If you want to retire by 65, you should be saving at least 20% of your gross income (starting at 20yo).

I can help with this. A degree does not need to cost six-figures nor are you obligated to pay your kids' way through college. You're very likely dulling their initiative if you do. Acquiring a valuable skill set is literally the objective of a college education. Income from new job goes toward tuition loans. You're welcome.

used to be old and in the way wrote:

did that, but won't be able to afford to retire at 65.. only had $200 000 saved up for the kid's college funds, it's not nearly enough.

Local state schools aren't that expensive. I have a 529 to defray costs but won't go bankrupt paying for my kids.

Braskey is correct.

I'm not sure about this...is it better to pay off your debt or put more (like 20%) in retirement? My husband leans more towards retirement, however, I would rather pay off our house asap as I can't stand giving the bank interest. One plan was to lower retirement to 14% this way we pay off our house in 3-4 years. I like this approach but seems like the op would not agree?

I paid off my student loans as quick as I could and we have two little ones to save for...I was only planning on saving enough to pay for half of their tuitions though. Although some ppl have advised not to save for their college because they will not get financial aide. I'm not sure what the best approach is in that regard yet either.

If the interest you get in retirement is more than your mortgage rate does it not make sense to put money in retirement?

The mortgage topic has been argued for decades and will never end. Do what feels right to you. I wanted to be mortgage free and am thrilled to be. I have friends who think I'm crazy because their money is working in other areas. The key is putting your money to work one way or another. The people who are screwed are the ones spending their money and not investing. We can split hairs over percentages of investment options, but if you're debating the options, you're already thinking the right way and doing the right thing. Invest in areas that give you the most comfort.

24 y/o

Salary: $125K

$67K in Fidelity account (miscellaneous funds + Roth)

~$10K-15K in Scottrade (can't remember my password to login and confirm)

~$15K-$20K in 401K

$27K in bank deposits

No mortgage

No loans

Gotta start somewhere

Save 10% of gross income, pay off loans, invest in indexes (low cost, inherently diversified), avoid taking on monthly payment obligations (car loans), actively work to reduce monthly obligations (shop for cheaper insurance, refinance the mortgage). Can't go too wrong with that:

$1M in 401(k) and other savings

Also, download the Personal Capital app, especially if you are an investor. Very cool tracking tool, and easily the best 401(k) analyzer I've ever seen.

The Overexplainer wrote:

My point was not to show anyone that they don't need to save 20%, but that the OP's post about how you would "have to" save 20% from age 20 to 65 at least, IS FALSE. And it can be proven FALSE.

Except when the law of averages kicks in and then the rest of us need to save 20%.

Zee wrote:

One plan was to lower retirement to 14% this way we pay off our house in 3-4 years.

If your husband agrees to it, then it seems like a good plan.

30 years old

Sole income, wife is home with 3 kiddos

$86k salary

$100k 401k - I put in 10% and get another 5% match

$20k cash on hand

About $70k equity on my house

Paid off civic that's going to be run till it dies, and owe around $7k on the 3 y/o minivan.

Rental home we own and net maybe $200/mo (caught in the crash and are renting instead of taking a big loss)

And here thought I was ahead of the average saver! Not on let's run I'm not!

When wife goes back go work in 5-7 years we will probably dump her entire $70k or so a year salary into savings each year. If she goes back into teaching she may see some pension, I don't know what she gets with her ~12 or so years she's already taught.

pop_pop!_v2.2.1 wrote:

The Overexplainer wrote:

My point was not to show anyone that they don't need to save 20%, but that the OP's post about how you would "have to" save 20% from age 20 to 65 at least, IS FALSE. And it can be proven FALSE.

Except when the law of averages kicks in and then the rest of us need to save 20%.

Not sure how old you are, but I am 49 and have never been out of work for a week since 1985. I used to have 5 jobs: my job as a Systems Engineer at EDS (45 hrs a week), a janitor job at an office building (just 5 hrs a week), Operator of a 11-customer lawn care service (just all day Saturday), Sunday sales at a bike shop, and Landlord/Owner of a Triplex (hrs vary). Had all five jobs from 1997-1999.

Now I just have three at once. When EDS went under I collected unemployment for 6 months for my 10 yrs of service, but I had three jobs the whole time. Paid all my bills during that time and wracked up $67,000 in my checking account.

Also, had a serious health problem in 2010-2012 that cost me $48,000. Still standing, still on track, still going to have what I need in the future.

Try to find a Retirement Calculator that will factor in long gaps in work history, and long, expensive illnesses and maybe that will help you out?

I get it that people lose their jobs, have time off to raise kids or have an illness, etc. it happened to me.

Fidelity had a really good retirement planner that surmised that you need to have SEVEN-TIMES your income at retirement saved. That MONEY added to Social Sec would yield 70-80% of your income at Ret Age. They said it, not me and it makes sense.

Say you are making $80K at age 65. Seven TIMES that IS $560,000. If you make 5% in post-retirement your FUND earns $28,000 a year (YES, I know it will fluctuate, when it does, you just keep taking a LEVEL amount out). (I know there will be taxes {but Trump has pledged to drop them to 15% for EVERYONE, so unless he breaks his pledge like he has with everything else taxes will be NOTHING for me - just like him} but there were taxes when you worked remember Eugene?).

70% of 80K is $56,000 per year. Count on $24,000 from SocSec. That leaves $32,000 for your fund to earn. So you see (even without a financial calculator) that it lasts almost FOREVER.

This model accounts for inflation by using the income you have AT RETIREMENT. YES, it DOES NOT account for inflation over your 20 yr retirement, but as you age you live on less. Deal with it, admit that it is true.

80% of 80K is $64,000 per year. Count on $24,000 from SocSec. That leaves $40,000 for your fund to earn. So you see (even without a financial calculator) that it lasts more than 20 years.

Again, you COULD save 20% of your income for 30 yrs and "JUST" save every OTHER year (like you say that regular people have to) and still end up with plenty of money. Try the Ret. Calc. from BankRate and you will get it.

These people saying you need to save 15-20-25% for 30-35-40 yrs are speculating that you will need $3,000,000-5,000,000 to make it in retirement. If you need $300K a year at age 65 to "make it", then YES you are absolutely right.

I'm a teacher, so when I retire, I get a fairly large percentage of my income (around 60%) as my pension. I also put away about 12% of my money into a 401k, so that money is making money (I have been putting in for about 10 years and already have almost double what I have contributed).

I have a fairly large amount of money in the bank (about $30,000), which I'm saving for when my wife gets pregnant. Overall, I'm comfortable, but wish I had more.

I feel like the purpose to a lot of these posts are to make people who are wasting their whole life on meaningless jobs feel a little better about themselves.

Time is the real currency. If you aren't spending at least 20% of your time doing exactly what you want a week, then you maybe you're doing something wrong.

Not sure of the point in throwing away the vast majority of my life working to save up money for the time of my life that I will be defecating through a tube in my side. The reality is that the twilight years of a human life are not pretty, no matter how much you have saved up. There's no way to financial plan your way out of that.

I have almost no savings, but I am going into 3/4 retirement now at the age of 37. The key wasn't an investment plan, it was figuring out what I actually needed to live and be happy. The list was pretty short and fairly cheap. I can work 10-12 weeks a year and cover expenses and have 40 weeks a year to travel, hike, fish, visit family, drink beers on porches and swap stories with friends.

I get it, it's not for everyone. Figure out what you want and go after it. Just don't be led away from the life you actually want by the false architects of the American Dream. Fear-driven false work-ethic is a big part of what's wrong with this country.

The truth is 50% of people are saving NOTHING for retirement and most will probably be just fine. It's not like those 120 million people are suddenly going to poof and turn into dust when they hit 65.

Most people in this country are too brainwashed to risk living a good life.

I'm a little older, 58, and can see the finish line. Its gonna be close but it looks like we are going to make it. Projecting retirement in 4 to 5 years. So instead of projecting I would like to reflect on our experience.

We decided to concentrate on paying off the mortgage early on. I still don't know if it was financially the wiser move but I cannot stress enough the peace of mind it gave us. Not only avoiding the interest payments, I disliked so much, but knowing if we hit a rough patch our home would not be in jeopardy.

Haven't taken out a car loan in 20 years.

We paid the entire tuition for our two children, one public and one private, and was punished severely for being a savers. Wished I would have planned ahead and placed (hid LOL) our money in accounts that were not used in the FAFSA and CSS aid calculators.

Over the years our contributions probably averaged around 10-15% of our salary, 15% in later years.

Our only major regret is not starting earlier. I started around 25 and my wife around 35, as she was a stay-at-home mom until then. We have been diligent since then and have not had any major life crises (yet?). But those few years of delay have made it closer than I would have preferred.

I have a question for the retirement wizards.

Current military retirement is this:

1) After serving 20 years you are eligible for retirement benefits.

2) You will receive 2.5% x yrs in service x avg base pay of last 3 years.

3) You start collecting as soon as you retire from service.

**There is an optional 401k type Thrift Savings Plan than you can start or stop whenever you want but DOD does not match anything.

Example: Retire at 20 yrs. Monthly base pay $6000. Retirement pay: $3000/mo

Now, in 2018 the military will start a new retirement system. If you have 12 yrs of service or less you have the option of staying with the old system. If you have more you will stay with the old system. All new soldiers after Jan 1 2018 will be on the new system.

The new system is as follows:

1) Soldiers automatically enrolled in a Thrift Savings Plan similar to a 401k. DOD matches up to 5%

2) Retirement pension is 2% x yrs in service.

3) Continuation Pay: A bonus payable at 12 yrs of service for a commitment of another 4 yrs. Dollar amount depends on MOS or career field. 2.5-15.5 x monthly base pay.

So this new system was put in place to give soldiers who don't stay 20 yrs some sort of retirement benefit (TSP with matching funds) and somehow to save DOD some money.

So what's your opinion on this? The new system seems better than the old system. Even for those who stay 20 or more years. 2% + TSP + Continuation Bonus seems greater than just the 2.5%? I'm going to have to sit down and crunch some numbers.

Alan

A slide that explains it:

https://www.firstcommand.com/new-military-retirement/docs/united-states-armed-forces-retirement.pdf

Alan

braskey wrote:

I can help with this. A degree does not need to cost six-figures nor are you obligated to pay your kids' way through college. You're very likely dulling their initiative if you do. Acquiring a valuable skill set is literally the objective of a college education. Income from new job goes toward tuition loans. You're welcome.

used to be old and in the way wrote:

did that, but won't be able to afford to retire at 65.. only had $200 000 saved up for the kid's college funds, it's not nearly enough.

I see both side of this.

First, a lot of college cost is room and board, not education. So that has to separated as to how you value it.

I would say to have the kids live at home and commute to college if you can. Big savings there.

And not everyone has to go to a big name private school.

But if you value a costly degree and have the means to do that for your children, then do it.

If you are saving to leave some kind of inheritance for your children it may be better to forego that inheritance for a fancy degree that could lead to high income jobs for them.

I'm not bragging there are plenty of people posting here who are doing better than me - I can't/won't talk to friends about this - not sure what your 2nd sentence means but my mortgage % is 3.5% - 30 year fixed - I'm making 5.5% in my 401k this year.

Good Info.