I was never taught how to actually plan for retirement. Last year before I turned 30 I realized how I’ve been failing and started to focus it.
I make $63k/year before bonuses, my wife is around $67k. My job matches 6%, hers matches 5%. She has around $40k in 401k, I have $19k while we both contribute 10% annually. I also have a lump payment pension that my job pays into annually. We also set up robo IRA’s last year and have contributed the maximum both years in a row. We should be able to contribute the max again on Jan first. We have around $5k in checking for immediate use and the rest of our liquid cash is $22k in a high yield savings account with Sofi.
Just hoping to know if I’m doing enough or if I’m still not doing something and I’ll regret it in the future.
Am I doing enough? Didn’t start retirement saving until a year ago.
byu/Odd_Split_8030 inpersonalfinance
Posted by Odd_Split_8030
14 Comments
Doing enough for what? A normal retirement? Sure. An early retirement? Maybe not.
You are starting to plan. Keep adding when you can. I added when I received cost of living increase and over time it added up. I invested in index funds primarily. If both of you contribute it helps as does taking full advantage of matching by an employer.
Something is always better than nothing. There’s a few calculators out there to give you an idea of how much you’ll have when you get a bit older.
I’d make sure your IRAs are Roths, but for now you’re doing fine.
If you can contribute a bit more right now to your 401K that would be best just because you’re both a little [behind](https://www.fidelity.com/viewpoints/retirement/how-much-do-i-need-to-retire), but as long as you’re getting the full employee match it’s fine.
You all make $130k together.
You’re both putting in 10% into each 401k, and you get a 6% match and she gets 5%. That alone gets you to the minimum 15% recommended retirement contribution.
Then another $14k going into Roth IRAs.
Total: $20,130 into 401ks, $14,000 into Roth IRAs = $34,130 or over 26% of your income invested for retirement. And that is ignoring the pension payment.
You’re doing more than enough. You have 3 decades for your money to compound and grow.
The general rule of thumb is to be at about 1x your annual income by age 30 in retirement savings. Your household is $130k, and you have about $60k saved in 401k’s and I imagine if you each have about $14k+ in each Roth IRA (just going off max, it’s probably much higher depending on what you invested in), so you guys are about $40k short of where you should be.
Don’t panic though. You are still young, and honestly, much further ahead than most people your age. All you really need to do is keep maxing the Roth IRA out every year, and maybe bump up the 401k contribution a percentage point each year for a few years. You’ll be set to retire at normal age just fine.
It depends on expenses but all your numbers sound good to me. You’re contributing 27% of gross income when you include the employer match and she is contributing 25%. Assuming your expenses stay in the same ballpark and you make an average return you should have enough to retire off investments alone in your 50s, and it should get pretty fat in your 60s with SS and the pension. Those assumptions may not hold true so stay the course as long as you can. If you get to your 40s and want to think about an early retirement the only thing you might want to do is start chucking some money in a taxable brokerage so you can split the tax burden (easy to get 0% LTCG if done right).
What are you investing in? Is it basically an HYSA or are you invested in the S&P 500?
Sounds like you are each putting $7k into a ROTH and another $6300 and $6700 into 401k. So almost 27k into retirement from your income.
As a percentage of your income that’s about 20%. That pretty good.
If you can afford more go for it. But I would say if you can keep that pace despite a slow start you will have a healthy retirement fund at 65.
That sounds like enough to me. I didnt really start saving for retirement until I was 20 and at the time I was making about 45k/yr and wasnt married. I am 46 now and I am on track to retire early if I want.
You are doing the right things. Question is when do you want to retire, what do you want your retirement to look like and are you saving enough to get there. Only you can answer that.
Any easy way to ballpark where you’ll be at is at a 7% return your money doubles every 10 years.
$59k at 30yo = $118k at 40, then 236k at 50, and 472k at 60, 944k at 70.
And that’s based on just what you have already saved. Keep saving more and it will keep going up.
At a 10% return it doubles every 7 years so with some market luck maybe you’ll be at even more.
I didn’t even get a decent job until I was over 30.
Edit: to complete my thought…
Recommend you start here
https://moneyguy.com/guide/foo/
– Invest enough there to capture the match in your 401k 403b and/or 457 plan
– Build a month or two of expenses in your local bank.
– Build another 6 months (or more depending on your risk tolerance, which should consider your job security, family income vs. bills, dependants counting on you, etc) for emergencies.
Many will say in a high yield savings account. I would recommend opening a brokerage account (Fidelity or similar is fine) and dumping it into VUSXX once you have the $3000 initial investment amount. It keeps a $1 price tag and pays a little better than a HYSA, and you can move money just as easily.
– Open a ROTH IRA at the same brokerage. Invest the max allowed.
– Follow the rest of the plan.
Recommended reading:
– The magic of thinking big
– The millionaire next door
– Wall Street Journal Guide to money and investing
-The Bogelheads guide to investing
There are so many more good books and resources, but these are easy to digest and will put you on a good footing.
Never stop learning, and good luck!
Depends on what you want to get out of retirement. If you’re trying to the high life and retire at 59.5 then probably not
I suggest that once you have topped the match by your employers you open a Roth IRA. It uses after tax money but it will not be taxed in retirement. That is a huge thing.
I put all my money into my 403B so the withdrawals the government is making me take at 76 have large tax ramifications.
When I was working you couldn’t put as much into a Roth IRA, but I still with I had been more diligent about it.