Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Based on my research, if I want to retire at the age of 67 and plan to die around the age of 84 (or later), I will need 17 years of retirement income. Based on my research, if I want to retire comfortably, it seems like I'll have to contribute about 20% of my gross income to retirement now (I'm 29 and have $22K in retirement as of now) in order to reach my goal. That includes a 4% full employer match. But if I do this, that only leaves me with about $1,000 a month to play with. I earn $75K annually, plus a 10-20% bonus payable every January.
What should I do? Should I scale down retirement savings and allocate that money to saving for a home down payment? I'm worried if I do that, because I'm young and these are the years that retirement funds should be building a strong foundation for the time value of money growth. Currently, I have about $17,000 saved for a home down payment. I need more like $60K.
How would you allocate your savings if you were in my shoes? Seems like my shorter term goals are simply out of reach, and I'm already 29 years old. Ugh. The American dream is dead.
No it isn't.
You just have to want it bad enough to get it.
You say you want to blow up to $400 a month on books, games, etc. That is fine. But that tells me that those things are more important to you than saving for a house, at this particular point in your life.
No it isn't.
You just have to want it bad enough to get it.
You say you want to blow up to $400 a month on books, games, etc. That is fine. But that tells me that those things are more important to you than saving for a house, at this particular point in your life.
Well, $200 of that $400 goes to lunches in the cafeteria at work. I don't consider that a need, because it can be replaced by bringing in lunch for cheaper. Even if I brought in lunch, I'd still have to spend like $140 a month on buying the food for lunch. And I need to eat a healthy, high-calorie diet (I'm underweight). But even that $400 a month is only like 7% of my gross income.
Based on my research, if I want to retire at the age of 67 and plan to die around the age of 84 (or later), I will need 17 years of retirement income. Based on my research, if I want to retire comfortably, it seems like I'll have to contribute about 20% of my gross income to retirement now (I'm 29 and have $22K in retirement as of now) in order to reach my goal. That includes a 4% full employer match. But if I do this, that only leaves me with about $1,000 a month to play with. I earn $75K annually, plus a 10-20% bonus payable every January.
What should I do? Should I scale down retirement savings and allocate that money to saving for a home down payment? I'm worried if I do that, because I'm young and these are the years that retirement funds should be building a strong foundation for the time value of money growth. Currently, I have about $17,000 saved for a home down payment. I need more like $60K.
How would you allocate your savings if you were in my shoes? Seems like my shorter term goals are simply out of reach, and I'm already 29 years old. Ugh. The American dream is dead.
You can get a piggyback loan, to reduce your downpayment. You can take out a loan on your 401k for a downpayment (pricey), you can save for a house now and put off the 401k contributions (long term home ownership will save you lots of money, but the trade off is your 401k is stunted).
Sounds like you are definitely on the right track, although, perhaps, a little over-stressed about the specific details of your 47-year retirement plan. The fact that you may not be able to do everything you want right now, at age 29, is a part of life that everyone faces.
A couple of things you might want to consider are: (1) You need a place to live now and both prices and interest rates are probably as low as they are going to get for a while - plus near-term appreciation in housing prices is likely. (2) You seem to be calculating your retirement based pretty heavily on today's income. Yet, the probability is that you will likely double your income and your ability to deal with both housing and retirement issues over the next 10(?)-years, is high.
(3) Life and circumstances change and plans need to be adjusted to accommodate those changes -For now, establishing a sustainable savings discipline is more important than the specific amount.
For now, keep doing what you are doing, without cutting things so tight that you can't really enjoy life. Try to optimize your 401K to take advantage of the 4% matching option, and lean a little heavier on the house savings side of things. Then, instead of spending your income increases on 'stuff', shift them ('money you never had') to get your retirement and house savings where you want them.
The obvious concern you have expressed will manifest itself in the personal discipline to bring about your goals and dreams. (The folks who never really act to turn their dreams and goals into reality ... are the ones who wind up never achieving them). - Cut yourself some slack, you'll get there if you live within your means, maintain a steady savings discipline and keep your eye on the goals you have set for yourself.
Sounds like you are definitely on the right track, although, perhaps, a little over-stressed about the specific details of your 47-year retirement plan. The fact that you may not be able to do everything you want right now, at age 29, is a part of life that everyone faces.
A couple of things you might want to consider are: (1) You need a place to live now and both prices and interest rates are probably as low as they are going to get for a while - plus near-term appreciation in housing prices is likely. (2) You seem to be calculating your retirement based pretty heavily on today's income. Yet, the probability is that you will likely double your income and your ability to deal with both housing and retirement issues over the next 10(?)-years, is high.
(3) Life and circumstances change and plans need to be adjusted to accommodate those changes -For now, establishing a sustainable savings discipline is more important than the specific amount.
For now, keep doing what you are doing, without cutting things so tight that you can't really enjoy life. Try to optimize your 401K to take advantage of the 4% matching option, and lean a little heavier on the house savings side of things. Then, instead of spending your income increases on 'stuff', shift them ('money you never had') to get your retirement and house savings where you want them.
The obvious concern you have expressed will manifest itself in the personal discipline to bring about your goals and dreams. (The folks who never really act to turn their dreams and goals into reality ... are the ones who wind up never achieving them). - Cut yourself some slack, you'll get there if you live within your means, maintain a steady savings discipline and keep your eye on the goals you have set for yourself.
Well, here is how I breakdown my savings. After ALL of my essential monthly living expenses, I have about 24% of my gross income available to allocate toward savings or nonessential expenses. The dollar amount is about $1,500 per month. Of the 24% net income, I spend about 7% on nonessential expenses. The other 17% is allocated to savings goals (i.e. retirement, house fund, etc.). Bear in mind that my 401K contributions occur before I reach the 24% figure. Is that bad? I think I'm living below my means.
Also, I wish I could set money aside for other goals, such as saving up for a car purchase in 5 years, or saving for a vacation or nice electronics, etc. It just seems hard to allocate funds to EVERYTHING on a continual basis and expect impactful results.
Based on my research...
But if I do this, that only leaves me with about $1,000 a month to play with.
I earn $75K annually, plus a 10-20% bonus payable every January.
I didn't see you mention kids or a house...
Quote:
What should I do?
Earn more and/or spend less... and keep socking it away.
Earn more and/or spend less... and keep socking it away.
I don't have kids and don't plan on ever having any. But I want to buy a house eventually. Right now I'm renting.
I highly doubt I'll be earning $150K in ten years from now as others have mentioned on here. Look, when I was 22 years old I started earning $52K. Now, seven years later I'm at $75K. I have never been promoted even once in my entire career. I'm still at staff level and I just don't see it happening for a while. I'm just being realistic here.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
