Adulting: Retirement

[Deleted User] · April 2015

FH has been reading financial blogs non-stop since January. He helped me move my old 401k from an old job into a better IRA where it's actually making me money. I started a new job in June, started putting 6% in this 401k in December. I don't get matched (the 6% gets me matched at 7%) until I've been here for a year. A couple weeks back I bumped my 6% up to 10%, and I'll probably go up to 14% in June/July. It makes more sense to me to put money away before taxes than it does to put it into my savings account where it only makes like half a percent interest.

Our only debt is our mortgage; he owns his car outright and neither of us have any student debt or credit card debt. As a couple we have exactly the same amount in our combined retirement funds (he has 4x more than me) as we owe on our house. I think net zero is probably pretty good. If we keep contributing the way we have been and max out our pre-tax contributions every year, we'll be millionaires by 2029-ish. He thinks.

He created a shared google doc that we're both obsessed with looking at. It's fun to see the magic that is the market.

sarawifenow · April 2015

kvruns said:

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.

No unfortunately no loopholes for me! If I find any I'll let you know.

lovemesomemonster · April 2015

I think we are doing pretty Ok on the plan.. FI has been investing in a 401K with company matching for 3 years and maxed it out the last 2, he also has a lot invested in stocks on the side (yeah, I know that's not a guarantee but it's extra money he had) and he has almost a year of living expenses in savings. I have been contributing for over 4 years to a 401K, started at 6% with company matching 5% and I'm now at 8% with company matching 5% and an extra 2% going into a Roth IRA. We also own two homes, one of which is a rental investment property and we are looking to invest in another one. FI's goal is to have a net worth of $1M by the time he's 30 (he's 26 now) it's a huge goal but the way he is I wouldn't put it past him. We have also been thinking about flipping some houses and starting at auctions, we will get serious about it after the wedding.

princessofgenovia · April 2015

I opened my Roth IRA when I was 18. Like...on my 18th birthday. So I've been contributing what I can to that for the past 6 years, in recent years I've been able to hit the max.

And when I was 16 I got my first 401K through work and when I opened my Roth I was able to roll it over (I didn't work there anymore).

I'm only 24, I plan to be working for a few more decades before I retire, so right now I'm just putting away what I can.

redheadbride15 · April 2015

Oh, this topic stresses me out A LOT!

I'm 37 and FI is 40. I'm way behind because I spent all of my 20s and early 30s in school or post-doctoral training and was earning less than $30k/year for a very long time while living in expensive cities so I was barely scraping by. I'm finally at a point where my education has paid off and I have a well-paying job, but have only started significant contributions into my 401(k) over the past 2 years. I jacked up my contribution rate to 12%, which is all we can afford right now. I feel blessed to have zero debt (including no student loan debt because I was able to get grants for all of my education), but there is so much catch-up to do. FI is in slightly better shape but he can't carry both of us.

classicalandedgy · April 2015

I think we are in pretty good shape, my FI and I both have very good government pensions. I am eligible retire in five years at the age of 42 with 50% of my top three years and full benefits, and I also contribute to my 414H. I can the start my second career and collect my salary and pension, which is great! My FI can't retire and collect his pension until he's 55 and has vested 25 years, but that is not a problem, he too contributes to his 403b and we have a healthy IRA. We also carry life insurance policies that cover at least the mortgage on the house in the event that something happens to the other.

jenna8984 · April 2015

lovemesomemonster said:
I think we are doing pretty Ok on the plan.. FI has been investing in a 401K with company matching for 3 years and maxed it out the last 2, he also has a lot invested in stocks on the side (yeah, I know that's not a guarantee but it's extra money he had) and he has almost a year of living expenses in savings. I have been contributing for over 4 years to a 401K, started at 6% with company matching 5% and I'm now at 8% with company matching 5% and an extra 2% going into a Roth IRA. We also own two homes, one of which is a rental investment property and we are looking to invest in another one. FI's goal is to have a net worth of $1M by the time he's 30 (he's 26 now) it's a huge goal but the way he is I wouldn't put it past him. We have also been thinking about flipping some houses and starting at auctions, we will get serious about it after the wedding.

Um for real? He should be the next Donald Trump if he can make that happen on his own. Do you mind if I ask how you got approved for loans for 2 homes and had the downpayments for 2 homes at your age? Don't have to answer if you don't want.

charcoalandblush · April 2015

I'm so bad at adulting, but particularly bad at this kind of stuff. I have a 401K at work, my work contributes 7.5% (regardless of what I contribute). Right now I'm only contributing 3%, but after the wedding I'm going to bump that up to 7%.

I also just joined Betterment. Once I get my emergency savings up to my goal (3 months income) I'm going to open an IRA and start contributing around $100/month to that, possibly more.

Student loans are killer... I will feel SO flush once those are paid off.

kvruns · April 2015

I will say I thought my 8% 401k contribution was pretty good but sounds like I'm on the low side here. Think I need to bump that up!

sarahufl · April 2015

My last job had an absurd 401k match. They matched 200% for up to 5% of your salary, vested at all times. When I told my dad about it, he was certain I heard them wrong. That certainly helped my retirement savings because I wasn't making a ton, but I was able to get all of their match, which left me in a good place.

I am fortunate to be very savvy with money and have a well-paying job. H is in an even better place than me. Neither of us have student loans and he has been making a lot of money since he graduated from college.

labro · April 2015

sarahufl said:
My last job had an absurd 401k match. They matched 200% for up to 5% of your salary, vested at all times. When I told my dad about it, he was certain I heard them wrong. That certainly helped my retirement savings because I wasn't making a ton, but I was able to get all of their match, which left me in a good place.

I just can't even believe it! That kind of company matching is unheard of! I always thought it was nice that I even got a 50% match up to 6%. I'm kind of jealous to be honest....

jenna8984 · April 2015

labro said:

sarahufl said:
My last job had an absurd 401k match. They matched 200% for up to 5% of your salary, vested at all times. When I told my dad about it, he was certain I heard them wrong. That certainly helped my retirement savings because I wasn't making a ton, but I was able to get all of their match, which left me in a good place.
I just can't even believe it! That kind of company matching is unheard of! I always thought it was nice that I even got a 50% match up to 6%. I'm kind of jealous to be honest....

Me too. I've never worked anywhere that offered more than 3% (in form of 50% of 6%)

lovemesomemonster · April 2015

jenna8984 said:

lovemesomemonster said:
I think we are doing pretty Ok on the plan.. FI has been investing in a 401K with company matching for 3 years and maxed it out the last 2, he also has a lot invested in stocks on the side (yeah, I know that's not a guarantee but it's extra money he had) and he has almost a year of living expenses in savings. I have been contributing for over 4 years to a 401K, started at 6% with company matching 5% and I'm now at 8% with company matching 5% and an extra 2% going into a Roth IRA. We also own two homes, one of which is a rental investment property and we are looking to invest in another one. FI's goal is to have a net worth of $1M by the time he's 30 (he's 26 now) it's a huge goal but the way he is I wouldn't put it past him. We have also been thinking about flipping some houses and starting at auctions, we will get serious about it after the wedding.
Um for real? He should be the next Donald Trump if he can make that happen on his own. Do you mind if I ask how you got approved for loans for 2 homes and had the downpayments for 2 homes at your age? Don't have to answer if you don't want.

I have no problem sharing what we have done. He has always been a hard worker, he used to farm in the summers and bank all of it (he's really bad at spending money). I landed a full time job a month after graduation in January 2011 and our first house was only $115K (purchased in Sept 2011), we used a loan that allowed us to put 3.5% down which I had in my savings, we will be refinancing to a conventional loan this year. We are fortunate enough that my fiance was offered a job before graduation in 2013 (after working as an intern for a year) and works 6 months out of the year in another state making non taxable per diem on top of his pay. He was able to save up the down payment in one summer on the second home purchased in Feb 2014 ($267K). I qualified for the first house with one income, mine has since gone up and he now makes far more than I do.

So in a nut shell.. luck and hard work is how we did it. He is 26, I am 28 now and we have made the sacrifices of him not being home for 6 months every year to save and invest. We also hardly eat out and don't shop much, but we do like our vacations

We save and pay cash for one vacation a year (ex. DR, HI, Mexico).

Cookie Pusher · April 2015

I like this blog about retirement savings: http://www.moneyunder30.com/how-much-should-you-contribute-to-your-401k

My company doesn't do a traditional 401k - they have a savings fund where employee contributions are post-tax (little to no penalties and no taxes for withdrawing funds) and they fully match the contribution up to 8% (which will be taxed upon withdrawal). I contribute the max (8%) and get the max company match. I also have a pension that is fully funded by my company and an annuity from when my dad died. DH has a traditional 401k with no match, but they throw in a bonus each year. He also has a pension which both he and his company contribute to and a rollover IRA from his previous job. We've been throwing money into savings to put towards a down payment on a house, but once we have the amount we want we'll go back to IRA contributions.

[Deleted User] · April 2015

jenna8984 said:

labro said:

sarahufl said:
My last job had an absurd 401k match. They matched 200% for up to 5% of your salary, vested at all times. When I told my dad about it, he was certain I heard them wrong. That certainly helped my retirement savings because I wasn't making a ton, but I was able to get all of their match, which left me in a good place.
I just can't even believe it! That kind of company matching is unheard of! I always thought it was nice that I even got a 50% match up to 6%. I'm kind of jealous to be honest....
Me too. I've never worked anywhere that offered more than 3% (in form of 50% of 6%)

At my job they give you 4% after you've been here for a year. You don't have to do anything to get that 4%. And they'll match 50% additionally up to another 3%. So, if you put in the minimum amount to be matched, you would be contributing 6% and the company would be contributing 7%. Now, the vesting gets a little crazy. I'm not entirely sure if it takes 3 years or 5 years to be fully vested. And I don't know if they do vesting in 20% increments or if they do, like 0% the first year, 0% the second year, and 100% the third year. I figure I'll figure it out after I've been here a year and they start their contributions.

labro · April 2015

@adk19 I hate vesting rules. My last company, you were 100% vested immediately upon hire. The company I'm with now, I'm not 100% vested until after 3 years of employment. I think the first year I'm 50% vested, then 75%, and then 100% at the end of 3 years. Not that I'm planning to leave any time soon, but it kind of sucks.

AprilH81 · April 2015

labro said:
@adk19 I hate vesting rules. My last company, you were 100% vested immediately upon hire. The company I'm with now, I'm not 100% vested until after 3 years of employment. I think the first year I'm 50% vested, then 75%, and then 100% at the end of 3 years. Not that I'm planning to leave any time soon, but it kind of sucks.

What sucks is if you are laid off you don't get vested automatically. I was laid off after 2 years and you have to be there 5 years for 100% vesting. They will actually go in and take money out of my account which is really pissing me off.

[Deleted User] · April 2015

labro said:
@adk19 I hate vesting rules. My last company, you were 100% vested immediately upon hire. The company I'm with now, I'm not 100% vested until after 3 years of employment. I think the first year I'm 50% vested, then 75%, and then 100% at the end of 3 years. Not that I'm planning to leave any time soon, but it kind of sucks.

Yep. I have a co-worker in his 50s who says that he won't quit until he's been here for 5 years because he's too old to just "leave 10K on the table. They'd have to fire" him.

I'm obsessed with looking at my contribution graph, so I'm going to enjoy seeing the changes in my money once the company starts contributing. The difference between my money and my "vested money" though should be fascinating.

sarahufl · April 2015

adk19 said:

jenna8984 said:

labro said:

sarahufl said:
My last job had an absurd 401k match. They matched 200% for up to 5% of your salary, vested at all times. When I told my dad about it, he was certain I heard them wrong. That certainly helped my retirement savings because I wasn't making a ton, but I was able to get all of their match, which left me in a good place.
I just can't even believe it! That kind of company matching is unheard of! I always thought it was nice that I even got a 50% match up to 6%. I'm kind of jealous to be honest....
Me too. I've never worked anywhere that offered more than 3% (in form of 50% of 6%)
At my job they give you 4% after you've been here for a year. You don't have to do anything to get that 4%. And they'll match 50% additionally up to another 3%. So, if you put in the minimum amount to be matched, you would be contributing 6% and the company would be contributing 7%. Now, the vesting gets a little crazy. I'm not entirely sure if it takes 3 years or 5 years to be fully vested. And I don't know if they do vesting in 20% increments or if they do, like 0% the first year, 0% the second year, and 100% the third year. I figure I'll figure it out after I've been here a year and they start their contributions.

Yeah, I mean- it was ridiculous. I never got a raise in the 3 years I worked there because they had "financial trouble". I wanted to tell them that, while I appreciate the 401k, I need money TODAY to pay my bills.

southernbelle0915 · April 2015

sarahufl said:
My last job had an absurd 401k match. They matched 200% for up to 5% of your salary, vested at all times.

That is INSANE!!!

buttercup1958 · April 2015

I have a decent savings account and checking account. My parents are helping me with college so I won't have student loans for undergrad. My mom may help me with my masters so I may only have to take out a small student loan. V has no debt either and has saved/invest wisely. I haven't set any retirement funds yet but I'm 21. I'm hoping my job after grad school will have a decent 401k plan. I don't know much!

WinstonsGirl · April 2015

I think we're doing pretty well, but no one really talks about it, so who actually knows.

I max out my RRSP every year, but that's pretty low since I have a pension, so I can't contribute too much. DH usually maxes his out. His company matches some contributions too, so he makes sure that part is maxed out for sure every year. I've also started transferring my monthly savings to a tax free savings account. Not a lot extra, but it gives me a tax break on interest.

I can start my pension at 55/56 and DH will be 65, so I'm planning to retire then. We have the mortgage, which we plan to have paid off in the next 3-4 years. DH owes his company on stock he purchased to be an owner, but that will be paid off in Dec, so we'll also have his dividend cheques from that coming in. Our current plan is to eventually snow bird to Hawaii in a condo we rent out the rest of the time.

I went to a pension interview a year or so ago at teachers convention. The guy was disgusted I was there since I wasn't about to retire. I wanted all the info I could get on my pension so I can retire faster. He didn't understand that I'd rather deal with this now and be stupid rich when I retire rather than wait till I'm 62 to start figuring things out. He was a jackass too

CMGragain · April 2015

DH retired from the federal government nine years ago on his government pension. We moved across the country to western Colorado, where housing and taxes are much, much less than the D.C. area. I retired two years ago and have my minimal social security income plus teacher's pension. Our home is paid for. We have no debts.

The biggest problem I see my contemporaries dealing with is health costs. We still have the coverage we had while DH was employed. That was part of his retirement benefit package. Health costs are still major for us, but we have the money to cover them.

Last month DH inherited a large trust fund. We don't need it. I inherited a nice stock portfolio from my late mother, two years ago, along with her savings accounts. Our average monthly expenses are about 60% of our income, not counting the recent legacies and our own retirement funds.

We plan to put a large portion of the money into a trust fund for our grandchildren's future education. They should be able to graduate college without student debt. Our own lifestyle will not change.

It is a shock for me to know that I have more money than I need. My father was a truck driver who worked for an oil company. There was never enough money for what we wanted. I went to college on his social security and veterans survivor benefits, as well as scholarships. I also worked from the time I was 16. It is good to know that we can help our children. I never imagined I would be in this financial situation, but I am grateful to DH and appreciate his careful planning.

jenna8984 · April 2015

CMGragain said:
DH retired from the federal government nine years ago on his government pension. We moved across the country to western Colorado, where housing and taxes are much, much less than the D.C. area. I retired two years ago and have my minimal social security income plus teacher's pension. Our home is paid for. We have no debts.

The biggest problem I see my contemporaries dealing with is health costs. We still have the coverage we had while DH was employed. That was part of his retirement benefit package. Health costs are still major for us, but we have the money to cover them.

Last month DH inherited a large trust fund. We don't need it. I inherited a nice stock portfolio from my late mother, two years ago, along with her savings accounts. Our average monthly expenses are about 60% of our income, not counting the recent legacies and our own retirement funds.

We plan to put a large portion of the money into a trust fund for our grandchildren's future education. They should be able to graduate college without student debt. Our own lifestyle will not change.

It is a shock for me to know that I have more money than I need. My father was a truck driver who worked for an oil company. There was never enough money for what we wanted. I went to college on his social security and veterans survivor benefits, as well as scholarships. I also worked from the time I was 16. It is good to know that we can help our children. I never imagined I would be in this financial situation, but I am grateful to DH and appreciate his careful planning.

@cmgragain That is very awesome and generous of you.

huskypuppy14 · April 2015

This article makes me sad, and the numbers are insane. There was no way I would have been able to afford that much right out of college.

It makes me want to change my contributions right now- i think I'm too low compared to the ret of you. My husband is doing pretty well on his 401K, but he's 4 years older and has contributed since his first job. I couldn't afford to do it at my first job, since living in Boston is hard on 30K a year.

https://blog.personalcapital.com/financial-planning-2/average-401k-balance-age/?utm_campaign=401kcompare&utm_source=Taboola&utm_medium=Content-Promo&utm_term=Is+Your+401K+Below+Average?-virginianpilot-hamptonroads&utm_content=http://cdn.taboolasyndication.com/libtrc/static/thumbnails/23ea97dbc887ea1f6d24d00e8b16ce66.jpg

jenna8984 · April 2015

@huskypuppy14 Um yea, that chart is fucking bullshit. Putting in 8k a year when you're 22 and then immediately jumping to the max of 17k a year??!?! That would have been 50% of my salary in my 20's. Even now at 30 years old, I do 10% and it's less than half that amount

It's like when I watch the Suze Orman show and those fuckers call in and she lists their assets and they are like 27 years old with 89k in retirement and I'm over here like how the fuck is that possible??!?! I swear it must just be people from Manhattan or something who enter the workforce making 100k.

Jells2dot0 · April 2015

That chart is insane, but I'm on track with it (at least on the low end for my age) and did not max out my 401K in my second year. I am maxed out now. Granted, I did start off out of college with a good salary. However, I think I just made some good investment choices. I had a fairly good annual rate of return every year.

princessofgenovia · April 2015

Um...that chart is crazy. What kind of jobs does she expect most people to have?

Of my group of friends I make the most amount of money. Most of them are currently making less than $35K a year. So the idea of $17,500 is asinine. That'd be more then half their annual wages.

Cookie Pusher · April 2015

I could put away 17.5K every year... if I stopped paying my rent!

princessofgenovia · April 2015

Cookie Pusher said:
I could put away 17.5K every year... if I stopped paying my rent!

According to the comments you should try moving into a studio apartment with a buddy. Because that is just a luxury dorm and who doesn't want a luxury dorm?

I'm seriously trying to figure out how to do this. I'm going to run the numbers, no fucking way is this actually possible for the average person.

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