How do our retirement savings look?

**bjl584** · 06-04-2012, 03:29 AM

I've heard that a rule of thumb is to have 1 to 1.5 times your annual income saved by age 30, so by that standard you are a little behind. But, you have plenty of time to play catch up.

I would definitely start, if not already started, Roth's for you and husband and max them every year.

Do you have any other assets? Savings? Emergency fund?

**sjc0816** · 06-04-2012, 04:54 AM

We have a pretty pathetic emergency fund right now. It's 5k. We have been holding off adding to it in favor of speeding up paying off our auto loan (7k left) and student loan (6k left). Our goal is to get it up to 25k once the debt is paid off. This seems like a difficult task right now but we will keep plugging along.

**MonkeyMama** · 06-04-2012, 05:22 AM

Agreed - could do better but certainly could do a lot worse. If you are plan to add 15% next year, plus ROTHs, that should be plenty to catch up. If you stick with it.

As a realtor, also keep a SEP IRA in mind for the future. I presume that makes you self-employed. You would figure the amount you can put in when you do your taxes - about 20% of your income. Since you can invest an IRA just about anywhere, it may be preferable to contributing to the 401k, aside from making sure to get the 401k match.

**dczech09** · 06-04-2012, 09:29 AM

At age 35, you should have between 1.60 and 2.00 times your household income for retirement savings. You currently have roughly 1 times, so you are a little behind.

I would definitely get going on the Roth IRAs.

Assuming a $120,000 household income, maxing the Roth IRAs for both of you would be 8.33%.

Do another 15% or so for the 401k/Roth 401k. This will allow for you to catch up on your savings.

I would do that mix for right now. In the meantime, build up the emergency fund to AT LEAST 6 times your monthly expenses. I say at least 6 because you are a realtor, so your income is a little more variable.

I would then knock out the auto loan, then the student loans.

After you have done all of this, you could do more for retirement savings if you please.

With $120,000 household income, you should be able to set up a good emergency fund, save a good portion for retirement, and pay off the debts in the matter of a few years.

**Christian321** · 06-05-2012, 10:04 AM

I'd say that since your gross is between 117,000-120,000 per year, you could have more money saved. As a comparison, I am 31, cleared about $80,000 after tax last year, and I have $450,000 saved. Now, I am not married or have kids yet, but proportionately speaking, there is still a big difference there I think.

You are doing better than a lot of people but if you really want to get ahead of the game, you need to up your contributions to your retirement accounts and make whatever lifestyle adjustments necessary to make that happen. If you watch your spending and stay out of unnecessary debt, your income allows for you to build savings/retirement rather easily.

**YLTL_Dan** · 06-05-2012, 04:50 PM

Originally posted by Christian321 View Post

I'd say that since your gross is between 117,000-120,000 per year, you could have more money saved. As a comparison, I am 31, cleared about $80,000 after tax last year, and I have $450,000 saved.

Great for you, but you're not a good comparison. Let's look at the numbers.

With what you're at now ($120k) invested in the stock market for 30 years at 8%, you'd have $1.2 million saved up. If you live off of 4% per year, you'd have $48,330 per year.

I know that's not adjusted for inflation, but you'll also continue to add to your investments over the next 30 years. If you add another $5k/year, you'd have closer to $1.8 million, or $72k per year.

Also, it sounds like you'll be smart enough to have all of your debts paid off before you retire, thus decreasing your needed income. It never hurts to add some more to your retirement, but don't lose sleep over it. You're off to a great start.

**sjc0816** · 06-05-2012, 05:40 PM

Thank you for the advice. We will keep plugging away! We will up the 401K and start funding Roths next year. I think the key for me to not fret...is knowing that our basic expenses in retirement will be very low.

Thanks again!

**LivingAlmostLarge** · 06-05-2012, 07:20 PM

You are doing better than expected. It's never easy. I think the numbers are so skewed when you are young and getting out of debt, saving for a home, etc. We didn't start retirement savings until 2006 really (had about $4k saved) and then we started with a maxing out a 401k and Roth IRAs. I didn't have a 401k from 2003 to 2010, and now I too stay at home.

I think you just have to make the best of what you have. Save at least 15% and I'd think everything else will fall into line. By living on 80-85% of what you make you aren't just saving, you are also getting used to never living up to your means.

At least for us since we started making an income in September 2005, we maxed out what we could saving wise and never looked back. The saving has just stayed the same, we lost my income, but made it up and then we never got accustomed to living on more.

I think that it's harder to change from scaling back a lifestyle and having to save more to having just been used to always saving. You are saving about 13% and it's not much more to get to 15%-20%. And you are used to living on so much less than other people.

**Christian321** · 06-06-2012, 07:11 AM

[QUOTE=YLTL_Dan;327272]Great for you, but you're not a good comparison. Let's look at the numbers.

With what you're at now ($120k) invested in the stock market for 30 years at 8%, you'd have $1.2 million saved up. If you live off of 4% per year, you'd have $48,330 per year.

I know that's not adjusted for inflation, but you'll also continue to add to your investments over the next 30 years. If you add another $5k/year, you'd have closer to $1.8 million, or $72k per year...

In theory, your advice is sound but I think earning 8% in the stock market is very hard to do. I don't know any common everyday investor who has ever earned greater than 4%. I know what the stats say over a 30 year period and all, but you also have to factor in the fact that we are living in very different times. Just because the market averaged 10% over the last 30 years, does not mean it will average 10% over the next 30 years. In fact, if anyone is calculating future savings based on a future expected interest rate, you are setting yourself up for failure.

The amount you save every month should always be your bread and butter. Relying on achieving a certain interest rate so that you can get away with saving less each month is recipe for disaster.

Forget about the interest rates, you make enough money each year that you can afford to save a lot of money. Your goal should be to eliminate debts and to live below your means so that you can maximize what you are paying yourself each month. At your income level, you can get your head WAY above water very quickly and should never have to worry about having adequate savings.

**tasha123** · 06-22-2012, 03:55 AM

" We have 120k in a 401k/Roth 401k. We are currently contributing 3% to 401k and 9% to Roth 401k." This is good and strategic plan you are doing here. And you are planing to increase another 3% every year is a slow but steady idea. You are heading in good way but you need to continue this.

**97guns** · 06-22-2012, 04:11 AM

everyone thinks you need millions to retire, i did it with only 280K which was only 5X my yearly income. you need your money to work for you, im netting a 12-14% return on my investment and with that kind of ROI my investment is returned to me in 7 or 8 years.

**disneysteve** · 06-22-2012, 04:18 AM

Originally posted by 97guns View Post

everyone thinks you need millions to retire, i did it with only 280K which was only 5X my yearly income. you need your money to work for you, im netting a 12-14% return on my investment

Even a 14% return on 280K is only $39,200/year income. While that may work for you, it wouldn't work for me and my family, or most families I suspect, especially if that is taxable income making the net even smaller. It's great if you can live happily and comfortably on less than 40K/year but quite honestly, we couldn't.

**97guns** · 06-22-2012, 04:28 AM

ok so double my numbers with 500K which would only be 5X you yearly. Christian321 is the perfect candidate for early/self retirement

**bjl584** · 06-22-2012, 05:43 AM

Originally posted by 97guns View Post

im netting a 12-14% return on my investment and with that kind of ROI my investment is returned to me in 7 or 8 years.

What are you invested in? Is this your real estate portfolio?

How do our retirement savings look?