Retirement accounts at age 30:
So I’ve heard the rule of thumb (yes I know you need to be careful with rules of thumb but I figure it’s a good baseline for right now until we know more about our needs in retirement) is that you should have a years worth of salary in retirement accounts by the time you’re 30. T is already 30 and I’m coming up on 29 in 4 months so I figured it was about time I evaluate things.
Turns out I can’t access one of his 401k account right now. We’ve been locked out so now T needs to call. A year or two ago the account was at 21k. If I assume no growth since then (which hopefully with all his contributions it should be at least a couple thousand) we have approx. 50k in investments. Our income is over 100k.
Honestly I thought we were doing better. But we are still fairly young and considering we only have 12 years left on our mortgage (and 20 on our investment property) things could be worse. The investment property is half in my name, half in my mothers. Once my brother gets settled she has always hoped to put him as a partial owner as well. If I sell half of my half to him the payments will be low enough that we will no longer need to rent the place out and instead we could all use it as a vacation home (it’s a condo on a lake and would be an ideal family summer house). Of course I can’t count on him being interested and I’m not sure of his money situation so that situation is very much in limbo right now. In the meantime we continue to rent the condo out.
As far as the mortgage is concerned we only have 12 years left. Right now we have 1,000 each month that we put towards debt. Over the past 4 years we’ve paid off credit cards, cars, student loans, etc., etc. The mudroom/1st floor bathroom addition really set us back last year. An estimated 8-10k cost ended up becoming 18k when all was said and done. Much of it was paid with cash. The rest was put on a 0% interest credit card and a 5k mom loan. The credit card will be paid off March 29th. Mom loan by August 2nd. At that point we will have 1,000 a month to do with as we please. I am planning on saving for maternity leave for a 2nd child. Then 300 or so of that 1,000 will need to go towards daycare. That’ll leave us with 700 a month.
What would you do with $700 a month?
I’m thinking of building a small emergency fund and then will start putting 300 to mortgage and the rest 400 to savings (for future cars, house maintenance, etc.) each month. Sorry for the scattered, rambling post. I really needed a monetary brain dump to lay all this out on the table and there it is. For now.
Retirement/Investments by age 30? & other financial ramblings
February 1st, 2013 at 01:40 pm
February 1st, 2013 at 03:01 pm 1359730887
Anyway, in 6 years we have tripled that money (contributing $10k-ish per year??). The thing about the "rules of thumb" is that it is very linear, whereas the more money you have the more it compounds. Just because you haven't met that first milestone doesn't mean you won't meet the next. You could be on track to exceed where you should be at 35 or 40. Our investments are on track to double during the next 5 years, as compounding returns should be matching what we put in. At some point soon, returns will be more than our contributions.
First $100k is the hardest, for sure, so buckle down and focus on that. It gets so much easier after that point. How much are you contributing? We have done 12% since age 23? It seems to be plenty for the long run. If I had extra money, I'd just set it aside/invest it for future retirement/college/mortgage paydown. I'd save in cash if I had shorter-term goals I'd need it for (buying up home? Replace cars?). Are you saving 15% for retirement? Could you save more (tax breaks?)
February 5th, 2013 at 05:32 pm 1360085577
Thanks for the comment!