Tales from the Wallet: Retirement

retirement-womenLadies, how much are you saving for retirement? How large does retirement loom in your thoughts — and where does it fall in your priorities?  Welcome to our next installment of our Money Milestone series, where we’ve discussed paying for grad school, wedding finances, home buyingfinancially planning for a baby, and financial strategies for divorce.

I haven’t retired yet, obviously, but it does loom fairly large in my thoughts and priorities just because getting enough saved by the time we want to retire — and hopefully meet a personal goal of paying for college for both boys — is not going to be a simple matter.  Constant vigilance is the key, I think!  Of course, you don’t want to save so much that you can’t enjoy your life right now — after all, not to get too dark on this sunny day, but not everyone will have to worry about retirement.  We max out my husband’s 401K and my SEP-IRA every year, and we save what else we can in tax-savvy investments and with automatic investing.  (I just started using a new app called Acorns, which is interesting: you can link it to bank and credit card accounts, and it will round up every transaction and invest the difference in Vanguard funds.  Spent $8.95 at the drugstore? It’ll take that $.05 and put it in a queue to invest when you get to $5.  It’s a bit wonky right now — it mysteriously hasn’t updated in 10 days — but I think it shows a lot of promise.)

Readers, are you throwing everything you can at retirement — or are you prioritizing other goals first (like keeping investments fairly liquid for a home purchase or other big expense like a wedding, or paying down debt)?  (Incidentally, we did try to answer what retirement assets you can use for a first home purchase in a previous post.) 

 

Pictured: Fossil ‘Sydney’ Zip Phone Wallet, now $56 (was $75) at the Nordstrom Clearance Sale

Further reading:

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Comments

  1. anon a mouse :

    I am aggressively saving but still worry that it won’t be enough. I try to comfort myself that I still have more than 30 years to catch up, and do the best I can. This year will probably be the first year that I hit the 401k max.

    The best tip I got for saving for retirement was this: every single time you get a raise, divert a big chunk of it to retirement. Half of the raise or more. You’ll never notice it’s gone (since your paycheck will still go up) and over time it will make a big impact in your nest egg.

    I’d also like to hear from others how owning a home factors into retirement savings. We live in a HCOL area and plan to pay off our home before retirement, then cash out and move out of the area. But that assumes that home values will still be strong at that particular point in time.

    • Anonamouse is so smart. I am goeing to follow her ADVICE by saveing more, tho I have been saveing thru my law firm’s 401K, b/c dad insisted on it. Before that, I just used my raise’s to buy new clotheing and give away my old clotheing to NY Care’s and Goodwill. Now I am also in a Partnership “top-hat” retirement plan under which I get a tax benefit for more then I get under the 401K. The onley bad thing is that I can onley get it out when I retire, and I have ordinary income on it, even tho the firm is involved in makeing investement decision’s for us–Dad thinks the law is wrong b/c it should be capiteal gain income, not ordinary income. Frank says NOT to worry about it b/c when I take it out, I will NOT be pretty enough to worry about it. FOOEY on Frank b/c I want to take care of myself even AFTER I retire.

      For the HIVE, I recomend you max out your 401K, like Dad did for me, so that I can NOT spend it. Also, the manageing partner says the 401K and partnership retirement plan is beyond the reech of creditor’s, whatever that means. Dad says if the firm is sued, they can NOT take that away from me. YAY! b/c if I got the money on day 1, I already would have spent it.

      So if we all follow the sage advise of Anonamouse, we will all be abel to retire, and be independent of drunk men who would just want to take our retirement funds for booze. FOOEY!

    • Anonattorney :

      Owning a home significantly impacts my ability to save for retirement. I also have no idea if it’s a good way to diversify my investment or not. Since I purchased my house, I have to pay 20% of my gross income to my mortgage. That increases a bit each year due to increasing property taxes. I also divert a not insignificant amount of cash to upgrades in the house, furniture, and repairs each year. I don’t feel house poor, but I do feel like I would have a lot more to put into retirement savings if I were still renting.

      On the other hand, I bought a house at the bottom of the market in a neighborhood that is now booming. Based on an estimated value for my house, my equity is now about 3x my down payment, 3 years into home ownership. Will that still be the case when I sell the house? Who knows. Will I essentially lose all that value because any subsequent house I buy will also be substantially more expensive? Probably.

      • I’m in the same boat. Retirement down since saving hard for and recently purchasing a home. But, if income increases and my mortgage stays static, even in the next 5 years, I’ll be in a much better position. Zero other debt to speak of. Still have never hit the 401k max – close, but not quote.

        I also find that, while interesting, this topic can be very polarizing on this s!ite. Yes, we all should be maxing 401ks, but it’s just not possible for some whether it be income levels or personal situations (health, kids, divorce, or otherwise), so I just encourage folks to keep that in mind as you read through comments. You do you :)

  2. Sydney Bristow :

    I was doing well and maxing out my Roth IRA, but had to divert that money this year because we moved and saved up for the wedding. Once we get back from our honeymoon I’ll be trying to max that out again. My strategy has been to max it out and then throw extra money at my student loans.

  3. I save for retirement by not having kids! lol ;)

    • :-) Same here… But I really want to have kids sometime in the near future though..

    • Babyweight :

      That is so true.

      We spend over $20k a year on childcare alone. Pre-parenthood we maxed out both 401ks and IRAs each year. That is no longer possible. I do 5% of my pre-tax income into my 401k and my husband does about 7% (because he has a match — lucky dog!)

      • Spirograph :

        0 kids is a really good savings strategy! HCOLA means I have an expensive mortgage and pay around $30k in daycare. Not to mention additional insurance costs that come with having children. I’m sure we could find the money to continue maxing both our 401ks, but I also want to enjoy my life *now* so I refuse to give up all of my creature comforts. It’s not pleasant to think about, but there’s no guarantee all of us will live to enjoy our retirement, and you can’t take money with you. Someday when my kids are old enough for public school, we’ll put the daycare savings back toward retirement, but for now the floor is whatever our employers match, and anything above that is weighed against other priorities.

        I am really, really glad I contributed a lot toward retirement in my 20s. Being able to think of these years with ridiculous daycare costs as a blip in overall good retirement savings habits helps quell my potential panic.

    • Anonymous :

      Me, too, but I also acknowledge that not having kids will likely mean paying for help earlier in retirement. That is particularly so because so far I’m also unmarried. I don’t know that I will never marry, but I plan for the most expensive scenario. That means I am probably going to need to pay for all manner of help along the way.

      • So do many ppl who have kids — particularly in the U.S., where most ppl move away from where their parents live. When the parents get older & need care-taking help, they’re just as likely to have to pay for it as to have family members living close enough to help.

  4. I think we’re doing OK but I still feel behind. I am 34, husband is 37. He has been maxing out his 401k since the day he started working. With the exception of a year when we were getting married and buying our first house, I’ve done the same. Those are in decent shape. We also have a pretty good-sized pool of stock from my husband’s company, and we put about 500/mo into an investment acct.

  5. Diana Barry :

    We max out my 401k and DH’s SEP IRA every year. That has gotten us to a pretty good place – I am late 30s and DH is turning 40 this year. I had no student loans and DH had around 40K that he knocked out in the first 6 years after college. Our projected 10-year net worth is now something I feel happy about, so that’s good. I think avoiding lifestyle inflation is a big thing – I did too much spending on clothes last year and so this year I had a shopping ban for the first quarter and have been trying to buy ONLY things that I really love since then. The reset really did help with that.

    College is a huge “what if” in my head. I figure if we want to pay for college we will have to save an extra million bucks just for that! (we have 3 kids) DH thinks that everything will move online by the time our kids go to college, I am not so sure.

    • Diana Barry :

      Oh, and I find that reading crazy early-retirement stuff like Mr Money Mustache really helps set your priorities. Those people will do ANYTHING to save a buck and also not to spend anything. Especially if you feel like your spending is out of control, everyone’s stories there are great motivation.

      • Yeah, but to get it, you have to read a lot of railing against poor people for being stupid, which pretty much makes me unable to appreciate any useful advice they have.

        • anon-oh-no :

          also, who wants to live like mr money mustache?

          while I totally get the idea of saving for retirement (for so, so many reasons), I do not get the mentality that many people have about not spending now so you can spend then. I might be biased given my family experience (my parents had grand plans to travel the world and “enjoy life” throughout retirement … two years into it my mom got a terrible form of dementia, my dad spent the next 5 years taking care of her, and then she passed away), but you have no idea what will happen to you or your spouse or kids during retirement years. So if I want extra shoes, or fancy coffee, or another vacation now, it make sense to me to spend that money now rather than put more towards retirement.

          • Agree with this so so much. I figure the point of earning money is to enjoy it, so I save a moderate amount for retirement but really try to have fun (responsibly) without pinching every penny so hard it screams.

          • Anonymous :

            Completely agree with this. I’m fortunate that my income allows me to max out my 401k, spend comfortably with no credit card debt, and pay above the minimums on my student loans, so I’m not exactly hurting in the financial department, but I certainly could cut spending and throw a lot more at retirement if I wanted to. I just prefer to enjoy life now when I’m young, healthy and free of serious obligations (kids, partner-level demands). I save enough that I’m not totally throwing my future overhead roof to the wind, but the idea of buckling down to the extreme during this time so that I can retire at 55 has no appeal to me.

  6. Baconpancakes :

    This is a fairly depressing thread to read, as someone who’s very proud to be saving 15% pre-tax income between a Roth and 401k, and nowhere NEAR hitting the 401k cap limit.

    • I think with finance related threads like this, most of the people who write are the ones who are in good shape financially. Others (including me) just see and feel poor and don’t add anything because we feel it is really not worth writing about. So, we don’t get the full picture here.

      • One of the upsides to Mr. Money Moustache is that he focuses on spending less. So, if you’re willing to downsize at the time of retirement by selling your home, moving to a lower cost of living area, living in a co-housing arrangment, or even moving to a country with a lower cost of living, you can still be ok. Although much of the audience has high earnings and high net worth, there are others of us who find this site useful for the career advice.

        • Baconpancakes :

          I agree there’s a lot of good advice on frugality on there, but I can’t get through more than one article of MMM at a time. His vicious attacks on anyone who points out that his particular road to financial independence isn’t going to work for them really leave a bad taste in my mouth. I also value certain (expensive) things more highly than he does, which he rejects as stupid. He proselytizes like a hellfire-and-damnation-all-or-nothing preacher, and it feels icky to me.

          • Plus MMM isn’t “retired” by my definition of retirement. More like self employed. A worthy goal indeed, but when I envision retirement, I don’t envision running a real estate business.

      • Honestly I don’t usually read these financial threads and the comments because of this. I just come away feeling bad about myself and convinced I’ll be eating cat food even though prior to reading, I thought I was doing just fine.

    • Right there with you. I’m saving like 2% of my post-tax income. Sigh.

      • Same here! I am putting a ton of money towards my student loans, and it still won’t be enough to pay them off in 10 years or less (I’m in an IBR program). All I have saved is enough to cover a few months of living expenses in case of unemployment. If I didn’t have the loans, I could save around 18% of my gross income. I am looking forward to getting a more stable job so I can refinance my loans with a lower interest rate and start making even larger payments towards them, then contribute to a 401K.

    • Sydney Bristow :

      15% is awesome! Super awesome! I’m nowhere near that and wish that I was.

    • Anonymous :

      For me, it helps a lot that I didn’t come from much money and I don’t expect to have an expensive lifestyle when I retire. No, I won’t have $2million saved. But my parents are fine now, and I’m pretty confident that I will be fine. I won’t be able to retire early or to live above my current means. But I love my job and have what I need, so I am good.

    • Don’t be depressed! My husband and I are very focused on retirement, but we’re still nowhere close to maxing out our 401k’s. We do our best to diversify our cash savings between house equity, Roth IRAs, 401ks, HSA’s and just cash. There simply isn’t enough cash to go around and now that kiddo #1 is en route, we’re trying to figure out where education savings fits into that mix.

      I think the most important thing is to remind each other to put some attention toward retirement and to give ideas on which savings devices to use.

    • I’m saving 15% plus I get a 5% match and try not to think about it too much – that’s all I can do right now. Too many other financial pressures in the here and now to worry about.

      • Anonymous :

        Look, you are doing what you can. A LOT of people don’t save nearly as much, so good job! (That is sincere, not condescending!)

    • This is also depressing as someone in education who works hard to save, but still only has $6k in a designated retirement fund. I’ve never had employer matching or anything. I do save around 20% of my post-tax income every month, more as often as I can, but split between emergency savings, house down payment fund, and retirement.

    • This is me. I thought I was doing so good… guess not

  7. Anon for this :

    I don’t even know where to start. We have a financial investor who told us we needed 2-3 million, and I have no idea how that is ever going to happen. We are both in our mid 30s and only have about 150 in a 401K and 40ish in other places. Both my husband and I are eligible for our state pension plan, but it’s also likely we won’t retire from these jobs and so we won’t be able to actually use that.

    • Wildkitten :

      You sound like you have a good start! Don’t focus so much on the end – I like to think about the steps in between, like saving a certain amount or percent per month/year and hitting certain goals each 5-10 years. Thinking about $3 million is not a helpful thought, but thinking about $X this paycheck is something you can put away.

  8. Wildkitten :

    Hitting the 401k ceiling would involve saving 1/3 of my pre-tax income every year, so I am definitely not doing that. I still have credit card debt I am working hard to pay off, so I try to prioritize both that and retirement.

    I save 5% for retirement and get a 5% matching contribution from my employer – so I save 10% to my retirement account. It is recommended that one should have 1/2 of their current income saved for retirement by the time they turn 30, which I am about to do and will have 1/3 of my income saved (so not quite there). I missed out on some years of contribution by going to law school.

    • Wildkitten :

      I have no idea why my comment is showing up funny.

    • Shopaholic :

      I’ve never heard of the 1/2 your current income saved by the time you’re 30 but I think that’s a good goal. I should get on that! I’m making decent money I think but have so many savings goals that unfortunately retirement is getting the short end of the stick. I keep telling myself I’ll max out my retirement once I’ve met the other goals but that keeps falling further and further behind.

      • I’ve always heard:

        1x income saved by age 35
        3x income saved by age 45
        5x income saved by age 55
        8x income saved by age 67

        Where income = your income at that moment in time.

        • That’s encouraging. I’m 47 and have about 4X my income. No kids, no house, no debt (except a car, but I could pay it all off right now if I needed to).

          To try to encourage people – I went to grad school, got a PhD in a hard science, did a postdoc, and didn’t get a “real” job until I was 33. So, in about 14 years, I went from essentially 0 to about $400K. And I live in a high COLA, didn’t really deprive myself, and while well-paid by my standards, I’m not hugely well paid (very low 6 figures just now).

          So, it can happen.

      • Wildkitten :

        I was raised by a single mom and my people live forever, so having retirement savings is really important to me. I’d like to own a house and have children and put them through school but I know there is part of retirement that I’ll have to fund myself either because I’m single or widowed. So, retirement is my top individual priority. Other priorities I can share if I choose to marry, or will figure out later if I don’t.

  9. I worked for nonprofits for the first 7 years out of college, paid for grad school and moved cross-country. I’m early 30s and, now that I have a job paying actual money, am saving 7% plus a 3% match and only have $15k saved for retirement and still paying off undergrad loans. I feel behind and stressed, but this feels like the first year of my adult life that I have things somewhat under control.

    Any tips on where to go from here? I entertain thoughts of starting a Roth but scraping together the $1-3k to start it is hard with paying off debt.

    Also: Acorns is a great app! I’ve saved $200 in about 3 months with it.

    • I felt similarly about a Roth, but a friend (who is also a financial advisor) got me set up with an American Funds IRA that only required a $250 deposit to start, and you could make tiny monthly payments. I bit the bullet and did it, and every six months I increase my automatic monthly payment in it by $25. I barely feel the extra $25 and it is a good supplement to my 403(b).

    • Honestly, I wouldn’t worry about the Roth until the student loan is done. Debt repayment is a form of savings, after all, and it’s a guaranteed return.

      Exceptions to this advice would include: you plan to use PSLF or a similar program or you have very low interest on your student loan.

      • Or if your income is low enough that you could qualify for the savers tax credit.

  10. My plan to retire is to never, ever retire. Kidding – sort of!

    As for kids: I don’t think – given basic biology – that I’ll be able to have more than one. My basic plan (that my boyfriend really likes, FWIW) is to tell the kid that we’re willing to pay 100% of the cost of the state flagship university, and if they want to go somewhere else, the difference is on them to make up in scholarships, work study, or loans. (The slight adjustment would be if they got into a really amazing school that doesn’t do merit scholarships.) If the kid wants to work her tail off to get into a great college, we’ll work our tails off to pay for college.

    • My parents covered my rent and would send me some cash for food while in college and the rest of the cost was on me. My brother and I chose to go to cheaper state schools as a result. My sister is about to start up at a fancy pants private school and my last two siblings have yet to decide.

      I’m hoping to do the same sort of thing for my kids, but I’ll probably be polling my mom extensively on if she would have decided to help out in other ways once she has the value of retrospective thinking on her side.

    • This is what my parents did and I think it was very fair. They covered rent + tuition + me not starving to death, but I had to work for spending money.

    • That’s what my parents did — paid toward private school the cost of state school. I think it’s really fair and generous.

  11. I’m 30, recently divorced. I max out my 401k each year and don’t invest beyond that. There’s about $90k in my 401k account from working for 5 years. I have about $25k in student loans, and about $75k in cash, which was my buyout from the house I used to own. I now live in an apartment. Hoping to buy a condo in my area, but even $75k is too low for a down payment on a 1-bedroom. Crazy. For the near future, I’ll be diverting any extra money toward home-buying.

  12. anon anon :

    I max out my 401(k), which is 20% of my paycheck. I also max out a Roth.

    Major caveat is that I have no kids and no debt, and no mortgage. My rent is fairly cheap for my major city.

    Like posters above said, I worry sometimes that I am saving for retirement at the expense of early home ownership. If I bought a condo, I would have to cut back on retirement investments. But then I’d have a condo, so maybe it wouldn’t matter.

    I am VERY financially cautious, so I feel better maxing out retirement accounts. but I also don’t want to regret not buying a home. I guess no one really knows the best approach.

    • anon anon :

      Forgot to add that my company does not match, so I go a little overboard with my 401(k) contributions.

    • AttiredAttorney :

      This is my situation too. I’ve maxed out 401K since my mid 20s, maxed out my Roth since high school, and I’ll also have a modest state pension with a few more years of service (late 20s now). But, I’m also wondering if I should cut back retirement savings to buy a house.With the real estate market still feeling relatively unstable to me, I’m hesitant to call a property purchase an investment.

    • Anonymous :

      I’m an advocate of home ownership, but if your rent is cheap, it sounds like you are doing the smart thing. Worst case, you can always rent in retirement if you have enough, but you need money to maintain a home, even if it’s paid off.

  13. I contribute 10% to 401k, plus some matching I’m not yet vested in. Maxing my ROTH is about another 10%, plus a couple hundred a month to an investment account.
    I started saving early enough that these levels are fine until I figure out shorter- and medium-term plans like graduate school and buying a house. I could max out the 401k if I didn’t save anything for shorter-term and cyclical expenses, but at my income level and age that’s more of a stretch than I’m comfortable with.

  14. I plan to stay at my state government job until I retire and then take advantage of the pension. I also save a small amount in a deferred compensation plan. My husband saves 6% of his income and gets a 6% match (this is not enough, but we still have student loans and kids so we have not figured out how to come up with more to save right now. Sigh.) We are on track to pay off our house before we retire and I will be fairly young once I am eligible for retirement from my state job and so I think I will probably continue working (probably for myself) for another 10-15 years.

  15. Little Red :

    I like to think I’m doing okay, but as a single and childless woman, I still worry that it won’t be enough since I’ll have to be my own safety net. I try to save a total of 20% of my gross income in my various non-401K investments. Not all of that is for retirement though since I plan to renovate my condo as soon as I pay it off.

  16. Cast Iron Radiators :

    Apologize for thread jack here but I really need advice. I spent months researching having our old radiators taken out, sandblasted, repainted, and put back. Seems common among places with lots of old houses like Boston, but we live in the mid-Atlantic area, so not common here. We found a professional willing to do the sandblasting and repainting. Our problem is with finding a plumbing/heating company to disconnect and reconnect the rads. We’ve talked to 2 companies so far. Both times the plumber walked into the house and immediately started saying that what I wanted to do was a big mistake because the pipes are so old something could go wrong. By the way, that conclusion is based just on the age of the house (1939), nothing visible looks wrong. It’s so frustrating because now my husband doesn’t want to do anything to get the rads and the wall behind them cleaned up. Personally I think it’s just that these professionals are inexperienced with what we are trying to do. What do you think?

    • Anonymous :

      They are absolutely right. Be prepared to have to repipe the whole house.

    • Bewitched :

      Our regular plumber removed our radiators, took them for sandblasting and repainting and reinstalled. His company works extensively on steam heat systems though-maybe the plumbers you have called are more of the clogged pipe variety?

      • Bewitched :

        ETA: our house was built in 1933, so same vintage as yours.

      • Cast Iron Radiators :

        Huge thanks for your post! I had been googling “radiators” to try and find plumbers that may be familiar with our system. After your post I googled “steam heat” and found 2 companies that said they do this all the time, as familiar as ordering McDonalds. Unfortunately, 1 of them won’t come to our area but they said they would try to get us a recommendation. It’s a lead and not a dead end, so thanks a bunch!!!!

        • Bewitched :

          No problem :) Another item for thought. We ordered wooden radiator covers for some of our more visible radiators. They were custom made for the height/width of the radiator-but were not expensive. I use those in the living room and dining room to cover the radiators which can be a nicer look, and also gives you some surface area to put a plant, photos etc. I think we bought ours online from the Wooden Radiator Cover Company or something, this was some years back but maybe others make them as well. Good luck!

    • Little Red :

      What you want doesn’t sound drastic or out of the ordinary. What’s your screening process for the contractors? Are you making it clear what the job entails and questioning them about their experience before the home visit for the estimate is even scheduled?

    • We wire-brushed radiators and repainted them with metallic silver and while it wasn’t as smooth as sandblasting they did end up looking so much better than before. Also second the recommendation of wooden and mesh radiator covers for where that works – much more attractive than bare radiator.

  17. I have a question. Do any of you feel resentment that your youthful years are spent just saving money and not enjoying life?

    • anon anon :

      I can’t tell if this is serious or sarcastic, but I’ll assume serious. Are the two mutually exclusive? I save money but also enjoy life… a lot! Can’t you do both?

      • This is a serious question. I feel that resentment, but cannot figure out a way to save money and still have fun.

    • Nope! I save a ton, spend a ton on loans, and still manage to have lots of fun. I can’t afford all the things but I can make what matters most work.

    • Anon for this :

      I do! I am super stressed about retirement so whenever I start planning a trip or looking at new clothes/purses, I feel a twinge of guilt that the money should be saved instead and don’t pull the trigger.

    • Baconpancakes :

      Yes and no. Even with my apparently paltry savings rate, I still feel resentful when I calculate that I can’t afford to join my friends hiking Machu Pichu, get a scuba diving certification to join my SO on his scuba trips, or enjoy some of the seriously fantastic restaurants my (same level) coworkers go out to. These things certainly aren’t necessary for happiness, and I do enjoy my life as it is and I’m overall very happy, but I love food and travel and adventure, and my ability to enjoy highly athletic vacations and rich foods is likely to continue to decrease as I get older. Already I can’t eat and drink the way I used to without getting digestive issues, and my knees are starting to seriously bother me, so…

    • I’ve never met a retired person who wished they had saved less and spent more money in their youth.

      • Asideralis :

        I’ve met many retired people who wish that they had traveled more and enjoyed themselves more, though.

    • Pretty Primadonna :

      I am kind of the opposite. I am several years out of law school, but have spent the time working as a government attorney, so my salary is not and has not been lucrative. When I first graduated, I was definitely enjoying my life and not saving much at all. In fact, I was living beyond my means and betting against future compensation that has not come to fruition.

      I think balancing saving for the future and spending in pursuit of enjoying life is the way to go. However, now, instead of doing that, I am zealously saving and cutting creature comforts–I have to do so to make up for lost time. I am in the pension plan through my employer, but the thought of whether I will ever have enough money to retire scares me. I wish I had balanced saving and living well from the start.

      • Pretty Primadonna :

        I am resentful that I currently make a salary that keeps me from saving the amounts I would like to be saving despite my penny-pinching and not spending frivolously.

    • I think if you prioritize the “fun” that is MOST important to you, you can do both. Maybe you can’t do all the travel, enjoy all the restaurants, and have tickets to all the games. However, you can still have one and skip out on the other two.

      My husband and I REALLY enjoy eating out. But this means that we don’t also go to concerts, movies, or travel as often or shop as often.

    • Asideralis :

      edited out. Was whining too much.

  18. Anonymous Associate :

    I think we are doing ok, given the student debt load and living in a high cost of living area. My fiancé had over 250k in student loans, and I had about 80k. But we still max out our 401k’s.

    I paid off my student loans last month after about 2.5 years out of law school, and now divert 3-4k a month to savings for a down payment, while the fiance diverts spare cash to the loans. We realistically need $200k for a down payment. Like others, I view my future home as a source of cash for retirement if needed/if we decide to move.

    It helps that we don’t have kids, and don’t plan to.

    I would like to retire as soon as possible-no later than 55, so I plan to aggressively stockpile cash and make not-too-risky investments. I like my job, but I like surfing, golfing, traveling, etc much much more and want to spend as much of my life doing those things as I can. Life is short!

    • Anonymous Associate :

      Forgot to add that we are going to elope, mainly to save the hassle, but it also saves a lot. Even getting married in a tropical destination with an extended honeymoon!!

    • Good for you! Even if you’re on a big law salary, that is impressive.

  19. If your employer doesn’t match, is there a baseline that you should be putting into your 401k? I am always so confused about this. My employer does an awesome automatic contribution that works out to 8% of my salary, regardless of how much I contribute. I’m contributing 10% right now and saving another 10% for an emergency fund. My emergency funds are very minimal right now. Should I be putting more into the 401k, maxing it out? Or is the emergency fund a more important priority? I am 25 FWIW…

    • Anonymous :

      I would do the emergency fund, then when you get to a good level, put it all into retirement. (That is, unless your parents or someone else could help you out if you really needed money, but it’s good to be independent, if possible!)

    • It’s usually a good idea for your emergency fund to be your first financial goal – at least 1-3 months of expenses. After that, emergency funds are more of a comfort level thing- if you want/ need say a one year emergency fund, go for it, but maybe split 50/50 emergency and retirement (or whatever works for you!)

      If your employer doesn’t match, you are usually better off putting your retirement money into an IRA first (Roth, i.e. post-tax if you think your income (taxes) will increase as you get older, standard IRA if you expect to have lower taxes in retirement). You will generally have better access to a wider range of funds with lower fees with an IRA than through your company’s 401k, although there are always exceptions. Vanguard, Charles Shwab, or Fidelity are good low-cost brokerages to start an IRA at.

      You can contribute $5,500 max. for the 2015 tax year- if you are able to save more than that amount, the $5,501 dollar would be the time to then put money into your employer’s 401k.

      Edit: Also, you can withdraw Roth contributions without penalties (since you’ve already paid taxes on them), which can be good as a back-up emergency fund.

  20. Senior Attorney :

    I got a late start and have had a couple of serious setbacks (*cough* divorces *cough*) along the way, but I am in reasonably good shape thanks to the fact I will have a government pension and subsidized health insurance in retirement. Nevertheless I still max out my 401(K) and 403(b) every year in addition to my pension. After the recent divorce my retirement date was pushed back to 70 from 65 and my present and future financial circumstances were permanently reduced, but I’m reasonably okay with that. (Q: Why is divorce so expensive? A: Because it’s worth it!)

    And as we’ve discussed a bit in the last couple of days, my “late retirement” plan (when I can no longer live on my own in my house) is to sell my house and use that money to pay for whatever care I need towards the end of life. Because I don’t think it’s reasonable to expect to be able to cash flow those expenses out of retirement income.

    • Wildkitten :

      Yup! My mom’s retirement is different (frugal but still very interesting) because she divorced my dad (who was a scumbag) and she is pretty happy and I am very proud of her. I’m sure in your retirement your son will be proud and you will be happy.

  21. Early 40s, in higher ed. I’ve been pretty focused on the idea of early retirement, so I have maxed out my 403b and a Roth for 11 years, and in the last few years since salary went (barely) into 3 figures, also max a 457b. Also contribute some to post-tax investments. So have been saving 40-60% of gross income for a decade. Double income, no kids – partner who is a few years older also maxes 401k and Roth. We have a paid off small house (high COL area). I will have a modest pension too. Should be on track to retire comfortably at 50-55 with >4M saved between us. Helps not to have kids, nor expensive tastes in material goods/food/entertainment, and to have made this a conscious goal and sort of a hobby, despite the delay of grad school in getting started. Do however enjoy life, eat out, travel internationally once a year. Anticipate needing to help out parents in some capacity at some point within 10 years.

  22. I max out my 401k at $18k per year as does my husband. We also overpay our mortgage which should be paid off in another year (we are in the bay area so it is worth a lot). I also have a brokerage account that I invest about $2k a month in.

    That being said, I took ten years off of work raising my kids, and we have 3 colleges to pay for, so I don’t feel super secure. At age 41 we have about $400k in our retirement combined, and put house is worth about $1.2m (boring 3 bedroom ranch).

    I’m curious how much people actually have saved. I really don’t know how we are doing.

  23. You know what this thread’s missing? Comments from the thousands of Corporette readers with 6 digits of SLs and moderate incomes. Holla!

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