Is it bad to put 23k a yr in retirement if I only make 42k?
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Is it bad to put 23k a yr in retirement if I only make 42k?
I have worked hard the last 5 years to pay off about $85k towards my student loans by living pretty frugally considering that I have been making 33-42k during those years, and living in a high cost of living city like Boston.
During this time my 28 year old fiancee was saving towards his retirement and now he has over $120k in his accounts. I have $30k in my retirement currently and I told him that I do not want to try for children unless I have $100k in my account. I am 30, and I plan on having children in the next 2-3 or so years. At that time I would like to stay home with them for a few years hence why I am trying to save $100k before taking off time. Is it a bad idea to put $23k a year into my retirement accounts for the time being until I reach my goal? I feel like I am missing something.
Please let me know if I am missing some basic flaw to my plan, as I can't seem to think of one.
During this time my 28 year old fiancee was saving towards his retirement and now he has over $120k in his accounts. I have $30k in my retirement currently and I told him that I do not want to try for children unless I have $100k in my account. I am 30, and I plan on having children in the next 2-3 or so years. At that time I would like to stay home with them for a few years hence why I am trying to save $100k before taking off time. Is it a bad idea to put $23k a year into my retirement accounts for the time being until I reach my goal? I feel like I am missing something.
Please let me know if I am missing some basic flaw to my plan, as I can't seem to think of one.
Re: Is it bad to put 23k a yr in retirement if I only make 4
nothing wrong with saving as much as you can.
Only thing, is don't plan on having 100k 2-3 years from now. You are better off setting your goal to 3 years of max contributions and get pregnant in 2.25 years (so have a child in 3 years), and let the market do what it does. Otherwise, if we have a 50% drop right before you decide to get pregnant, it might be another 3 years before you have children.
Only thing, is don't plan on having 100k 2-3 years from now. You are better off setting your goal to 3 years of max contributions and get pregnant in 2.25 years (so have a child in 3 years), and let the market do what it does. Otherwise, if we have a 50% drop right before you decide to get pregnant, it might be another 3 years before you have children.
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Re: Is it bad to put 23k a yr in retirement if I only make 4
Congratulations on paying off your student loans!!! Great Job My advice would be not to tie your family's growth to your 401k balance. At least not an absolute dollar number like $100k. Far better would be to decide you want to get to a point where you could say "I am comfortable with the way we have been budgeting and living and feel we are in a position for me to take a few years off." That may take a year to get to or three it depends on his career, your combined lifestyle etc. But definitely be wary of putting your family on the back burner for too long would be my advice. My wife and I waited five years after getting married to have kids and looking back there wasn't really that much ground gained financially (relative to now or where we will be in the future), we just told ourselves it was the wise thing to do based on general societal advice. If your marriage is stable and you both want to have a child as long as you can support it which you obviously can then by all means go for it, don't let the whimsy of the stock market dictate your family's life! Best Wishes, you sound like a really intelligent individual who thinks through decisions and is wise with her money!
"Contentment", the only thing you ever truly need more of!
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Re: Is it bad to put 23k a yr in retirement if I only make 4
Nice work, OP!
It is really nice to be financially stable and have a little traction before starting a family.
It is really nice to be financially stable and have a little traction before starting a family.
An elephant for a dime is only a good deal if you need an elephant and have a dime.
- ruralavalon
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Re: Is it bad to put 23k a yr in retirement if I only make 4
Welcome to the forum .TryingtoInvestNow wrote:I have worked hard the last 5 years to pay off about $85k towards my student loans by living pretty frugally considering that I have been making 33-42k during those years, and living in a high cost of living city like Boston.
During this time my 28 year old fiancee was saving towards his retirement and now he has over $120k in his accounts. I have $30k in my retirement currently and I told him that I do not want to try for children unless I have $100k in my account. I am 30, and I plan on having children in the next 2-3 or so years. At that time I would like to stay home with them for a few years hence why I am trying to save $100k before taking off time. Is it a bad idea to put $23k a year into my retirement accounts for the time being until I reach my goal? I feel like I am missing something.
Please let me know if I am missing some basic flaw to my plan, as I can't seem to think of one.
Congratulations on getting that student loan debt paid off.
Spend a little on something you enjoy, to reward yourself. Continue to live frugally, save as much as you comfortably can, and invest it in your retirement account. No, its not bad to put 23k a yr in retirement if you only make 42k.
But don't link starting a family to any particular dollar goal. [Medical advice removed by admin LadyGeek]
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Re: Is it bad to put 23k a yr in retirement if I only make 4
Hello and welcome to the forum!
Don't tie up all your money in pre-tax accounts, especially if you are having a family.
How many months current expenses do you have in taxable? Money is fungible, therefore it is better to think of all of your assets as being potentially available for retirement. Combined you and your finance are at 150K for retirement and have no student debt or other loans? You are way ahead of 90% of folks your age....congrats on having a good head on your shoulders. I wouldn't be overly concerned on the absolute dollar figure in your accounts, one bear market can make quick work of that - my accounts were down 40% in 2008 (ouch!), it came back and more. The point is the market will fluctuate as will the account values in either real or nominal terms.
Good Luck to you.
Don't tie up all your money in pre-tax accounts, especially if you are having a family.
How many months current expenses do you have in taxable? Money is fungible, therefore it is better to think of all of your assets as being potentially available for retirement. Combined you and your finance are at 150K for retirement and have no student debt or other loans? You are way ahead of 90% of folks your age....congrats on having a good head on your shoulders. I wouldn't be overly concerned on the absolute dollar figure in your accounts, one bear market can make quick work of that - my accounts were down 40% in 2008 (ouch!), it came back and more. The point is the market will fluctuate as will the account values in either real or nominal terms.
Good Luck to you.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Re: Is it bad to put 23k a yr in retirement if I only make 4
I assume OP is putting the maximum allowed in each her ROTH and 401(k), in order to hit the 23k.Grt2bOutdoors wrote:Hello and welcome to the forum!
Don't tie up all your money in pre-tax accounts, especially if you are having a family.
How many months current expenses do you have in taxable?
A Roth makes a great emergency fund.
An elephant for a dime is only a good deal if you need an elephant and have a dime.
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Re: Is it bad to put 23k a yr in retirement if I only make 4
It may, but when having a family I prefer to err on side of caution and have ready cash available. Can you imagine being in the hospital, getting a call from admissions saying come down and pay the $900 bill for your new child. The last thing you want to think about is "oh, darn it - now I have to cash out my retirement account to pay for admissions". Am I the only one who believes retirement accounts are for retirement, not for ordinary expenses? My point is, liquidity is essential for day to day living. Retirement accounts are amongst the last line of defense withdrawals, or should be anyway. Withdrawing from a ROTH wastes very valuable "tax-free" asset accumulation space.bungalow10 wrote:I assume OP is putting the maximum allowed in each her ROTH and 401(k), in order to hit the 23k.Grt2bOutdoors wrote:Hello and welcome to the forum!
Don't tie up all your money in pre-tax accounts, especially if you are having a family.
How many months current expenses do you have in taxable?
A Roth makes a great emergency fund.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Re: Is it bad to put 23k a yr in retirement if I only make 4
That scenario simply wouldn't happen. If OP did need $900 quickly, I'm sure she could pause her retirement contributions for a month and make the payment IF she didn't have another way to get the money.Grt2bOutdoors wrote:It may, but when having a family I prefer to err on side of caution and have ready cash available. Can you imagine being in the hospital, getting a call from admissions saying come down and pay the $900 bill for your new child. The last thing you want to think about is "oh, darn it - now I have to cash out my retirement account to pay for admissions". Am I the only one who believes retirement accounts are for retirement, not for ordinary expenses? My point is, liquidity is essential for day to day living. Retirement accounts are amongst the last line of defense withdrawals, or should be anyway. Withdrawing from a ROTH wastes very valuable "tax-free" asset accumulation space.bungalow10 wrote:I assume OP is putting the maximum allowed in each her ROTH and 401(k), in order to hit the 23k.Grt2bOutdoors wrote:Hello and welcome to the forum!
Don't tie up all your money in pre-tax accounts, especially if you are having a family.
How many months current expenses do you have in taxable?
A Roth makes a great emergency fund.
Why should OP leave Roth opportunity on the table because she might need that money for an emergency - that is a waste of tax-free accumulation space? Wouldn't she be better off to seize the opportunity and respond to the emergency if and when it occurs?
An elephant for a dime is only a good deal if you need an elephant and have a dime.
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Re: Is it bad to put 23k a yr in retirement if I only make 4
If we are putting it to a vote, I would vote in favor of building a buffer in a liquid account (as Grt2bOutdoors suggested), not in a tax-advantaged retirement account.
One of my pet issues on Bogleheads is that there is too much focus on retirement savings, and not enough on other life savings. This leads people in their 20s to invest all in equities, mostly in tax-advantaged accounts, and potentially be unnecessarily cash-strapped during the young family years.
OP, you are clearly smart and disciplined. Since you are disciplined, I would expect you could build up that savings and not touch it unless you really need to. But you may want the flexibility to stay home for a bit, or change jobs, after you have your first or second kid. You will be creating a ton of stress if all/most of your savings is tied up in tax-advantaged retirement accounts.
Other posters have alluded to another possible flaw in your plan - fertility. You won't know whether you and your fiance will have problems conceiving until you start trying. My wife and I started in our early 30s and, without getting too personal, let's just say there were some big bumps in the road. We wished we had started earlier. (We also wished we had eloped!)
Best of luck.
One of my pet issues on Bogleheads is that there is too much focus on retirement savings, and not enough on other life savings. This leads people in their 20s to invest all in equities, mostly in tax-advantaged accounts, and potentially be unnecessarily cash-strapped during the young family years.
OP, you are clearly smart and disciplined. Since you are disciplined, I would expect you could build up that savings and not touch it unless you really need to. But you may want the flexibility to stay home for a bit, or change jobs, after you have your first or second kid. You will be creating a ton of stress if all/most of your savings is tied up in tax-advantaged retirement accounts.
Other posters have alluded to another possible flaw in your plan - fertility. You won't know whether you and your fiance will have problems conceiving until you start trying. My wife and I started in our early 30s and, without getting too personal, let's just say there were some big bumps in the road. We wished we had started earlier. (We also wished we had eloped!)
Best of luck.
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Re: Is it bad to put 23k a yr in retirement if I only make 4
My fiancée actually has 60k in his checking accounts, saved as a sort of emergency fund for the both of us.
I hadn't really considered fertility issues, I think it is something that is at the back of my mind, but maybe its something I should consider a little more closely. Our wedding is next summer, 2015. and I was planning on trying for kids in the summer of 2016. So that I can save a little bit during the beginning of 2017, and hit my 100k goal that year. I was planning on having a very frugal next few months by putting 5k more in my 401k, and the 5.5k for this years roth in before tax time next year.
Should I be putting this money in much more conservative funds. Currently I have about 85% in stocks(due to being 30), between large, mid, small, international. Is 85% too risky for someone who plans on being out of work for several years? (though still making spousal roth contributions) during those years.
I hadn't really considered fertility issues, I think it is something that is at the back of my mind, but maybe its something I should consider a little more closely. Our wedding is next summer, 2015. and I was planning on trying for kids in the summer of 2016. So that I can save a little bit during the beginning of 2017, and hit my 100k goal that year. I was planning on having a very frugal next few months by putting 5k more in my 401k, and the 5.5k for this years roth in before tax time next year.
Should I be putting this money in much more conservative funds. Currently I have about 85% in stocks(due to being 30), between large, mid, small, international. Is 85% too risky for someone who plans on being out of work for several years? (though still making spousal roth contributions) during those years.
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Re: Is it bad to put 23k a yr in retirement if I only make 4
I think that is entirely based upon your risk tolerance and personal preference regarding Asset Allocation. 85/15 is certainly well within the realm of reasonableness. I really like and am following the advice of posters here who say if an AA makes you nervous or you find yourself checking the market a little too regularly, you are probably over invested in Equities compared to your real risk tolerance. Everyone who wants to be 100% or even 90/10 Equities for the "Expected" Returns isn't necessarily able to do so and stay the course. I'm 32 and find 80/20 is the right mix for me at this point. That doesn't mean that 90/10 or 70/30 would be "wrong" for another 32 year old. Hope that helps!
"Contentment", the only thing you ever truly need more of!
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Re: Is it bad to put 23k a yr in retirement if I only make 4
60K is a bit ridiculous to keep in a checking account. I hope the checking account at least pays some decent rate of interest.TryingtoInvestNow wrote:My fiancée actually has 60k in his checking accounts, saved as a sort of emergency fund for the both of us.
I hadn't really considered fertility issues, I think it is something that is at the back of my mind, but maybe its something I should consider a little more closely. Our wedding is next summer, 2015. and I was planning on trying for kids in the summer of 2016. So that I can save a little bit during the beginning of 2017, and hit my 100k goal that year. I was planning on having a very frugal next few months by putting 5k more in my 401k, and the 5.5k for this years roth in before tax time next year.
Should I be putting this money in much more conservative funds. Currently I have about 85% in stocks(due to being 30), between large, mid, small, international. Is 85% too risky for someone who plans on being out of work for several years? (though still making spousal roth contributions) during those years.
I usually keep 1 to 2 months expenses in checking and anything after that in a higher yielding liquid savings account (read - insured) for my e-fund.
If I were you, I'd relax and focus on the things at hand - your relationship and wedding, all else will fall into place in due course. Can there be bumps?, perhaps, life is full of bumps, curves and straight lines. Anyone who says different is lying through their teeth.
Your asset allocation should be based on your willingness, ability and need to take risk, remember my example above about being 40% down - that was with an 80/20 mix back then - if you are comfortable with potentially being down 40% and in the course of a few days or in my case within 3 months, then that could be the mix for you. An 85/15 mix could have you down as much as 42-45%. Something to be considered. Don't be too conservative, ideally you won't be touching the money for at least 30 years - you need growth but you also need some stability to sleep well at night.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: Is it bad to put 23k a yr in retirement if I only make 4
"Am I the only one who believes retirement accounts are for retirement, not for ordinary expenses? My point is, liquidity is essential for day to day living. Retirement accounts are amongst the last line of defense withdrawals, or should be anyway. ......"
No, you are not the only one. Count me in. I am loathe to withdraw so much as a dime from either my traditional or Roth until I have to - the year after turning 70 & 1/2.
I think the OP is to be commended for having the discipline to sock away so much in retirement accounts, wish I saw more young women like her doing the same.
But I seldom do.
No, you are not the only one. Count me in. I am loathe to withdraw so much as a dime from either my traditional or Roth until I have to - the year after turning 70 & 1/2.
I think the OP is to be commended for having the discipline to sock away so much in retirement accounts, wish I saw more young women like her doing the same.
But I seldom do.
Re: Is it bad to put 23k a yr in retirement if I only make 4
Due to the magic of compounding, the money you save now is the money that will REALLY count later on. People who wait until later sometimes find they have waited too long and they can't ever catch up.
Re: Is it bad to put 23k a yr in retirement if I only make 4
As others have noted, I wouldn't necessarily place a nice round number goal in your 401k as your milestone for getting pregnant. Starting a family doesn't necessarily happen on the timeline you want it to, and delaying that due to financial goals might not be the best plan. Without giving too many details, we had to wait over two years from our desired start date, even though we had no fertility issues. Like you, and basically all of our friends of similar age, we naively assumed that you can just have kids when you decide to do so. It doesn't always work that way.
But as for the actual question - it's not bad to do so if you can afford it. It's only bad to do so if you feel like you are costing yourself your life in the meantime.
But as for the actual question - it's not bad to do so if you can afford it. It's only bad to do so if you feel like you are costing yourself your life in the meantime.
Retirement investing is a marathon.
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Re: Is it bad to put 23k a yr in retirement if I only make 4
Depends because passing up Roth IRA contributions in favor of an emergency fund makes no sense as you can just as easily hold the liquid funds in Roth.NoVa Lurker wrote:If we are putting it to a vote, I would vote in favor of building a buffer in a liquid account (as Grt2bOutdoors suggested), not in a tax-advantaged retirement account.
Re: Is it bad to put 23k a yr in retirement if I only make 4
Agreed--one way she might have less money in her Roth, but the other way she definitely has less money in her Roth. I'd go for the "might."placeholder wrote:Depends because passing up Roth IRA contributions in favor of an emergency fund makes no sense as you can just as easily hold the liquid funds in Roth.NoVa Lurker wrote:If we are putting it to a vote, I would vote in favor of building a buffer in a liquid account (as Grt2bOutdoors suggested), not in a tax-advantaged retirement account.
Re: Is it bad to put 23k a yr in retirement if I only make 4
Why not go even more extreme?
Your plan is to eventually not work.
Why don't you try saving 100% of your take home, living on only your husband's income?
It'll be good practice for when you need to live on only one income and it will supercharge your savings.
Your plan is to eventually not work.
Why don't you try saving 100% of your take home, living on only your husband's income?
It'll be good practice for when you need to live on only one income and it will supercharge your savings.
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Re: Is it bad to put 23k a yr in retirement if I only make 4
Hello,
Thank you for all the follow-up it has been really helpful and me and my fiancée read over all of these together. If I could just ask an additional question.
It seems like we shouldn't necessarily have 60k in our checking account. What are we supposed to do with it? The checking it is in now has no interest on it, it is just a standard checking at Bank of America. What is considered a high yield savings account, percent wise?
Can you recommend a place where we could find one like that?
Thank you again!
Thank you for all the follow-up it has been really helpful and me and my fiancée read over all of these together. If I could just ask an additional question.
It seems like we shouldn't necessarily have 60k in our checking account. What are we supposed to do with it? The checking it is in now has no interest on it, it is just a standard checking at Bank of America. What is considered a high yield savings account, percent wise?
Can you recommend a place where we could find one like that?
Thank you again!
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Re: Is it bad to put 23k a yr in retirement if I only make 4
I had a few years in my mid-late 20's finishing my MS then PhD, when I was making ~$45k/yr and maxing roth ira, 403b, HSA, and i-bonds (~$28k/yr). Shared an apartment with 3 other broke students, parked my truck and exclusively rode my bike or walked; lived off <$10k/yr. I was so busy working full-time and going to school that I didn't notice how pauper-like I was living. I was perfectly content at the time and it not only set me up pretty well financially, but helped me develop LBYM habits. If you can do it without really compromising your happiness, do it.
Re: Is it bad to put 23k a yr in retirement if I only make 4
Well, I certainly wouldn't want to keep 60k in an account that pays zero interest. 'High-yield' accounts sadly don't pay much more than zero nowadays, but it's easy to get one paying a little under 1% online, at banks such as Ally, American Express, Discover, and Capital One. There are also what are known as "rewards checking accounts" out there at some smaller banks that will pay you more interest (perhaps up to 3%) on a limited sum, but only if you fulfill various conditions with them, such as direct deposit and conducting a minimum number of debit card transactions per month with them. The limits on those accounts are always much less than 60k, so I don't think it's worth it for you unless you don't mind all of the extra hassle.TryingtoInvestNow wrote:Hello,
Thank you for all the follow-up it has been really helpful and me and my fiancée read over all of these together. If I could just ask an additional question.
It seems like we shouldn't necessarily have 60k in our checking account. What are we supposed to do with it? The checking it is in now has no interest on it, it is just a standard checking at Bank of America. What is considered a high yield savings account, percent wise?
Can you recommend a place where we could find one like that?
Thank you again!
The underlying question for what to do with your taxable money is, what is your goal for this money? Is it an emergency fund? Is it savings for a big ticket item such as a down payment? Is it part of your retirement savings? If it is your emergency fund, then you need to look at how big of an emergency fund you really need, and then to decide a use for the rest of the money.
Retirement investing is a marathon.
Re: Is it bad to put 23k a yr in retirement if I only make 4
If you'd like to keep it cash-like (e.g for emergency fund), I would recommend I-Saving Bond. It's super secure, and offer (at least) inflation protection, and it's liquid (after 1 year). You can buy $10K per person per year, so it may take several years to put some of that amount into I-bonds. You can decide whether it should all be in your fiancee's name or if it can also be under your name, which will make available $20K per year to get I-Bonds. It it were me, I'd probably move at least $40-50K to I-Bonds and leave the rest in checking account.TryingtoInvestNow wrote:Hello,
Thank you for all the follow-up it has been really helpful and me and my fiancée read over all of these together. If I could just ask an additional question.
It seems like we shouldn't necessarily have 60k in our checking account. What are we supposed to do with it? The checking it is in now has no interest on it, it is just a standard checking at Bank of America. What is considered a high yield savings account, percent wise?
Can you recommend a place where we could find one like that?
Thank you again!
Best,
AC
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Re: Is it bad to put 23k a yr in retirement if I only make 4
I think the more appropriate statements and questions would be (given that you're getting married):TryingtoInvestNow wrote:Please let me know if I am missing some basic flaw to my plan, as I can't seem to think of one.
Is it bad to put <combined retirement contribution> a yr in retirement if we make <combined income>? We have <combined retirement> in 401k/IRAs and <combined cash> in our checking account.
The thought process should be similar to how married people can fund each others' IRAs even if the other didn't have any income.
- ruralavalon
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Re: Is it bad to put 23k a yr in retirement if I only make 4
That's exactly right, what is the intended use for that money?kenyan wrote:. . . . .TryingtoInvestNow wrote: It seems like we shouldn't necessarily have 60k in our checking account. What are we supposed to do with it? The checking it is in now has no interest on it, it is just a standard checking at Bank of America. What is considered a high yield savings account, percent wise?
Can you recommend a place where we could find one like that?
The underlying question for what to do with your taxable money is, what is your goal for this money? Is it an emergency fund? Is it savings for a big ticket item such as a down payment? Is it part of your retirement savings? If it is your emergency fund, then you need to look at how big of an emergency fund you really need, and then to decide a use for the rest of the money.
It's not really possible to suggest where to put it or what sort of investment to use without knowing the intended use and the expected time frame.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
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Re: Is it bad to put 23k a yr in retirement if I only make 4
Is it bad to put 23k (mine) and 23k (his) a year in retirement if we make 142k a year? We have 31k(mine) and 120k(his)in 401ks and IRAs and 60k in checking accounts(his).
We currently keep the money separate as we have through our entire relationship and split costs. As I wanted to make sure that he didn't pay for my student loans inadvertently. Now that they are paid off(which is when I stated I would feel okay getting engaged), I would like to dedicate my efforts towards building a retirement for myself. I think still guilty about putting money together, at first it was because I had student loans and he did not. And now it is because he makes much more than I do.
We don't have any plans for the 60k, so we can look into I-savings bonds, thank you! Perhaps we could use it in the next 5 years, but it was money that he saved by default as I lived frugally then so did he, since we were not going out to eat anymore or taking vacations while I was paying down my debt.
If we had to set aside an amount for an emergency fund, it would be around monthly expenses (2400) times 12 months I assume($28,800)? The rest of it doesn't really have a plan per say.
We currently keep the money separate as we have through our entire relationship and split costs. As I wanted to make sure that he didn't pay for my student loans inadvertently. Now that they are paid off(which is when I stated I would feel okay getting engaged), I would like to dedicate my efforts towards building a retirement for myself. I think still guilty about putting money together, at first it was because I had student loans and he did not. And now it is because he makes much more than I do.
We don't have any plans for the 60k, so we can look into I-savings bonds, thank you! Perhaps we could use it in the next 5 years, but it was money that he saved by default as I lived frugally then so did he, since we were not going out to eat anymore or taking vacations while I was paying down my debt.
If we had to set aside an amount for an emergency fund, it would be around monthly expenses (2400) times 12 months I assume($28,800)? The rest of it doesn't really have a plan per say.
Re: Is it bad to put 23k a yr in retirement if I only make 4
I don't see what being a woman has to do with it. Young men and women alike often fail to save for retirement adequately.drawpoker wrote:"Am I the only one who believes retirement accounts are for retirement, not for ordinary expenses? My point is, liquidity is essential for day to day living. Retirement accounts are amongst the last line of defense withdrawals, or should be anyway. ......"
No, you are not the only one. Count me in. I am loathe to withdraw so much as a dime from either my traditional or Roth until I have to - the year after turning 70 & 1/2.
I think the OP is to be commended for having the discipline to sock away so much in retirement accounts, wish I saw more young women like her doing the same.
But I seldom do.
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Re: Is it bad to put 23k a yr in retirement if I only make 4
That's totally fine for now just like how my girlfriend and I split shared costs before we were married, and each covered his/her own personal expenses. It's great that you took responsibility of paying off your own debt whether or not your fiancé would have helped pay it off after it became a shared debt after marriage.TryingtoInvestNow wrote:We currently keep the money separate as we have through our entire relationship and split costs.
Moving forwards, things like retirement and children and daily expenses and income are shared, and it might take a while to adjust to that especially if you've been so independent and responsible for your own finances. I think things start to make more sense after marriage once you have a shared checking account where both incomes are deposited.
It's great to have personal goals, but just remember after getting married, you're a team. (Unless you expect the team to split and each individual needs to have prepared for him/herself ahead of time.)TryingtoInvestNow wrote:I would like to dedicate my efforts towards building a retirement for myself.
Re: Is it bad to put 23k a yr in retirement if I only make 4
Lots of good ideas to consider.
I'll echo one other poster to be careful thinking you have many years to have children. If you want them, the time is coming fast that it will become more difficult (expensive) and possibly difficult for you and baby. My OB GYN urges women to try to conceive while in their 20s because it is so much easier and lower risk.
Congratulations on what you've managed to accomplish so far!
I'll echo one other poster to be careful thinking you have many years to have children. If you want them, the time is coming fast that it will become more difficult (expensive) and possibly difficult for you and baby. My OB GYN urges women to try to conceive while in their 20s because it is so much easier and lower risk.
Congratulations on what you've managed to accomplish so far!
The mightiest Oak is just a nut who stayed the course.
- ruralavalon
- Posts: 26297
- Joined: Sat Feb 02, 2008 9:29 am
- Location: Illinois
Re: Is it bad to put 23k a yr in retirement if I only make 4
No, it's not bad. That's a savings rate of 32%, which is very good. Continue to live frugally and invest what you can. But as I mentioned earlier, do spend something on yourselves to celebrate what you have accomplished already.TryingtoInvestNow wrote:Is it bad to put 23k (mine) and 23k (his) a year in retirement if we make 142k a year? We have 31k(mine) and 120k(his)in 401ks and IRAs and 60k in checking accounts(his).
You'll be happy later that you got yourselves off to a very good start. When children come there will be more expenses, and less ability to save.
It's fine to keep everything separate for now, start to think about joint accounts and coordinating investments after your marriage. Even then certain accounts, like 401ks and IRAs, must be kept separate although you can coordinate what you invest in.We currently keep the money separate as we have through our entire relationship and split costs. As I wanted to make sure that he didn't pay for my student loans inadvertently. Now that they are paid off(which is when I stated I would feel okay getting engaged), I would like to dedicate my efforts towards building a retirement for myself. I think still guilty about putting money together, at first it was because I had student loans and he did not. And now it is because he makes much more than I do.
So put around $29k in an "emergency fund", which needs to be cash or some low risk investment that can be quickly converted to cash without cost or significant penalty. Examples are savings accounts (see bankrate.com for ideas), short term federally insured CDs, a good credit quality short term bond fund (such as VG Short-Term Investment Grade Bond Fund VFSTX, or VG Short-Term Corporate Bond Index Fund VFCSX), or some combination of those.We don't have any plans for the 60k, so we can look into I-savings bonds, thank you! Perhaps we could use it in the next 5 years, but it was money that he saved by default as I lived frugally then so did he, since we were not going out to eat anymore or taking vacations while I was paying down my debt.
If we had to set aside an amount for an emergency fund, it would be around monthly expenses (2400) times 12 months I assume($28,800)? The rest of it doesn't really have a plan per say.
I - Bonds cannot be redeemed for one year after purchase, and there's a small penalty if redeemed within five years (see the wiki). So you can use I - Bonds as part of an emergency fund only after they are more than one year old.
Are your IRAs Roths or traditional?
Then he could invest the remaining $31k in a taxable mutual fund account in tax-efficient funds like a total market type stock index funds. Or part of the extra $31k could be I - Bonds.
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