Adulting: Retirement

AprilH81

Do you guys have retirement goals?  Are you contributing to a retirement fund on a regular basis?  How do you feel you stack up with others your age/similar income bracket?

littlepep

I definitely feel like I got a bit of a late start because my job right out of grad school was contract/freelance basically so I didn't have a 401K. Once I did get my current job, I still had to wait a year to contribute. 

Now I'm doing 5% of my income because my company will match 4% if I do 5%. I probably could be contributing more, but I have student loans to pay down so that's priority 1 for me. 

FI is really good with money luckily. I think he's had a IRA since he was like 12. (Kidding. Kind of.) 

emmaaa

i have a 401K through work and a retirement plan through Prudential that is invested in stocks (that they handle for me). I don't contribute but $40/month ($20/paycheck) because I can't afford to do anymore yet. 

I feel like at 24, I am ahead of the game compared to other people my age.

amelisha

FI is a really good saver and has a ton put away in RSPs and his investments were made with retirement in mind. I...have workplace matching for RSP contributions and don't do much other than that. But I've only been out of uni for a couple years so haven't been making decent money that long, so I'm not feeling super bad about it. But I don't have any debt of any kind at least. It's definitely a priority for the near future though.

Kahlyla

We've been contributing to RRSPs since our early twenties. It used to be that we would actually borrow from H's mom to max out our annual contribution, then pay her back immediately from the increased tax refund we got as a result (she agreed that starting early should be a priority). Now we just save up throughout the year to make our contributions. We invest through BMO Nesbitt Burns, a mix of mutual funds, stocks, etc.

We also own two rental properties in addition to our home, and I imagine our retirement will include either selling those at some point, or continuing to do the landlord or Airbnb thing. But we won't rely on property to fund our retirement, it would just be gravy.

kvruns

Yep and I would say I am ahead of the game. I've always contributed to my 401(k) as soon as I'm eligible and took advantage of the match offered.  Now I am at 8% I think and I get 3-4% from the company on top of that.  I also max out my Roth IRA each year ($5,500 I think) and then put $$ into a Fidelity investment account that is technically liquid but I plan to use for long-term savings.

I've always been a saver and not a spender, though I tend to hoard $$ in a savings account as opposed to investments so I'm working on that.

labro

H and I are at the point where we're trying to figure out what else we can be doing to save for retirement.

Currently, we're both contributing to 401ks. I contribute 15% (my company matches 3%) and he contributes 5% with a 3% match from his employer. We have significant cash savings and we paid off both of my student loans this year. We should have H's student loans paid off by the end of 2016. We own our own home.

Goals:

We'd like to have a net worth of $1 million by age 40, but we have no idea how to go about doing that other than getting involved in the market.

We'd like to start contributing to a Roth IRA and max out my annual 401k contributions and also increase H's annual contributions.

I've had some people recommend taking out a term life insurance policy even though we don't have children yet. I don't see how this really feeds in to or can improve your retirement, but I guess I just need to do more research. I'd really like to meet with an investor or financial planner, but since H's job is in the stock trading industry, we're limited in who we're able to work with.

climbingsingle

We have a large 401k and we have other accounts that will be used for retirement. H has been working with a financial planner for years, so I feel like we're in good shape. 

I'd love to be able to retire in the next 10-15 years, but obviously that will depend on quite a few things, mainly on if my H will be ready to sell one of his businesses by then. 

Maggie0829

I actually have no idea how well or not well I am doing in regards to retirement.  I have a 401K through work (started it back in '08) and H has a pension plan through his job.  Other then that we don't have any other investments and such.  I keep saying that we need to talk to a financial advisor because this crap is like reading a book upside down, backwards and in a different language.

cupcait927

I could be doing better but I'm not worried about our current path. I only just started contributing to my 401k almost two years ago but I'm at 5% with company match of 50%. My company also automatically bumps you up 1% every year until you hit 10%. You can opt out of doing that but it's great for me because a) it's automatic so no thinking and b) it's gradual so I don't really notice the increase when it's only 1%. I do need to switch up my investments because it's WAY too conservative for my age but I have zero idea how to diversify so I need to have H look at it.

 

H has a pension through his job that he's been participating in for almost 6 years now. He should be fully vested in the next few years I believe (or he might be already). He also just started contributing to a 401k last month and it's putting in 4%.

 

We don't plan on having kids (for now) and we also plan on working until 60-65 (maybe longer) so I feel somewhat comfortable with our path. I'll probably bump up by 401k contribution this summer so that I can get to 10% more quickly.

 

H is a personal banker that handles insurance and retirement planning and working on becoming a financial planner. He sees SO many people that aren't prepared for retirement at all. He recently had a woman come into his office, in her 50s, that only has $50,000 in her 401k from a previous job. She's currently not contributing anything at her new job and told H that she really wants to take that $50k and invest it all in a business venture. He had to keep his jaw from dropping on the table and told her in no uncertain terms that he would NOT advise that because she could face the stark reality of losing it all and having nothing to retire on. And that was just the most recent story. It's been truly eye-opening for both of us and a good reminder that we need to plan for our future.

banana468

Yes.   I have a 401K through my current employer and I'm going to roll my old 401K into an IRA (was at previous employer for 12 yrs).   DH has a great match program w/ his employer as well and we've both been contributing since our early 20s.

I feel like this is one of the things that is not discussed or emphasized enough to younger people in the workforce.  

JennyColada

Most of DH's life has been to prepare himself for a family, and thus, retirement. He's been contributing the max allowable amount to his 401k and IRA for quite a while. I've been doing 401ks at work (~10%), but with my new job we decided that I'll just opt out (company doesn't match for 2 years, and chances are I'll be a SAHM in the next few, that and working part time...DH decided that the additional ~$1000 didn't make a difference and that I should just enjoy it myself).

I have some mutual fund investments from my grandma, and DH has a personal portfolio too.

dolewhipper

Yea. I'm totally raising my hand in saying I have no idea where H and I should be right now as far as retirement money is concerned. I put away 10% to a 401k with my company matching 6%, and H puts 6% away (not sure if his company matches).

I confess I have no idea where to start for other options. 

FutureMrsN3312

Maggie0829 said:

I actually have no idea how well or not well I am doing in regards to retirement.  I have a 401K through work (started it back in '08) and H has a pension plan through his job.  Other then that we don't have any other investments and such.  I keep saying that we need to talk to a financial advisor because this crap is like reading a book upside down, backwards and in a different language.

This is me!  I feel very clueless and that's scary!  My friend recommended her financial advisor I just need to make time for an appointment with him.

jenna8984

From the ages of 22-26 I was a job hopper. The companies didn't let you join in 401k until you worked there a year and I left each company at the 1 year mark. So I missed out on those years. When I finally stuck at a job, I started at 6% and now a few years later I do 10%. Sometimes I feel ahead and sometimes I feel behind so I guess I'm the average- like half my friends say they do 5 and half of them say they do 15. I would like to do more but I'm afraid I won't be able once we have to start paying $1,000 a month for daycare.

My husband has 10 years in his union and he plans to stay and get his whole 30 years. If he left tomorrow, he would still get a portion once he turns 65, but if he works there for 20 more years that amount will triple so we'd really like that to happen.

We don't have any type of stocks/ investments.

@kvruns I'm exactly the same as you. I could put $$ a month more into my 401k but I prefer to hoard it in liquid savings account where I can see it and potentially use it. Not that I would ever use it, but you know what I mean, I just like knowing it's there in my savings account and not some unknown investment in cyberspace somewhere.

 

blabla89

Coming right out of school, I felt it was more important for me to build up some emergency savings first, so that's what I did. I plan to start contributing to a 401K this year now that I have plenty of savings to sustain me if I'm ever out of work.

sarawifenow

Being in finance, I love this stuff! H and I both have 401(k)s that are matched by our employers up to 5%. H also has a pension plan.

 

I have a Roth that I max each year as well as a traditional IRA that are both invested. I want to start putting more into savings, but things are a little tight right now.

 

I am way ahead of the game for my age. I'm always trying to convince my friends to start saving. With inflation and outside market factors, you can never start early enough. 

AprilH81

dolewhipper said:

Yea. I'm totally raising my hand in saying I have no idea where H and I should be right now as far as retirement money is concerned. I put away 10% to a 401k with my company matching 6%, and H puts 6% away (not sure if his company matches).

I confess I have no idea where to start for other options. 

Most financial planners have a rule of thumb to be putting away 10-15% of your income into a retirement account (either a 401(k), ROTH IRA, or traditional IRA) including any VESTED company match/contributions.

Also I've seen them recommend that you should have at least one year salary in a retirement account by the age of 30 (some say 35).

Those of you who are starting early, GOOD FOR YOU!!!!!  The sacrifice now will pay off big in the long run.  All of that money and compounding interest will give you so many more options down the road.

I also started contributing to my 401k as soon as I was eligible, but only at 3-4%, I gradually increased it to 10% and this year I also started a ROTH (I'm 34).  DH is similar but he has had a ROTH for a longer amount of time.

We don't have any set goals we just save as much as we can right now.  We have a financial planner and I may see if he can help us set some goals so we don't over-save to the point where we can't enjoy the fruits of our current work.

I admit I buy into the hype that "no one" saves enough for retirement so I feel like we should be doing more, but if I actually look at our current savings I think we are on track, if not slightly ahead of the game.

Retirement planning and financial advice should be talked about a lot more.  So many people have questions that they are afraid to ask or they think that retirement is so far away they can wait to start saving.

ohmrs2014

DH and I are behind in the game.  His 401K is horrible so he doesn't use it, in fact, no one in the smaller office or larger office uses it.  And I teach in a Catholic School, so we don't have that opportunity to put away into a fund.  Whatever we do have is in our savings with the hope of opening at least one IRA before the baby is born.

l9i

I feel like we are in really good shape for our age.  I currently contribute to a 401(k) at 11% with a 7% match.  My thoughts were to start early and not get used to the extra income once I started my "big girl job" and I think that was very wise.  Over the last couple years I worked to bump it to 11% as my salary increased.  However, DH is starting a job where he has 401(k) options so I'll be leaving mine where it is and then he'll start investing in his and growing his percentage each year.  I also know I have a pension plan with my company but I'm unsure of what it is..

Along with that, we finally have built an emergency fund and working to pay off DH's student loans.  We are working hard to pay them off by next summer.  After that, we're looking to start having kids and I'm wondering where we need to be financially for that!  We've talked about meeting with a financial planner and I'm thinking that would be beneficial.  Overall, I think we are doing well.  We're saving now and paying off loans while living with much less for what we make... but it will be so worth it in the long run!!

AprilH81

Kahlyla said:

We've been contributing to RRSPs since our early twenties. It used to be that we would actually borrow from H's mom to max out our annual contribution, then pay her back immediately from the increased tax refund we got as a result (she agreed that starting early should be a priority). Now we just save up throughout the year to make our contributions. We invest through BMO Nesbitt Burns, a mix of mutual funds, stocks, etc.

We also own two rental properties in addition to our home, and I imagine our retirement will include either selling those at some point, or continuing to do the landlord or Airbnb thing. But we won't rely on property to fund our retirement, it would just be gravy.

Rental properties would be an excellent part of a retirement strategy as long as you can keep good renters in there!

jenna8984

@sarawifenow See I can never wrap my head around Roth IRA's. They have so many restrictions and penalties for early withdrawals. So I feel like if I'm already paying tax on this right now, why would I NOT have it in a savings account where I can touch it in emergencies? What is the benefit?

Jells2dot0

DH and I are kind of in an oddball situation because of our age difference. He will be 53 this June and is in great shape to retire in a few years. He has several 401ks he has accumulated over the years as well as a pension and savings. However, what makes it even better is that he can jump onto my medical and not have to draw anything but his pension (why not since there won't be a penalty for withdrawing after 57.5) because we have set ourselves up to live off of my salary. He has just taken on the mindset of working as long as he enjoys it (he actually likes what he is doing) and when he starts to get pissy about it, he'll just retire. He may try to teach at a local community college as his "second career" as well.

As for me, I am on track to retire at 55, so I've got 20 years to go. I contributed to my 401K from day 1 at the employer match point and now I have my 401K maxed at the $18K/year mark plus employer contributions. I don't qualify for IRAs, so I just do some other savings on the side. I, too, have a pension. Between the two of us, we don't have any other bills other than our mortgage (one of his homes is rented out) and occasionally a car payment, so that also helps. We're hoping that DH will have not touched very much of his retirement funds in the ~15 or so years that I was still working so that when I retire, so we'll then have a ton of money to just have fun!

sarawifenow

@jenna8984 For me, I think of a Roth IRA as my solid retirement money. Sure you can take the money out early with a penalty, but the benefits are awesome. Roths grow tax free which means you pay taxes when you put the money in, but any dividends, capital gains, etc are all tax free. That way when you do begin to draw from it in retirement, you are not taxed on any of the earnings that you have made throughout the years. It really is awesome.

 

I always recommend my clients to have some liquid safety money. The thing with savings accounts is that they will earn you virtually nothing. So if you have 100,000 in a savings account, that is pretty much what you are going to be taking out. With a Roth, if you put in 100,000 (through a rollover or conversion...max contributions before the age of 50 are 5500/yr) in and draw from it in, say, 15 years your possibilities are so much better. For example, my clients are averaging a 5% rate of return on their portfolio. That would be a 5000 gain a year. Multiply that by 15 and that is an additional 75,000 of tax free money in your pocket. Of course that is all speculative and depends on the markets, your eligibility for Roth IRAs, and other various factors. I just love the benefits of Roths.

 

*Disclaimer--all of this is just me throwing numbers out there. I am in no way advising anyone financially.

 

ETF:tag

southernbelle0915

I have no idea if we're in shape or bad shape because we haven't really talked to anyone about it.

I've contributed to my 401K since I was 24. Same with DH. I'm 29 and he's 30 now. I started small - I think 4% because that was the employer match. Gradually, I've moved it up. Now I'm at 14%. I figure if I don't check it all the time, I won't really miss it, right?

I don't know what percent DH contributes. I think 10%?

I'm actually in the process of rolling over my 401K from a previous employer into my new employer's account. When I called the old account to transfer, they advised me against doing it. I still don't really understand why? No fees on either side. Are they just trying to keep my money or is there an actual good reason to not roll over a 401K?

sarawifenow

southernbelle0915 said:

I have no idea if we're in shape or bad shape because we haven't really talked to anyone about it.

I've contributed to my 401K since I was 24. Same with DH. I'm 29 and he's 30 now. I started small - I think 4% because that was the employer match. Gradually, I've moved it up. Now I'm at 14%. I figure if I don't check it all the time, I won't really miss it, right?

I don't know what percent DH contributes. I think 10%?

I'm actually in the process of rolling over my 401K from a previous employer into my new employer's account. When I called the old account to transfer, they advised me against doing it. I still don't really understand why? No fees on either side. Are they just trying to keep my money or is there an actual good reason to not roll over a 401K?

@southernbelle0915 if there are no fees involved on either side, I would think they are just trying to keep your money. Have you thought about rolling into an IRA? Usually there are more investment options that way. Just a thought...

kvruns

@sarawifenow I thought you could only do up to $5,500 total between roth and traditional? how are you maxing out the Roth and having a traditional?

sarawifenow

@kvruns You are correct. My traditional is from a rollover that I did from a previous employer's 401(k). My wording was confusing, I agree. I am not contributing to my T-IRA at this time. Just have it invested and I sometimes will update/diversify my portfolio with the money that is in there already. 

kvruns

southernbelle0915 said:

I have no idea if we're in shape or bad shape because we haven't really talked to anyone about it.

I've contributed to my 401K since I was 24. Same with DH. I'm 29 and he's 30 now. I started small - I think 4% because that was the employer match. Gradually, I've moved it up. Now I'm at 14%. I figure if I don't check it all the time, I won't really miss it, right?

I don't know what percent DH contributes. I think 10%?

I'm actually in the process of rolling over my 401K from a previous employer into my new employer's account. When I called the old account to transfer, they advised me against doing it. I still don't really understand why? No fees on either side. Are they just trying to keep my money or is there an actual good reason to not roll over a 401K?

I had 2 old 401(k) accounts and a pension that was turned into an IRA and I rolled all of that over into a Fidelity account.  I wanted to have it all in one place vs having 10 different accounts and trying to track it all down 20 years from now.

Are you incurring any fees for keeping the old 401(k) where it is?  Or is it just sitting there or do they manage it like they would for active employees? Those are things I would consider.  I preferred rolling it into a Fidelity account so I could have one concentrated spot for that stuff vs rolling it over to the new employer if I were to change jobs.

southernbelle0915

@sarawifenow - I hadn't thought about it. Probably a very good suggestion! I guess really because I don't know what my options are, I haven't explored much. I don't know a ton about long-term savings options and it's always a little overwhelming.

We haven't met with your banker in a long time. And then it was more about buying a house and merging our finances. We need to have some long-term discussions!

kvruns

sarawifenow said:

@kvruns You are correct. My traditional is from a rollover that I did from a previous employer's 401(k). My wording was confusing, I agree. I am not contributing to my T-IRA at this time. Just have it invested and I sometimes will update/diversify my portfolio with the money that is in there already. 

ahh makes sense!  I was hoping there was some weird loophole I didn't know about.  I too rolled over a bunch into a Traditional IRA but if I understand correctly I can't make additional contributions unless I'm forgoing the Roth.