Ideally, you should be saving as much as you can. I feel as if though, I’m putting too much in savings and stretching myself thin. I have to do constant mental math calculations to make sure I don’t run out of money.
Salary – $94,500
I put 20% of my paycheck in 401k.
Gross Paycheck: $3,938
Net Paycheck: $2,172
I also increased my withholding to 15%.
I’m putting $788 per paycheck in my traditional 401k. Which is $1,576 a month.
I’m also putting $750 a month in a brokerage, $250 in Roth.
I’m coming up with roughly $3k to spend a month, this amount to about $1,500 in rent and the rest in food, groceries, misc.
I love savings this much but I feel like I’m living paycheck to paycheck and trying to figure out if I’m insane or I need to cut back.
$15k in emergency savings
$41k in Roth IRA
$20k in IRA
$23k in 401k
$40k in brokerage
$5k in other brokerage
I’m 26.
Am I putting too much in retirement and savings?
byu/boss_man14 inpersonalfinance
Posted by boss_man14
11 Comments
you’re on track. if you want to lean on the frugal side, you can increase your emergency fund to 6 months or 30k instead of 3 months. You are on track to have about 1 year of your salary in retirement by age 30 which is what experts suggest. If you want to be frugal, stay the course. If you want to ease up, you are above average for your age, so you can, but I probably wouldn’t yet if I were in your shoes.
Over all, Great job so far!
Edit: You are on track to have a year to a year and a half of your salary in Retirement by age 30 which is what experts suggest
That is very similar to what I do. I spend less when I feel like its paycheck to paycheck. If I need a little extra I will reduce the 401k for a paycheck or 2. At the rate you are going you will be able to retire early
Depends on what age you want to retire and how much you want to withdraw when you retire and how many years you want to be able to withdraw that consistent amount.
Plus it needs to be enough to cover your expenses, medical and dental for the time as well.
You might regret it now, but you won’t when you’re 60. Keep on rockin’ it!!
How are your dating life, friend time, and hobbies going? What do you want to accomplish with your money?
You’ve indicated no goals, just accumulation. There has to be a purpose to money; otherwise, what’s the point?
A good rule of thumb is to save between 15% and 25%. Academics suggest you don’t save too much in your twenties because the point of savings is keep your standard of living steady through retirement, not to suffer a low standard of living now so you can enjoy a higher one later.
I’m a big proponent of 6 months emergency fund. Not less, and definitely not more.
If I were you I would continue saving as much as possible and re evaluate at age 30. You never know when you could lose a job or a health issue comes up. Keep on Stashin the money into investments while you can.
I know when I practiced net zero budgeting it was a bit difficult psychologically. Now I kind of just have setpoints. I fill up my tax advantaged buckets, and then if I have more than $4k than my emergency fund target with no immediate plans for it, then I invest it in a brokerage account.
Side note: why are you investing in a brokerage account if you aren’t maxing out the 401k?
As far as is it too much, do you want early retirement, normal retirement, semi-retirement, or delayed retirement? That’ll change the response you get.
Saving is great but you could die at any time. What’s the point of living just to save if you don’t enjoy it? I think there’s a balance and if you’re this stressed about it allow yourself to spend just a little more “fun money” a month and live!!
At 26 you have almost $130k in invested assets. Without putting another dollar away, at an average of 8% return, that will be nearly $2 million by the time you are 60, or $2.91 million at 65. This is a good time to think about what your goals are. When do you want to retire, how much do you want when you retire, are you going the way of FIRE or FINE?
Only you can answer what is too much depending on the rest of your life circumstances. You have built a great financial base for your life. Once you figure out some goals, it is easier to help calculate actions for the present.