34M, married, three young kids, MCOL area.
102k salary
7k contract income from side gig
If I stay at this job for four more years, I'll be vested in pension (formula: final monthly comp x 1.1% x years of service)
54k in 403b invested with Fidelity ProManage (saving 3% right now pre-tax)
25k in HYSA
25K in SoFi Brokerage, mostly in VOO and VTI
2k in HSA (just started)
Employer pays 100% of medical insurance, $3500 deductible
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$3250 mortgage payment (I know this is crazy) 29 years left at 6.5%.
$200/month personal loan repayment to parents (I think in total I borrowed about $15k from their whole life insurance policy)
No credit card debt
No auto debt (two paid off 10 year old Toyotas)
Sailboat worth about $6500, insured
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My takehome is about $7200 per month. My main point of anxiety is retirement savings. We doubled our mortgage payment to get into a better area with more room for the kids, no regrets, and we feel very fortunate, but there's nothing left at the end of the month.
If you were in my shoes, what would you do to optimize retirement stability? Ideally would like to pay for my kids' college, too. That's not in the cards right now. TIA!
Feels Like We're Not Saving Enough
byu/QuiVenitInNomine inpersonalfinance
Posted by QuiVenitInNomine
15 Comments
I assume your wife is staying home with the kids? I’d just wait that out and when they’re school aged, she will go back to work and you can aggressively save. It’s not ideal, but that’s reality if you choose the family with stay at home parent route.
If you keep things up, you’re looking to have ~$900k (in current dollars) saved in 30y. At 4% that’s $36k. If you stay with your employer, that’s another $33k pension, plus SS. You’ll be fine.
>homeschooling
That’s an expensive choice. You’re making yourself house poor to be in a good area, which usually means good schools, but you’re choosing not to take advantage of that. Which is fine, but there’s an obvious solution for money anxiety.
Please have your kids go to public school if they’re old enough….
You are behind. You need to assume you won’t get this pension, because right now you don’t have it.
You need to be saving a minimum of 15% towards retirement, not 3%. Since you’re behind, bump those numbers up as much as possible.
You bought way too much house.
Nearly half of your take home is going to your mortgage. No wonder you’re stressed. I’m not understanding the choice to move to a better place for the kids, and then not send them to the presumably better schools. You’re going to need a second income to maintain the house long-term.
I don’t understand buying the expensive house in the nicer area, just to keep your kids at home—public schools often also provide a community—folks you can carpool with, nanny share with, etc. If your wife isn’t going to work, you need more income for your mortgage (and other expenses).
$3k mortgage on $100k salary is tough. We have a similar mortgage and recently upgraded from $1500 mortgage as well. Not going to lie, I miss low mortgage payments.
Options are limited, either increasing your income or reducing expenses. The 2nd option is almost impossible because of fixed costs. Life is just expensive in general. How many kids do you have? How many more years your wife plans to stay home to take care of kids?
You don’t make a lot for MCOL is the reason
No help here other than to say I fully relate to your situation. You are not alone.
Are you the only income earner? Your mortgage is 46% of your take home. That is your entire problem. Talking about anything else is useless.
I’m in a similar boat with family size. My mortgage is about half of yours. My income is about the same. My plan is to increase my income by working better and harder. I feel like I need to be making at least 150k to make it sustainable and be able to save and invest responsibly. 102k just isn’t enough.
Edit: to add, we also homeschool and live on one (my) income. 4 kids. Don’t stop homeschooling 🙂. What you give them in these first 18 years will be much more valuable than any amount of inheritance you could leave them later.
I think your car situation is another thing to be a bit stressed about. Both are 10 years old, if one of them dies your looking at either having just one car, wiping out your savings, or adding another monthly payment.
I agree with the others, you are spread thin. You can either have the nice house or the stay-at-home spouse. Having both is going to hold you back unless you can significantly increase your salary.
Honestly, it doesn’t seem like you can afford a stay at home parent on your salary alone. Not along with the big house in a good school district, plus college for kids, plus healthy retirement savings. I fear you may have to start prioritizing.
If the mortgage and job don’t change and you just need to homeschool, you’re either saving for their college or your retirement. For some cultures, everything goes into the kids and then the kids become the retirement plan. It kinda seems like that’s what’s going to happen if you want to keep everything else the same.
To optimize retirement stability and pay for kids’ college, it would be to get your spouse to work asap or get a much higher paying job. You guys are behind on retirements and have too much house per income. Gl
Honestly, saving takes a large amount of discipline. Ideally your wife going back to work would make the most impact, but I understand your position on this due to homeschooling. This means that you need to find a higher paying job, cut some of your expenses, or get another job/side hustle.
Not having enough in retirement is an emergency and your children shouldn’t have to take on the burden of taking care of their parents in their later years, due to poor financial decisions in the present.
There is a lot of other sound advice in this thread and I’m wishing you and your family the best! ❤️