Anything else I should be doing at age 31?

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Skinny
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Anything else I should be doing at age 31?

Post by Skinny » Sat Jan 11, 2014 3:15 pm

I think I'm in good shape, but just want to make sure I'm not missing or overlooking anything in terms of long term saving that I should be doing now in my 30's. What things did you do, or wish you had done in your early 30's that made the biggest difference in your savings?

I've got both a Roth IRA and a SIMPLE IRA with employer match that are being maxed out, with a goal of having $100,000 in the combined accounts by the end of 2014. I've kept everything very easy and have all of the IRA money in the Vanguard Target Retirement 2040 fund. I should actually reach the $100k goal in April / May as long as the funds stay about the same in value or increase. In addition I'll have saved back up to 6 months of emergency fund savings by then also (after raiding it a bit for a trip to New Zealand). I currently have no debt, everything has been paid off. I plan to start saving for a new vehicle next year, my current truck still has probably another 5 years of worry free life left, so I'm not in any hurry regarding that goal.

I've looked at purchasing a home, but ultimately decided it doesn't make any financial sense due to the area I live in being a vacation destination with very little in the way of affordable housing, too many vacation homes driving up the prices. A mortgage would easily be x2 or x3 the cost of my current rental for a smaller, far away, run down property.

I have probably $500 - $750 additional per month above and beyond current savings and living expenses that I could use if needed, or if I'm not missing anything I'll just keep using it for fun!

Calm Man
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Re: Anything else I should be doing at age 31?

Post by Calm Man » Sat Jan 11, 2014 3:17 pm

Money is very important and you are asking good questions. But I think even more important by far at this point in your life is setting up your life. It sounds like your current location might not be optimal but I can't be certain from what you write.

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EternalOptimist
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Re: Anything else I should be doing at age 31?

Post by EternalOptimist » Sat Jan 11, 2014 3:32 pm

Save, live below your means and invest wisely---64 yr old retiree
"When nothing goes right....go left"

Skinny
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Re: Anything else I should be doing at age 31?

Post by Skinny » Sat Jan 11, 2014 3:38 pm

My current location is the Tahoe region and is actually pretty optimal for both work and play. I work in the ski industry so living in a vacation town is just part of the deal. I'm happy with my career and location, with no plans to change it up. Rent in the area is high, but not too unreasonable; home prices on the other hand are pretty absurd for what you get.

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Watty
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Re: Anything else I should be doing at age 31?

Post by Watty » Sat Jan 11, 2014 4:39 pm

Since you don't own any real estate you might want to add a REIT index fund to your asset allocation to get some more exposure to real estate for diversification.

You might keep open to the idea of moving to a less expensive ski area like in Oregon or Idaho if a great job opportunity is available there.

Many people find that never buying a house is the right choice for them but to be able to retire without having a paid off house or a low fixed rate mortgage payment will require a larger nest egg.

If you will be renting some place for $1,000 a month when you retire you will need an extra $12,000 a year after taxes. With a 4% safe withdraw rate that would mean that you would need to have around an extra $400K when you retire to generate and extra $16K before taxes. There are lots of ways that you can figure the numbers but it will be a large extra amount that you will need to save.

It would be good to make a spreadsheet to see if you are really on track to have all the retirement money you will need.

basspond
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Re: Anything else I should be doing at age 31?

Post by basspond » Sat Jan 11, 2014 5:35 pm

Your fun fund seems to be a little high. What you will realize is that the sooner you get your money to start working for you the bigger and easier your nest egg will grow. We got married in our mid twenties and didn't have kids until our thirties. Being DINKs for that decade gave our nest egg a great start. We were in a starter house and moved up. Bought low and made about 30%.

OCR
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Re: Anything else I should be doing at age 31?

Post by OCR » Sat Jan 11, 2014 7:52 pm

Most people are happy to put away 5-10% of their income into savings. If you do so, you should have a comfortable retirement fund when you turn 65. However, if working until 65 doesn't sounds that great to you, you will need to increase your savings percentage significantly. Some people are able to save 25-50% of their income by living a very frugal lifestyle. It's not for everyone, but the higher the percentage of savings you can achieve, the earlier you can consider retiring. So it comes down to which you value more - spending today or having freedom to not need to work earlier in life. You can run some numbers in one of the various retirement calculators on the internet to get a sense of just how much each percentage increase in your savings rate will bring you to reaching financial independence. Sometimes seeing the numbers staring right at you may help to motivate you to make better decisions on saving vs spending.

dgdevil
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Re: Anything else I should be doing at age 31?

Post by dgdevil » Sat Jan 11, 2014 8:14 pm

Enjoy your youth, in every way.

But how carefully have you budgeted for your NZ trip? I just got some major sticker shock down there. Queenstown - adrenaline sports capital - could give you a financial workout.

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slow n steady
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Re: Anything else I should be doing at age 31?

Post by slow n steady » Sat Jan 11, 2014 11:52 pm

OCR wrote:Most people are happy to put away 5-10% of their income into savings. If you do so, you should have a comfortable retirement fund when you turn 65. However, if working until 65 doesn't sounds that great to you, you will need to increase your savings percentage significantly. Some people are able to save 25-50% of their income by living a very frugal lifestyle. It's not for everyone, but the higher the percentage of savings you can achieve, the earlier you can consider retiring. So it comes down to which you value more - spending today or having freedom to not need to work earlier in life. You can run some numbers in one of the various retirement calculators on the internet to get a sense of just how much each percentage increase in your savings rate will bring you to reaching financial independence. Sometimes seeing the numbers staring right at you may help to motivate you to make better decisions on saving vs spending.
+1
It comes down to want you want. Are you single or married with kids? (You don't need to answer this but just something for you to think about) If you are single and plan to stay that way and want to retire at 65 then you are doing great. If you get married and have a stay at home spouse to take care of kids your savings rate will drop and your retirement expenses will probably be higher. There are many variables that we don't know, but it sounds like you are enjoying life while putting away funds for the future so keep it up.

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pteam
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Re: Anything else I should be doing at age 31?

Post by pteam » Sun Jan 12, 2014 1:22 am

don't worry too much about owning a house vs renting when your young. My example I bought my current home 10 years ago and and I'd be lucky to get exactly the same amount I paid 10 years ago not counting all the property taxes I paid, and replacing appliances and furnaces, etc etc

Plus owning ties you down and you have to pay expensive realtor fees when you sell or die trying to do a for sale by owner

gclancer
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Re: Anything else I should be doing at age 31?

Post by gclancer » Sun Jan 12, 2014 2:09 pm

Live (and work) in Nevada if at all possible - it'll save you a couple years of work in the long run

davebarnes
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Location: Berkeley, Denver, Colorado USA

HSA

Post by davebarnes » Sun Jan 12, 2014 2:56 pm

If you can do a HSA, then do it to the max.
Pre-tax in and tax-free out.
A nerd living in Denver

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