous.
HSA can roll into a retirement vehicle I think eventually.
You both need life insurance.
At 150K, it might not be unreasonable to save 15k per year for retirement. The sooner the better.
HSA can roll into a retirement vehicle I think eventually.
You both need life insurance.
At 150K, it might not be unreasonable to save 15k per year for retirement. The sooner the better.
Posted on 8/31/22 at 6:21 pm to makersmark1
Max the HSA and invest anything over the minimum cash balance. Then the key is to pay for medical expenses out of pocket instead of tapping the HSA.
Max a ROTH IRA (invested into VTI) and then fill up your 401k's as best you can.
Bank as much as you can as soon as you can. Life generally doesn't get cheaper.
After all that, invest excess cash in a regular brokerage account.
Future self will thank you
Max a ROTH IRA (invested into VTI) and then fill up your 401k's as best you can.
Bank as much as you can as soon as you can. Life generally doesn't get cheaper.
After all that, invest excess cash in a regular brokerage account.
Future self will thank you
Posted on 8/31/22 at 7:37 pm to HermanBoone
In order, in my opinion. Might not be perfect mathematically, but probably the easiest way:
I would fund HSA to pay for baby delivery when due. Tap the fund when baby arrives and leave the contribution level high after delivery.
Start with 5% in the 401k. Hopefully your match ramps up quickly from 1%.
Max out Roth x 2.
Increase 401k contributions.
I would fund HSA to pay for baby delivery when due. Tap the fund when baby arrives and leave the contribution level high after delivery.
Start with 5% in the 401k. Hopefully your match ramps up quickly from 1%.
Max out Roth x 2.
Increase 401k contributions.
Posted on 8/31/22 at 9:38 pm to SwampCollie
quote:
Max the HSA and invest anything over the minimum cash balance. Then the key is to pay for medical expenses out of pocket instead of tapping the HSA.
This can’t be stressed enough. Max the HSA.
Posted on 9/1/22 at 10:28 pm to HermanBoone
quote:
I have no retirement savings yet.
quote:
I’m 29
Posted on 9/1/22 at 11:20 pm to b-rab2
What's the yearly max for an HSA? I have one but don't really put much into it other than the $600 the company puts in every year
May start maxing it out if I can since everyone seems to think that is such a good idea
May start maxing it out if I can since everyone seems to think that is such a good idea
Posted on 9/2/22 at 12:04 am to Pelican fan99
quote:
What's the yearly max for an HSA?
$7300 for a family in 2022.
$7750 in 2023.
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