41 years old
Single income household. Married (wife is 36), 3 children under 12.
Salary is $130k per year, I invest 10% into my Roth 401k (plus 4% company match into a traditional) and max out my HSA. I know that I should be trying to max out the 401k, but it's hard finding the room to do it.
Current 401k balance is ~$165k, HSA is roughly $9k. Emergency fund of $37,000. Unfortunately, my HSA balance has suffered due to some surgeries one of my sons needed. Luckily, I think it's behind us.
The rule of thumb says that I should have ~$400k saved, so it stresses me out. But my salary has gone up quite a bit in the last 5 years. I didn't clear $80k until 2020, received a raise to $105k at the very end of 2020, and my salary has gone up ~30% since then.
Is it as bad as I fear it is if I want to retire at 65?
I feel like I'm way behind on retirement, is it as bad as I think?
byu/Mother____Clucker inpersonalfinance
Posted by Mother____Clucker
13 Comments
If your kids are all school aged/not home during the day, would really help if your wife was working full time.
You can do it, but you need to be aggressive with your 401K contributions.
I will say that I don’t know if this holds given that your wife does not work. Has she ever? Will she ever? If you are relying on social security for both of you, she’ll need to join the workforce.
Congrats! You have more net worth (not including home equity) than 72% of the population in your age bracket!
https://dqydj.com/net-worth-by-age-calculator/
Here’s another ‘fun’ (the data isn’t fun, it’s terrifying) link to dig around.
https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Financial_Assets;demographic:agecl;population:all;units:median;range:1989,2022
If you never ever save another penny, invest your 210k in a basic 3-fund portfolio averaging 7%, you’ll have $1,000,000 (in today’s dollars) at 65.
Max your 401k ($23,500) per year until 65 and you’ll have about $2,500,000
You’ll be okay.
It will all depends on how much you’re looking to spend in retirement. You need to figure out a yearly spend number then multiple that by 25.
Example: if you want to spend 60k a year you need to have 1.5m. Simple calculation not factoring in tax implications.
Use online calculators to see if your contributions and compound interest will meet your number by 65.
Yea you’re a bit behind mostly because you are a single family income and your retirement needs to support both you and your wife.
Assuming you keep your current contribution rate and your salary doesn’t change, you will retire with roughly $787K according to this site: [https://www.bankrate.com/retirement/401-k-calculator/](https://www.bankrate.com/retirement/401-k-calculator/)
I don’t know where you live but you are probably going to be able to retire in the US on that much money in 20ish years.
You’re more than fine. Take 401K down to company match and take trips with the kids while they are still with you.
You are supporting a family of five… 3 kids under 12? Whew! You’ve made the decision to have a large family and the trade-off is that you will be working as long as you can.
It’s going to be hard to catch up with one income and 3 kids under 12. You need to try and increase your 401K but it’s going to be hard. You don’t talk about expenses at all, Mortgage?, Cars? etc. Vacations need to be cheap if any for a while. Any option for your wife to work part time at least in the future? Cutting whatever expenses you can will help.
I will say I was in your exact spot 16 years ago with 3 kids under 10 but with more in my 401K, but you can get there. Today I am 56 with 1.5M in investments and own my home free and clear.
Make sure you have term insurance for yourself, Your family needs it in case something happens to you. $1M minimum.
Don’t plan on saving for your kids college. You need to save for your retirement first.
Good Luck.
Does your wife have a Roth IRA?
> But my salary has gone up quite a bit in the last 5 years. I didn’t clear $80k until 2020, received a raise to $105k at the very end of 2020, and my salary has gone up ~30% since then.
That only matters if your expenses don’t also go up. In your case, it looks like it has since you’re not able to put a significant amount towards retirement. So yeah, you’re behind according to the rules of thumb. But those are only general guidelines. You have to decide what retirement looks like for you.
I think you are a little behind, but not in dire straits. You have a rather large emergency fund. I make considerably less than you, but only keep $20k in a true emergency fund. You would do well not to “elevate” your lifestyle as I see so many people do. Remember one important thing though. It sounds like the bulk of your 401k is in Roth. Don’t know if that’s true, but if it is that’s a big feather in your cap. Because you can use 100% of those funds towards income. Try to avoid debt. That is the one thing I see so many people get into trouble with.
Will you have college costs for your children in a few years?
Are you in a LCOL area, or will you move to one in retirement?
Does your wife have any retirement accounts? She could do a spousal Roth
I’m not a finance person, I was a sahm. I wish I had insisted on putting money towards my own retirement when I was in the thick of child rearing.
Why roth 401k? I don’t understand. Id be doing traditional and increase the savings amount.
You’re doing ok. You’ll just have to work a lot longer.