Retirement Savings -- Countup

[Randomsaver]

Yup, I'd rather just enjoy the youth and live happy but save some for the future. Btw, the 25% saving rate starts this year. Hence, my balance of only $300K in 401K. My average is 10% history to date. So doing a late push especially with the catch-up scheme for those who hit 50y. I do have more than a million dollar total property though from 3 properties.

[Randomsaver]

Gotta think through this bear season as buying opportunities.

[kork13]

But the example given by LAL was "to save 80% of what they made". I don't even know how the math works for that for a salary of $10K a month for example. That leaves only $2K a month for living. I think the person referenced was kork and I am curious how he made it to save 80%. He's got to be earning $150K annually at least.

I never saved 80%, mostly "only" hovered between 35-55% of income saved/invested. But as you/LAL mention, having a bigger income helps alot in being able to do that. Over the last 17 years, we've averaged around $160k annual income ... I started low ($50k in 2008), but it ramped quickly within 4 years to $80k, then married around year 7 & doubled our household income. The biggest factor is that we continued to live only on ~$60k/yr ... Even when our income spiked for a few years up to $220k in a HCOLA, our expenses stayed "low" around $80k.

I generally say that any household who earns at least $100k has the capacity to build up their first million within 10-15 years, if they save at least 35% of income.

[Atretes1]

Gotta think through this bear season as buying opportunities.

I've made 4 purchases in my taxable account. It kept going down so I kept buying more within a week. I want to add to my taxable account anyway.

[LivingAlmostLarge]

I never saved 80%, mostly "only" hovered between 35-55% of income saved/invested. But as you/LAL mention, having a bigger income helps alot in being able to do that. Over the last 17 years, we've averaged around $160k annual income ... I started low ($50k in 2008), but it ramped quickly within 4 years to $80k, then married around year 7 & doubled our household income. The biggest factor is that we continued to live only on ~$60k/yr ... Even when our income spiked for a few years up to $220k in a HCOLA, our expenses stayed "low" around $80k.

I generally say that any household who earns at least $100k has the capacity to build up their first million within 10-15 years, if they save at least 35% of income.

Kork random question but did you ever calculate what you made on including non-taxable? What was your real income? And how much you made from BAH and BAS? What was real income even if it wasn't taxed? Was the $60k a year including the BAS and BAH? I wonder if military people struggle thinking they make X but they really make Y with so much stuff being non-taxable.

[kork13]

Kork random question but did you ever calculate what you made on including non-taxable? What was your real income? And how much you made from BAH and BAS? What was real income even if it wasn't taxed? Was the $60k a year including the BAS and BAH? I wonder if military people struggle thinking they make X but they really make Y with so much stuff being non-taxable.

That's a very valid point, and a harsh surprise for alot of folks when they leave the military. They're making $80k/yr in the military, then get a job making $100k in the civilian world & are shocked by their reduced QoL/spending power.

Just because I'm a finance nerd, I do have a line on our budget/spend plan spreadsheet with "tax-effective income" ... But I don't log it semiannually like I do our gross income (which the numbers I said earlier are).. Looking back into my archive, my tax-effective income has averaged around 5-12% higher (~$10k-$20k) ... Call it 8% (~$15k) on average. For enlisted folks with lower base pay, that difference can easily be 25-30% or higher.

That figure also doesn't take into account an approximated "total compensation" accounting for mostly-free healthcare, lower grocery costs (on average, using the base commissary), certain tax-free or discounted shopping benefits, etc. The military mails us an estimate of this dollar figure every year, but nobody pays much attention to it.

[Randomsaver]

Happy for you kork! Thanks for the inputs as well.

[LivingAlmostLarge]

That's a very valid point, and a harsh surprise for alot of folks when they leave the military. They're making $80k/yr in the military, then get a job making $100k in the civilian world & are shocked by their reduced QoL/spending power.

Just because I'm a finance nerd, I do have a line on our budget/spend plan spreadsheet with "tax-effective income" ... But I don't log it semiannually like I do our gross income (which the numbers I said earlier are).. Looking back into my archive, my tax-effective income has averaged around 5-12% higher (~$10k-$20k) ... Call it 8% (~$15k) on average. For enlisted folks with lower base pay, that difference can easily be 25-30% or higher.

That figure also doesn't take into account an approximated "total compensation" accounting for mostly-free healthcare, lower grocery costs (on average, using the base commissary), certain tax-free or discounted shopping benefits, etc. The military mails us an estimate of this dollar figure every year, but nobody pays much attention to it.

Your living expenses reimbursed is only 8% higher? That seems low.

[kork13]

Your living expenses reimbursed is only 8% higher? That seems low.

It depends on the mix of taxable vs non-taxable income. Base pay & special duty pay are taxable ... Housing, COLA, & food allowances are non-taxable. Higher ranking folks have higher base pay & (if applicable) special duty pay, so the non-taxable component is less impactful. Also, if you're living on base, you don't get the housing stipend, which is the biggest chunk of non-taxed income.

For example:
An officer pilot with 15yrs & living on base might earn $9k/mo base pay + $1k/mo flight pay (taxed) + $300 food (non-taxed). The non-taxable component is only 3% of gross income.

An enlisted admin troop with 6yrs in living off base might earn $3.5k/mo base and $1600/mo housing + $500 food. The non-taxable component is over 35% of gross income, with a significant influence.

Right now, my situation is closer to the first example, and only 5% of my income is currently non-taxable. The biggest chunk of our non-taxable income is actually from my wife's disability retirement pension (just over $2k/mo), which is 99% tax-free

[Randomsaver]

This downtrend is actually good for me as I still have 4 years of work planned. The hope is within that timeframe, we hit new highs on year 4.

Let the market do what it wants to do -- instead of anger or fear on the fifty or sixty thousand that was lost across all my equities, I will greet the market with joy on the discounts. Do your worst market and if you want slow recovery, so be it!

[Randomsaver]

Savings to Retire at 55 to be used for Age 56-60
Balance: $ 60K
End-Goal by 55: $100K (that means a living budget of $20K/year for age 56, 57, 58, 59 and 60)
Retirement Condo $400K: Fully Paid (No Renting expense!)

At 61, saved rent income will cover it; at age 62, it is SS onwards
401K Retirement Savings: $ 318K
IRA Retirement Savings: $ 67K
Total Retirement Savings: $ 385K (It's a long way back to this top but I wanna Rock N Roll)


My Forecasted Monthly Retirement Check Amounts, if to retire starting 2026 (actual withdrawal can only start in Jul of 2031):
401 : $ 1.64K
IRA : $ 0.32K
SS : $ 1.54K
Tot : $ 3.50K
Goal: $4.00K
The mood is go crazy on purchase!