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Retirement Savings
Posted on 1/22/20 at 10:52 am
Posted on 1/22/20 at 10:52 am
Generally speaking, how much of my pay should I save? My job offers 5% matching funds with 1% automatic. I'm currently saving 13% per pay period. Is this sufficient?
12
Posted on 1/22/20 at 10:55 am to DRTiger67
My wife and I save 20% of our income for retirement and another 10% into general savings. Not sure what you are a Dr. of, but she is a physician. We also still pay $2,500/month for student loans and $3,000/month for a nanny, so saying you can't save more is BS.
***This post has been edited to reflect that we save 20% b/c I made a mistake by adding rather than taking the average of our savings.***
***This post has been edited to reflect that we save 20% b/c I made a mistake by adding rather than taking the average of our savings.***
This post was edited on 1/23/20 at 9:05 am
Posted on 1/22/20 at 10:59 am to TheWiz
No student loans or a nanny but 40% is a lot.
Posted on 1/22/20 at 11:00 am to DRTiger67
quote:
No student loans or a nanny but 40% is a lot.
I'm not working forever. We hope to be out of the workforce by 59.
Posted on 1/22/20 at 11:53 am to DRTiger67
Wife & I are at 20% retirement; 20% to vacation, home imp & kids college tuition
Generally speaking, you should start with making sure you receive the full match from your employer. After that, its about what you can work within your budget, and how much you plan to spend when you retire.
I created a spreadsheet using a conservative 4% interest rate each year from today until my wife is 100 (I'm older). I also estimated my post-retirement expenses as the same as our current expenditures (we will not have a mortgage, kids tuition...; but we will travel more). I did not factor in raises, but I also did not factor in inflation. From there I determine how much we need to save each year towards retirement.
Right now we will need to work until I am 65 to have the lifestyle we want with our current retirement savings; we are revisiting this to see what it'll take to retire when I'm 60. We both enjoy our jobs/careers and may decide to work until 65-70+; but want to make sure we have the flexibility to just walk away when I'm 60.
Generally speaking, you should start with making sure you receive the full match from your employer. After that, its about what you can work within your budget, and how much you plan to spend when you retire.
I created a spreadsheet using a conservative 4% interest rate each year from today until my wife is 100 (I'm older). I also estimated my post-retirement expenses as the same as our current expenditures (we will not have a mortgage, kids tuition...; but we will travel more). I did not factor in raises, but I also did not factor in inflation. From there I determine how much we need to save each year towards retirement.
Right now we will need to work until I am 65 to have the lifestyle we want with our current retirement savings; we are revisiting this to see what it'll take to retire when I'm 60. We both enjoy our jobs/careers and may decide to work until 65-70+; but want to make sure we have the flexibility to just walk away when I'm 60.
Posted on 1/22/20 at 11:53 am to DRTiger67
quote:
Is this sufficient?
Depends on what age you want to retire and what your goals are in retirement.
Posted on 1/22/20 at 12:00 pm to TheWiz
Why are you carrying student loans yet still saving 50% of your income?
Seems like you could afford to blow The student loan out.
Seems like you could afford to blow The student loan out.
This post was edited on 1/22/20 at 12:00 pm
Posted on 1/22/20 at 12:12 pm to DRTiger67
quote:
. Is this sufficient?
As already said. Depends on what your goals are. When do you want to retire? How old are you now, how much do you have saved? What do you want your cash flow to be? What do you expect your healthcare costs to be? Will you have any outstanding debt? Do you want to have a nest egg to pass down?
This could put you in the range of 15-50%
At least what I've come across most recommend 20-25% of your income, but I don't think there should be a blanket number without some introspection of yourself.
Posted on 1/22/20 at 12:15 pm to DRTiger67
quote:
Generally speaking, how much of my pay should I save? My job offers 5% matching funds with 1% automatic. I'm currently saving 13% per pay period. Is this sufficient?
You're getting pretty close. Consensus is to just go up to the minimum required to get the maximum match at work and then go the rest of the way with your own IRA (probably ROTH, depending on your analysis) up to 15% of your gross pay (if you can tolerate it, 18% to 20% is probably better).
Now, if you have a particular reason to keep it all with your job (like I do), then go ahead and keep it all with them. However, if you don't have a compelling reason, then consider opening your own ROTH IRA with Vanguard, Fidelity, etc., pick your poison for the rest.
You can even park your emergency fund in a ROTH IRA and have some of that money do double duty for you.
Posted on 1/22/20 at 12:33 pm to DRTiger67
My personal number based on research and calculations is 15% of "your" (not counting matches) pretax money starting with your first job out of college. If you are starting later than 22 or 23y/o, might be a good idea to up that number accordingly.
If you put any money in Roth, be sure to adjust the value accordingly based on your marginal tax rate. For example, say you made $100k. I would say put $15k in the 401k. If you want to do 50/50 between traditional and Roth 401k, I would put $7500 in traditional and $5850 (adjusted for 22% tax rate) in roth. If you wanted to put it all in Roth, I would do $11,700.
the reason I would recommend not counting employer matches in your evaluation is because you never know when you might change jobs and lose money because you are not 100% vested. This way you don't get behind should something happen.
If you put any money in Roth, be sure to adjust the value accordingly based on your marginal tax rate. For example, say you made $100k. I would say put $15k in the 401k. If you want to do 50/50 between traditional and Roth 401k, I would put $7500 in traditional and $5850 (adjusted for 22% tax rate) in roth. If you wanted to put it all in Roth, I would do $11,700.
the reason I would recommend not counting employer matches in your evaluation is because you never know when you might change jobs and lose money because you are not 100% vested. This way you don't get behind should something happen.
This post was edited on 1/22/20 at 12:36 pm
Posted on 1/22/20 at 12:37 pm to DRTiger67
I max out 401(k) and Roth IRA every year. Rest to brokerage account. I save roughly 40 to 42% of my income every year.
frick working forever. I plan to quit by 56 at the latest.
frick working forever. I plan to quit by 56 at the latest.
Posted on 1/22/20 at 12:38 pm to jclem11
We're saving roughly 35% of our gross right now.
Plan is to retire before 60.
Plan is to retire before 60.
Posted on 1/22/20 at 2:06 pm to JayDeerTay84
32% of that is pre-tax, the other 8% being our Roth IRAs. I haven't run the numbers, but I assume that we would get railed pretty hard with taxes if we stopped all those pre-tax contributions.
Plus, time in the markets...
The loans are pretty manageable. I would much rather maintain the loans, contribute $65,000 to our retirement accounts, save +/- $30k/year (most of the savings here is to eradicate the loans completely by 2022'ish), and still live very comfortably.
Plus, time in the markets...
The loans are pretty manageable. I would much rather maintain the loans, contribute $65,000 to our retirement accounts, save +/- $30k/year (most of the savings here is to eradicate the loans completely by 2022'ish), and still live very comfortably.
Posted on 1/22/20 at 5:24 pm to TheWiz
TheWiz = Douche of the Day
Posted on 1/22/20 at 6:12 pm to DRTiger67
I'm putting about 35% of my salary toward retirement. I got a bit of a later start in life, but should still be able to retire at 58 or 59.
Posted on 1/22/20 at 8:22 pm to Tpayne99
How so?
Posted on 1/23/20 at 2:41 am to TheWiz
My wife is a lawyer and my nanny is calling, I don’t have time to explain it to you.
Posted on 1/23/20 at 6:52 am to TheWiz
Your math is Bernie and Liewatha level math.
If your income is low enough to allow you to contribute to a Roth, then you’ll not have enough to fund your school loans and nanny unless you still live with your parents.
If your income is low enough to allow you to contribute to a Roth, then you’ll not have enough to fund your school loans and nanny unless you still live with your parents.
This post was edited on 1/23/20 at 6:58 am
Posted on 1/23/20 at 7:43 am to DRTiger67
I generally think of 15% of gross as a great barometer. If you can do more, then fantastic but that rate typically hits the mark for an above average saver.
Posted on 1/23/20 at 8:04 am to ynlvr
quote:
If your income is low enough to allow you to contribute to a Roth, then you’ll not have enough to fund your school loans and nanny unless you still live with your parents.
Geez, thought this board was for like-minded savers and investors.
Buddy, I am sorry that some of you are mad that my wife and I got multiple, valuable degrees and we are successful. If you take some time to educate yourself, then you could learn about the backdoor Roth IRA. It's quite simple. I will post a link for you to educate yourself.
Backdoor Roth IRA
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