I think your fine...may not be able to retire early but if you invest the money well and keep adding 1k per month you should be fine after 65. Is the 1k your money invested or matched money from your company? My company matches up to 10% which is normal and good for a 10% raise!
askjdisd wrote:
My saving has picked up recently, but I feel I'm way behind the 8-ball on this. Any thoughts?
As has been said a couple times, you have MORE than the average for your age (a couple years ago a study showed that the average 45-year old had only $25,000 invested for retirement; you're way ahead of that at just 31 years old). Also, as has been said, just because you have more than the average doesn't mean it's enough.
The good - $1,000 a month is decent. Keep that up and with your start you will have $1,571,261.46 at age 62, and that's at JUST 7% annual return. Not super rich, but you could make it work on that, and if you can't then give more later when you make more. Your goal should eventually be to give more than that if your income allows. 15% MINIMUM should be the goal, and more if you can stomach it (I don't know your income and I don't want to know, so I don't know if you're in the right range or not).
The bad - You have debt. Good that that car loan will be gone soon. Student loan debt is a pain too. Once all that debt is gone (you should consider getting that student loan debt gone quickly), then NEVER ever go into debt for anything other than a house that is no more than 25% of your take home pay again.
The point to ponder - You not wanting to buy a house. For sure you can make it in your later years without buying a house, but you'll need to put even more away than you are if you don't buy a home. Buying a home and paying for it quickly is one way to GREATLY limit your outgo in retirement. As a renter, your rents will continue going up until you die.
A point to not believe - Another poster mentioned that people in your generation will have to work to age 70 before retiring. I call BS on that. Put your money away, live well within your means, stay out of debt, and you can retire at 60 or earlier even if you want. All it takes is a plan. Plan to work until 70 and you likely will. I've already begun teaching my kids (who are young and still living at home) that they can create their own destiny. At 31, you're young enough to manage a retirement in your mid 50s if you really want to. We have so much earning potential in the US, and so many viable living options that you can sock away 50% of your income if you really wanted to. Go do it!
Thanks for your insight. I'm required to invest 2.5% and my company matches 13%. I also invest in another retirement account. In total, I'm investing 23% of my gross pay (this includes my company match).
With inflation the $1000 a month will worth less so you will need to increase that amount going forward.
To the 60 yr old runner. If you had 32k back when you were 31 that is worth a lot more in todays dollars. You were way ahead.
There are less pensions now and social security could fail, people will live longer means that people need more than they use to.
askjdisd wrote:
Thanks for your insight. I'm required to invest 2.5% and my company matches 13%.
Dude, what companies are matching 10-13%? Mine just got bumped up to 75% of the first 8% (i.e. 6%) and i was happy about that...
Maybe I'm wording it wrong. I am required to put 2.5% into my retirement account and my employer puts in 13%. So, as an example, for every $1 I put in, my employer puts in $5.20 (up to that 13% max, of course). I work for a major public research university.
Dude I just got outta jail for f***ing up some police officers a couple years ago, I'm back in compton, have no place to stay cuz i got no money, my dad got f***ed up by some cops but no-one gave a shit!, I robbed a bank last week, spent all the money on gunz n' shit, so now I got no money and have gotta fend for myself on the streets o' compton with a couple o' AK's and my main niggas lookin out for me, i'd like to see you try and walk a mile in my shit, so qwit your complaining. and deal wit your shit.
f*** DA POLICE
Flagpole wrote:
askjdisd wrote:My saving has picked up recently, but I feel I'm way behind the 8-ball on this. Any thoughts?
As has been said a couple times, you have MORE than the average for your age (a couple years ago a study showed that the average 45-year old had only $25,000 invested for retirement; you're way ahead of that at just 31 years old). Also, as has been said, just because you have more than the average doesn't mean it's enough.
The good - $1,000 a month is decent. Keep that up and with your start you will have $1,571,261.46 at age 62, and that's at JUST 7% annual return. Not super rich, but you could make it work on that, and if you can't then give more later when you make more. Your goal should eventually be to give more than that if your income allows. 15% MINIMUM should be the goal, and more if you can stomach it (I don't know your income and I don't want to know, so I don't know if you're in the right range or not).
The bad - You have debt. Good that that car loan will be gone soon. Student loan debt is a pain too. Once all that debt is gone (you should consider getting that student loan debt gone quickly), then NEVER ever go into debt for anything other than a house that is no more than 25% of your take home pay again.
The point to ponder - You not wanting to buy a house. For sure you can make it in your later years without buying a house, but you'll need to put even more away than you are if you don't buy a home. Buying a home and paying for it quickly is one way to GREATLY limit your outgo in retirement. As a renter, your rents will continue going up until you die.
A point to not believe - Another poster mentioned that people in your generation will have to work to age 70 before retiring. I call BS on that. Put your money away, live well within your means, stay out of debt, and you can retire at 60 or earlier even if you want. All it takes is a plan. Plan to work until 70 and you likely will. I've already begun teaching my kids (who are young and still living at home) that they can create their own destiny. At 31, you're young enough to manage a retirement in your mid 50s if you really want to. We have so much earning potential in the US, and so many viable living options that you can sock away 50% of your income if you really wanted to. Go do it!
I agree with everything flagpole says except the student loan. The interest rate of the student debt is most important. Student loan interest is an above line tax deduction. If the interest rate is "low enough" then pay off the monthly minimum.
I put low enough in quotes because low is more of a personal metric.
TRUTH - most Americans are obese redneck evangelicals driving pickup trucks who struggle just to put food on the table. so if you even know what a stock is and have anything in savings other than under your mattress, you're way ahead of the average "American."
aslkdfmsdsadf wrote:
TRUTH - most Americans are obese redneck evangelicals driving pickup trucks who struggle just to put food on the table. so if you even know what a stock is and have anything in savings other than under your mattress, you're way ahead of the average "American."
i am a redneck and drive a pickup. whats wrong with that?
askjdisd wrote:
Maybe I'm wording it wrong. I am required to put 2.5% into my retirement account and my employer puts in 13%. So, as an example, for every $1 I put in, my employer puts in $5.20 (up to that 13% max, of course). I work for a major public research university.
Am I reading this correctly? Your employer puts in 13% if you only contribute 2.5%?!?! That is both an excellent matching rate and cap. I think most of us around your age get around 4-8% matched with a dollar for dollar match.
I would suggest you take a long look at what you're doing with that $1000. Pay the $2k on the car loan then pay $1k+your current car payment towards the school loan. You have the right idea with investing, but you may be better off ridding yourself of your two large debts before any more investments. With that nearly unheard of 401k match, you could get a pretty sizable retirement account very quickly if you watch spending and save as much as possible after paying off your loans. At the bare minimum, you'll have your current monthly savings of $1000 plus the 2 monthly loan payments you are currently making along with 15.5% of your gross salary.
Thank you for your response. Yes, I have to put 2.5% in and my employer puts in 13%. This is mandatory and they will not match more than that. I have another retirement account where I put in about 7.5%, but they don't match it at all.
I've paid $4k off of my car loan in the last month or so, and I've got $2k to go. My goal is to have it paid off by the end of the year. My school loan balance is about $6k and the interest is 5.25% (or near that). I try to keep an emergency fund of 3-4 months, so I want to keep that "topped off" before I start paying a lot into the school loan balance. I like having the safety net of the emergency fund.
32k??? You're focked. Pray Obama takes from the rich and gives to you.
It's not hard to be above-average as most Americans in this country are in debt with little to nothing saved , and waste time going to church hoping their financial situation magically changes, but not surprisingly it never does. Then they decide it's time to join the T.E.A. party because they don't like that any minorities (not real Americans, American newbies) of similar socioeconomic status are getting the same "hand-outs" they are.
Tax advantaged retirement accounts are use it or lose it on a yearly basis. Any time you don't max it out, you are giving up an opportunity that can't be replaced. If the loans are at reasonable rates, it might not make sense to pay them off ahead of schedule if it means forgoing retirement savings.One tricky thing is that a lot of financial advice that is dished out is for undisciplined people. So you get generic stuff like pay off debt before saving and so on.
would like some free money too wrote:
askjdisd wrote:Maybe I'm wording it wrong. I am required to put 2.5% into my retirement account and my employer puts in 13%. So, as an example, for every $1 I put in, my employer puts in $5.20 (up to that 13% max, of course). I work for a major public research university.
Am I reading this correctly? Your employer puts in 13% if you only contribute 2.5%?!?! That is both an excellent matching rate and cap. I think most of us around your age get around 4-8% matched with a dollar for dollar match.
I would suggest you take a long look at what you're doing with that $1000. Pay the $2k on the car loan then pay $1k+your current car payment towards the school loan. You have the right idea with investing, but you may be better off ridding yourself of your two large debts before any more investments. With that nearly unheard of 401k match, you could get a pretty sizable retirement account very quickly if you watch spending and save as much as possible after paying off your loans. At the bare minimum, you'll have your current monthly savings of $1000 plus the 2 monthly loan payments you are currently making along with 15.5% of your gross salary.
why do people discuss their personal finance matters on letsrun? go see a financial advisor you puppet.
because financial advisors charge out of control fees i.e. rip off
+1
askjdisd wrote:
My saving has picked up recently, but I feel I'm way behind the 8-ball on this. Any thoughts?
Shut up.
I'm 31 and I've got about 5000 in by 401k, and student loans that will not be paid off until I'm 56.
Yes, I plan on dying first.
It's not great, but it's a start. I exited grad school at 36 with a fairly substantial negative net worth, but had it up to seven digits a decade later.
The best thing about your situation is that the younger you are, the more risk you can afford to take -- meaning a higher percentage of investments in stocks.
Whatever you do, try to make sure that you don't have to negative split that last decade or so of your working life in order to fill the piggy bank. Investing is one time where setting a fast pace early really pays off.
An interesting site that covers a lot of aspects of investing, retirement planning is Money Chimp (poor name, but top notch content.) Among the features they have is an excellent retirement calculator: