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re: Retirement Savings
Posted on 1/23/20 at 8:09 am to ynlvr
Posted on 1/23/20 at 8:09 am to ynlvr
His numbers do seem odd but he has provided some information that should lead us to determine their income.
He could be talking about Roth Backdoor but he is claiming 8% to the Roth. The most for a Roth is $12,000 therefore if it is 8% and they are contributing the max that would lead to an income of $150k.
He claims they save 40% and it is $65,000 which would equate to an income of $163k.
A reasonable assumption is the pre-tax is 401k which maxs at $19,000 per person so if they contribute $38,000 and that is 32% that equates to $118K.
Needless to say, we can assume the largest number above which is $163k which seems really low unless his wife is still a resident or he doesn't work and she doesn't have a high paying specialty.
If they are saving $65k towards retirement and spending a combined $66k (student loans + nanny) that would leave them with about $30k and that doesn't even account for taxes, insurance, or any other deductions. No idea what is real and what isn't but the numbers he throws out gives little confidence in anything being accurate unless I am missing something. I guess he could be implying they save $65k+$30k=$95k which would equate to $238k total. That is more reasonable but still suspect to save $95k+$66k (loan+nanny) and if they are saving so much pre-tax he would likely not need backdoor roth.
quote:
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.
quote:
My wife and I save 40% 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.
He could be talking about Roth Backdoor but he is claiming 8% to the Roth. The most for a Roth is $12,000 therefore if it is 8% and they are contributing the max that would lead to an income of $150k.
He claims they save 40% and it is $65,000 which would equate to an income of $163k.
A reasonable assumption is the pre-tax is 401k which maxs at $19,000 per person so if they contribute $38,000 and that is 32% that equates to $118K.
Needless to say, we can assume the largest number above which is $163k which seems really low unless his wife is still a resident or he doesn't work and she doesn't have a high paying specialty.
If they are saving $65k towards retirement and spending a combined $66k (student loans + nanny) that would leave them with about $30k and that doesn't even account for taxes, insurance, or any other deductions. No idea what is real and what isn't but the numbers he throws out gives little confidence in anything being accurate unless I am missing something. I guess he could be implying they save $65k+$30k=$95k which would equate to $238k total. That is more reasonable but still suspect to save $95k+$66k (loan+nanny) and if they are saving so much pre-tax he would likely not need backdoor roth.
1
Posted on 1/23/20 at 8:12 am to DRTiger67
Put whatever you can afford to put in and still pay your bills, have some fun, and maintain a savings. That number may fluctuate but most accounts nowadays you can change your contribution from a push of a button on your phone.
Posted on 1/23/20 at 8:27 am to bod312
Posted on 1/23/20 at 8:35 am to TheWiz
quote:
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.
I am not going to make large assumptions, but as I read that statement, you are saving $95K a year. If you are able to do that, you have to be outside of the backdoor roth income requirement (or right close to it). I am not a tax guy or CPA, but I was under the impression the phaseout starts at $193K combined.
Based on your "50%' savings setup, that would seem to be the case.
Also, with that level of income, I would think you would more look at "total interest" paid on the school loans vs an affordable payment.
This post was edited on 1/23/20 at 8:37 am
Posted on 1/23/20 at 8:45 am to STB
Hey guys.... Whoops, I had to go back and look at my math. Turns out, I am completely WRONG. We only contribute 20.3% of our salaries to retirement. I'm not separating pre and post tax stuff.
Me:
$16,500 401k(can't max b/c of safe harbor. Do get $5k match)
$6,000 Roth IRA (via backdoor Roth)
Her:
$19,500 403b
$10,000 457
$6,400 TRSL Pension Plan
$6,000 Roth IRA (via backdoor Roth)
In addition to that, we target setting aside $3k into savings every month plus the other major expenses I mentioned that seemingly pissed everyone off.
Me:
$16,500 401k(can't max b/c of safe harbor. Do get $5k match)
$6,000 Roth IRA (via backdoor Roth)
Her:
$19,500 403b
$10,000 457
$6,400 TRSL Pension Plan
$6,000 Roth IRA (via backdoor Roth)
In addition to that, we target setting aside $3k into savings every month plus the other major expenses I mentioned that seemingly pissed everyone off.
Posted on 1/23/20 at 8:51 am to JayDeerTay84
quote:
Also, with that level of income, I would think you would more look at "total interest" paid on the school loans vs an affordable payment.
Yeah, the interest rate is 5%. Not awesome, but now awful either. My wife and I will pay off over $200k in student loans right at five years post-fellowship. I think that's a pretty solid plan.
You also have to keep in mind that she did not start earning "money" until she was 33/34, so any extra time we can get in this robust market is a major advantage to our retirement.
Posted on 1/23/20 at 8:52 am to TheWiz
Sorry to put you on blast but it seemed confusing since the numbers didn't add up, hence people calling you out. This makes a lot more sense.
This post was edited on 1/23/20 at 8:53 am
Posted on 1/23/20 at 8:57 am to TheWiz
quote:
Yeah, the interest rate is 5%. Not awesome, but now awful either. My wife and I will pay off over $200k in student loans right at five years post-fellowship. I think that's a pretty solid plan.
Yea school loans suck. That is why I went in the military and traded my time for the GI Bill.
Posted on 1/23/20 at 9:03 am to bod312
Not even close to mad. My dumbass was adding each of our savings percentage instead of taking the average as partners.
Posted on 1/23/20 at 3:12 pm to TheWiz
Nice correction on the 40% to 20% retirement savings. Makes a little difference. I’m also familiar with the backdoor Roth stud. Unfortunately I have a couple decades of SEP and SIMPLE IRA money getting in the way of the backdoor.
Posted on 1/23/20 at 3:18 pm to ynlvr
I'm not afraid to admit when I make a mistake. It still didn't change the total amounts we save. I just biffed our savings % as a couple.
Posted on 1/23/20 at 3:22 pm to TheWiz
quote:
I just biffed our savings % as a couple.
At least you’re a Whiz with multiple degrees
Posted on 1/23/20 at 3:26 pm to ynlvr
Yep. Apparently triggering the frick out of folks by mentioning our retirement savings, debt pay down amounts, and the luxury of a nanny too. 
This post was edited on 1/23/20 at 3:30 pm
Posted on 1/23/20 at 3:32 pm to TheWiz
quote:
Buddy, I am sorry that some of you are mad that my wife and I got multiple, valuable degrees and we are successful.
This ^ and your original flawed numbers are what “triggered” anyone. Nice to meet you.
Posted on 1/25/20 at 5:47 am to TheWiz
Myself:
401k with match: $54k
HSA: $7,100
IRA: $1,500
Health credits from ER: $3,000
Wife:
401k with match: $36,000
Wife socka away cash from each paycheck
I’m too lazy to calculate %.
401k with match: $54k
HSA: $7,100
IRA: $1,500
Health credits from ER: $3,000
Wife:
401k with match: $36,000
Wife socka away cash from each paycheck
I’m too lazy to calculate %.
Posted on 1/25/20 at 7:53 am to MSTiger33
Wow! Y'all get some insane matching & profit sharing. Jealous!
Posted on 1/25/20 at 11:41 am to DRTiger67
I'm a believer in the trinity study which says you need 25 times your annual expenses in retirement. This will allow you to withdraw at a rate of 4% annually with a 95% success rate with a 50/50 portfolio allocation upon retirement.
Example: If you spend $40k per year then you need $1M in retirement. So, if I'm 30 and I plan to retire at 65 and I have nothing saved yet, I will need to contribute about $700 per month assuming a real rate of 6%.
Some people are more risk averse than others so they may adjust the math accordingly, but it's a pretty good rule of thumb. Most online retirement calculators are based on what you earn instead of what you spend, so I don't find them helpful.
Lots of stuff on the trinity study on the bogleheads formum and FIRE subreddit.
Example: If you spend $40k per year then you need $1M in retirement. So, if I'm 30 and I plan to retire at 65 and I have nothing saved yet, I will need to contribute about $700 per month assuming a real rate of 6%.
Some people are more risk averse than others so they may adjust the math accordingly, but it's a pretty good rule of thumb. Most online retirement calculators are based on what you earn instead of what you spend, so I don't find them helpful.
Lots of stuff on the trinity study on the bogleheads formum and FIRE subreddit.
Posted on 1/25/20 at 12:57 pm to MSTiger33
quote:
Myself:
401k with match: $54k
I make enough to max and live comfortably but dam....my match is nothing! that would make a HUGE difference is my total retirement savings.
Posted on 1/25/20 at 1:04 pm to FinleyStreet
quote:
I'm a believer in the trinity study which says you need 25 times your annual expenses in retirement.
I have a question around this. I see a lot of posts and articles that talk about 75% or so of your last income is what you want to strive for. But is that really true?
It seems to me that your monthly/annual expenses are really what is at play here. I mean you could have a 100K income, but your expenses might be 40K annually and the rest is either savings/taxes/retirement, etc.
As best I can tell in retirement, I will want to make sure I can pay all my current/planned bills, any healthcare costs, and discretionary spending and be good to go. So if I do that and my annual expenses are 40K, isn't that the number I'm trying to replace in retirement?
Posted on 1/25/20 at 1:12 pm to kywildcatfanone
Yes.
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