I'm a 31 year old married male who just finished his PhD after 7 years. My wife just got her PhD as well in the same field. During graduate school, all tuition was waved, but the stipend was only $20,000 each year. Despite this low income, I've managed to save about 17% of my income. My wife and I are working as postdocs these next two years making $56,000 each, which is close to 3x our graduate school salary. When postdoc ends in two years, our salaries are likely to almost double again to above $100,000. These changes in future earnings are making it hard to accurately plan for retirement and save for a house, especially after such a slow start, which we know is important due to the magic of compounding. I haven't been able to find any online retirement calculators that allow you to increase salary and contributions. Lastly, my wife and I don't come from families with money, so we are likely going to have to figure all of this out on our own.
Below I outline my current financial situation (you can assume the same is true for my wife) and then I present how I am currently saving and one alternative approach. My main questions is which option do people think is best? Thank you all in advance!
I'm currently working as a postdoc for the next two years.
- Fixed Expenses: 43.92%
- Savings: 30%
- Guilt Free Spending: 26.08%
- Vanguard VFIAX $15,000
- Vanguard VBTLX was $3,000
- Cash Savings $8,000
- Undergraduate Loans $16,000
I am having a hard time calculating how much I will need to save for retirement and figuring out a reasonable timeline based on my past, current, and future salary. All the retirement calculators that I've found online only allow for a fixed income and do not allow you to increase income and contributions as you age. Anyways, I have two options for saving and I was wondering what people think is best?
Option 1: My Current Plan
- Salary: $56,000
- Take Home Pay: $43,909.92
- Tax Rate: 21.59%
- Monthly Pay: $3,659.16
- Fixed Expenses (43.92%): $1,607.12
- Savings (15%): $548.97
- Roth IRA (15%): $548.97
- Guilt Free Spending (26.08%): $954.30
Option 2: 403(b)
- Salary: $56,000
- 403(b) Max Contribution: $19,500
- Salary After 403(b) Contributions: $36,500
- Estimated Take Home Pay: $30,140
- Estimated Tax Rate: 17.42%
- Monthly Pay: $2511.67
- Fixed Expenses (63.99%): $1,607.12
- Guilt Free Spending (36.01%): $904.55