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Without going into too much detail my employer provides a pension equal to 35-45% of your highest earnings. Employer contributes an automatic 1% to 401k for free, and matches up to 5%. I'm contributing 6%, and with the match the employer is also contributing 6%. It's a traditional IRA, and due to the generous stock market grew at 17% last year and about 10% this year.
I've also had a Roth IRA since I was 22, I'm 30 now. 4 years ago I lowered monthly contribution to the Roth to just $60 a month, it's growing albeit slowly, unsure if I should keep it separate and let it grow on its own or combine it with the 401k.
The kicker of it all is I'm force retired 26 years from now at 56. I know there's no hard and fast rule on what you should contribute for your 401k, but any advice is appreciated. If more details are required just ask, just want to know if I'm on a good track at this point in time.
Without going into too much detail my employer provides a pension equal to 35-45% of your highest earnings. Employer contributes an automatic 1% to 401k for free, and matches up to 5%. I'm contributing 6%, and with the match the employer is also contributing 6%. It's a traditional IRA, and due to the generous stock market grew at 17% last year and about 10% this year.
I've also had a Roth IRA since I was 22, I'm 30 now. 4 years ago I lowered monthly contribution to the Roth to just $60 a month, it's growing albeit slowly, unsure if I should keep it separate and let it grow on its own or combine it with the 401k.
The kicker of it all is I'm force retired 26 years from now at 56. I know there's no hard and fast rule on what you should contribute for your 401k, but any advice is appreciated. If more details are required just ask, just want to know if I'm on a good track at this point in time.
Because this is the personal finance forum, the people who post here lean towards being as financially conservative as possible. So, they'll tell you to max it.
Your retirement goals are your own.
One thing you can do is figure out how much your social security is, then how much your yearly expenses are. Subtract that by your SSI and your pension, and how many years you expect to live, and that's how much you need.
Employer contributes an automatic 1% to 401k for free, and matches up to 5%.
I'm contributing 6%, and with the match the employer is also contributing 6%.
That's great. Put the rest into your IRA and broker account and bank savings.
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just want to know if I'm on a good track at this point in time.
Better than most. Retirement accumulation is most important but...
but most want a home and other things as well that all require occasionally spending down savings.
Have after tax save/invest vehicles with good balances to do that with.
Last edited by MrRational; 10-08-2018 at 10:27 AM..
Without going into too much detail my employer provides a pension equal to 35-45% of your highest earnings. Employer contributes an automatic 1% to 401k for free, and matches up to 5%. I'm contributing 6%, and with the match the employer is also contributing 6%. It's a traditional IRA, and due to the generous stock market grew at 17% last year and about 10% this year.
I've also had a Roth IRA since I was 22, I'm 30 now. 4 years ago I lowered monthly contribution to the Roth to just $60 a month, it's growing albeit slowly, unsure if I should keep it separate and let it grow on its own or combine it with the 401k.
The kicker of it all is I'm force retired 26 years from now at 56. I know there's no hard and fast rule on what you should contribute for your 401k, but any advice is appreciated. If more details are required just ask, just want to know if I'm on a good track at this point in time.
It really boils down to how much you value having control over your own time and how much you like having options in life. The more you save/invest, the more options you'll have at a younger age.
With the match, you're contributing about 12% of your gross. Ignoring the pension, 12% of your gross is enough for a decent retirement in your 60s if you keep doing it.
Personally, I wouldn't trust the pension. I work in the public sector and our pension plan got reformed. The newcomers got a less generous plan. I'm grandfathered in the old one, but everyone also took a pay cut, which also effectively cut the pension benefit, because the pension was based on a % of highest year's salary. I am glad I tried to save as if I wasn't going to get one. Now, in my late 40s, I'm in a pretty good position.
The math of retirement is actually pretty simple. Just take a look at the chart in the article here:
At the very least, I would increase the Roth IRA contributions. Roths are great, especially for young people because they withdrawals are tax free. Also, you can take your contributions (not the growth) out at any age without penalty, so it gives you some flexibility if you retire/become financially independent before age 59.5.
I think you are in good shape. I would put 1/2 of any pay increase or bonus into the 401k after you max out of the Roth. To me the Roth is the real home run if the government keeps their paws off of it in the future.
I would also look into HSA. High deductible plans are usually very low in premium, and if you are healthy and only go to the doctor for an annual checkup you pay nothing. HSA accounts are even better than Roth, since it's pre-tax, grows tax-free, and you can withdraw tax-free for all health expenses. Over your lifetime you will incur medical expenses, so the money will be a great way to supplement your retirement income.
Because this is the personal finance forum, the people who post here lean towards being as financially conservative as possible. So, they'll tell you to max it.
Your retirement goals are your own.
One thing you can do is figure out how much your social security is, then how much your yearly expenses are. Subtract that by your SSI and your pension, and how many years you expect to live, and that's how much you need.
I've always felt that you should save as much as you possibly can. If you discover later in life that you didn't save enough, then its too late. You are probably assuming your employer's pension plan and SS will be there and we don't have an 08 recession the day you retire. All of the above can happen.
I've always felt that you should save as much as you possibly can. If you discover later in life that you didn't save enough, then its too late. You are probably assuming your employer's pension plan and SS will be there and we don't have an 08 recession the day you retire. All of the above can happen.
The only issue then becomes WHERE to save? If you save every penny in retirement accounts that you can't access in an emergency or for a downpayment for a house then you have limited yourself. OP - keep your options open by contributing to your 401k, Roth, and outside of those into emergency and long term savings.
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