I’m 37 and got a late start on investing. I thought i wanted to buy a house, but things changed and prices kept climbing.
So I ended up saving up too much cash. Finally about 3 years ago, I opened a Roth IRA and have maxed it each year. Last year, I got the chance to open a 401K and I’m trying to max that out each year as well. I don’t know that I’ll always be able to max both. I now have about $58k between the two, not great, but way better than I was a year ago.
I‘m starting to invest the $280k that I was just blindly saving for a house in my HYSA. I finally opened a brokerage, and invested some in VOO. I hope to keep doing this, but it’s hard mentally to invest that money that’s been sitting safely (but also losing money to inflation.) So I’m trying to just do it slowly.
If I keep my current strategy, will I likely be okay in retirement, even though I got a very late start? I wish I’d started investing in my 20s, but what's done is done. What concerns me is I feel I really have to max both accounts for 30 years to have any hope to retire, and I don’t know I’ll be able to do that.
The housing situation stinks but I’m not looking to buy right now and may never buy. I just don’t see the point when I’d have to tie up a lot of my savings in the down payment to afford the PITI. And I wouldn’t be able to invest much in retirement after buying a home and having a mortgage and maintenance, so I don’t know that’s worth it now that I can’t really find anything under $250k.
I only make about $70k per year.
Am I totally screwed as for retirement?
byu/NewMaximum3204 inpersonalfinance
Posted by NewMaximum3204
6 Comments
A big part of buying versus renting is that when you hit retirement, you don’t have rent or a mortgage to pay (or you sell, and have a large sum that you can put into rent or buying a new place).
You’re fine. It also depends on what life you want to have in retirement and what your partner is savings and doing.
Start here: https://www.reddit.com/r/personalfinance/wiki/commontopics.
retirement by age: https://www.fidelity.com/viewpoints/retirement/how-much-do-i-need-to-retire#:~:text=Key%20takeaways,60%2C%20and%2010x%20by%2067.
You’re fine. You’re just not as tax optimized as you could be
Your $280,000 is what puts you ahead of most people your age. That effort was not wasted. You don’t have the best tax advantage, and you missed a lot of growth from investment, but you still have the $280K which is more than most people have saved. So you’re going good.
You can max out both 401k and your Roth since you make more than 24k a year. Just use your 280k cash to supplement your income. Mathematically that is equivalent to putting ~30k of your 280k cash into the tax shelter each year until they all go in there. Whether or not you want to be that aggressive is a separate calculation.
casually mention 280k saved for retirement? In your 30’s? I think you’re fine bub
You’re not as behind as you think. $280k in savings plus maxed retirement accounts at 37 is pretty good. If moving it all at once feels uncomfortable, you could split it into 6 or 12 equal chunks and invest one per month.
At 7% real return over 28 years, that $280k alone works out to roughly $1.8M. The further along in your career, the more you’ll be able to add.