Amount saved by age

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Cycle
Posts: 882
Joined: Sun May 28, 2017 7:57 pm
Location: USA

Re: Amount saved by age

Post by Cycle » Mon Mar 12, 2018 12:40 pm

DC3509 wrote:
Mon Mar 12, 2018 9:37 am
Cycle wrote:
Sun Mar 11, 2018 11:49 am
I really like the madfientist podcasts. There is a good one from kitces http://pca.st/hfNT.

Minimize your major recurring costs to maximize your savings. Before making big purchases calculate cost, time saved, cost per hour of gained/lost free time, increased salary, cost per use. Houses, apartments, cars, insurance, grad school are some of the major ones.

Prioritize time / health / relationships over net worth. Counterintuitive, working hard and getting more income may buy you more time if you avoid lifestyle inflation... Via FIRE

FWIW, we now save 177k per year on 300k income at age 34/35, net worth 1.2M. DW just got a 37% raise which is going straight to more VTIAX. FIRE target is 4M in today's dollars. Everyone's target will be different depending on their risk tolerance and annual spending.
Just curious how this works with taxes at that income level. We essentially lose 40% off the bat with taxes and have been told there is very little we can legally do about that line item.
We owner occupy a rental property, our half has a taxable value of 140k. For tax purposes, that property is showing a small loss this year. We have 1 car (8.5k), I bike / bus. We have paid off all our loans. We only go on 3 international vacations a year( south Africa, Copenhagen, and Galapagos last year). No kids yet...

Roth 11k
Taxable 99k
401k 46.5k
HSA 7k
Stock puchase -> 1yr hold but then VTIAX -> 14.5k

DC3509
Posts: 280
Joined: Wed Jul 12, 2017 7:25 am

Re: Amount saved by age

Post by DC3509 » Mon Mar 12, 2018 1:27 pm

Cycle wrote:
Mon Mar 12, 2018 12:40 pm
DC3509 wrote:
Mon Mar 12, 2018 9:37 am
Cycle wrote:
Sun Mar 11, 2018 11:49 am
I really like the madfientist podcasts. There is a good one from kitces http://pca.st/hfNT.

Minimize your major recurring costs to maximize your savings. Before making big purchases calculate cost, time saved, cost per hour of gained/lost free time, increased salary, cost per use. Houses, apartments, cars, insurance, grad school are some of the major ones.

Prioritize time / health / relationships over net worth. Counterintuitive, working hard and getting more income may buy you more time if you avoid lifestyle inflation... Via FIRE

FWIW, we now save 177k per year on 300k income at age 34/35, net worth 1.2M. DW just got a 37% raise which is going straight to more VTIAX. FIRE target is 4M in today's dollars. Everyone's target will be different depending on their risk tolerance and annual spending.
Just curious how this works with taxes at that income level. We essentially lose 40% off the bat with taxes and have been told there is very little we can legally do about that line item.
We owner occupy a rental property, our half has a taxable value of 140k. For tax purposes, that property is showing a small loss this year. We have 1 car (8.5k), I bike / bus. We have paid off all our loans. We only go on 3 international vacations a year( south Africa, Copenhagen, and Galapagos last year). No kids yet...

Roth 11k
Taxable 99k
401k 46.5k
HSA 7k
Stock puchase -> 1yr hold but then VTIAX -> 14.5k
Thank you. It still seems like on the lower end of the tax scale that you are basically living on something around $35-45K a year. That obviously works for you and kudos to you, but wouldn't work for us.

Pacman
Posts: 161
Joined: Sun Feb 20, 2011 11:50 pm

Re: Amount saved by age

Post by Pacman » Mon Mar 12, 2018 1:41 pm

Cycle wrote:
Mon Mar 12, 2018 12:40 pm
DC3509 wrote:
Mon Mar 12, 2018 9:37 am
Cycle wrote:
Sun Mar 11, 2018 11:49 am
I really like the madfientist podcasts. There is a good one from kitces http://pca.st/hfNT.

Minimize your major recurring costs to maximize your savings. Before making big purchases calculate cost, time saved, cost per hour of gained/lost free time, increased salary, cost per use. Houses, apartments, cars, insurance, grad school are some of the major ones.

Prioritize time / health / relationships over net worth. Counterintuitive, working hard and getting more income may buy you more time if you avoid lifestyle inflation... Via FIRE

FWIW, we now save 177k per year on 300k income at age 34/35, net worth 1.2M. DW just got a 37% raise which is going straight to more VTIAX. FIRE target is 4M in today's dollars. Everyone's target will be different depending on their risk tolerance and annual spending.
Just curious how this works with taxes at that income level. We essentially lose 40% off the bat with taxes and have been told there is very little we can legally do about that line item.
We owner occupy a rental property, our half has a taxable value of 140k. For tax purposes, that property is showing a small loss this year. We have 1 car (8.5k), I bike / bus. We have paid off all our loans. We only go on 3 international vacations a year( south Africa, Copenhagen, and Galapagos last year). No kids yet...

Roth 11k
Taxable 99k
401k 46.5k
HSA 7k
Stock puchase -> 1yr hold but then VTIAX -> 14.5k
I'm not sure the world only fits in there :sharebeer

User avatar
Cycle
Posts: 882
Joined: Sun May 28, 2017 7:57 pm
Location: USA

Re: Amount saved by age

Post by Cycle » Mon Mar 12, 2018 3:01 pm

We churn credit cards for miles and have miles from work travel, which covered airfare for two trips. We purchased the tickets to Copenhagen on a wim, $320 rt thru air Canada. We stay at air bnb / hostels with private rooms or use points for hotels, very inexpensive.

We eat in the restaurants the locals eat at which are often more economical. Often we picnic for lunch and eat breakfast at the hotel or make it at the air bnb.

Portugal/Morocco and Vietnam are on the short list for next places, the 3rd will likely be purchased on a wim when there is an airfare sale.

It is challenging to keep a high savings rate. It requires an engineered lifestyle, understanding exactly where the big costs are and how to minimize them so you don't have to worry about the little stuff. We don't coupon clip. Minimalism is enormously helpful in this efficient lifestyle, which we've been dabbling in the last 2 years.

chicagoan23
Posts: 308
Joined: Thu Jan 29, 2015 4:34 pm

Re: Amount saved by age

Post by chicagoan23 » Mon Mar 12, 2018 3:53 pm

Cycle wrote:
Mon Mar 12, 2018 3:01 pm
It is challenging to keep a high savings rate. It requires an engineered lifestyle, understanding exactly where the big costs are and how to minimize them so you don't have to worry about the little stuff. We don't coupon clip. Minimalism is enormously helpful in this efficient lifestyle, which we've been dabbling in the last 2 years.
The biggest expense for most high income couples is federal income taxes. Based on your descriptions it seems like at $300k or so you're paying around $70k in federal income taxes. and living on $50k? Any thoughts on how to best minimize that expense?

KSActuary
Posts: 379
Joined: Fri Jan 13, 2012 10:53 pm

Re: Amount saved by age

Post by KSActuary » Mon Mar 12, 2018 4:06 pm

$100,000 by age 30. Pretty easy after that.

User avatar
Cycle
Posts: 882
Joined: Sun May 28, 2017 7:57 pm
Location: USA

Re: Amount saved by age

Post by Cycle » Mon Mar 12, 2018 4:07 pm

chicagoan23 wrote:
Mon Mar 12, 2018 3:53 pm
Cycle wrote:
Mon Mar 12, 2018 3:01 pm
It is challenging to keep a high savings rate. It requires an engineered lifestyle, understanding exactly where the big costs are and how to minimize them so you don't have to worry about the little stuff. We don't coupon clip. Minimalism is enormously helpful in this efficient lifestyle, which we've been dabbling in the last 2 years.
The biggest expense for most high income couples is federal income taxes. Based on your descriptions it seems like at $300k or so you're paying around $70k in federal income taxes. and living on $50k? Any thoughts on how to best minimize that expense?
I think we are living on ~40k a year, hard to say with the constant credit card churning. Our taxes are reduced by 46k going into 401k, 7k going into HSA. We have 19.2k in rent that is mostly reduced through depreciation of a major rennovation, so a lot of that despite going to VTIAX is not taxed.

Live in a duplex and rent out the other unit. Get a roommate in the spare bedroom of your house or apartment. Airbnb your place when u are out of town. Better yet, I know a guy who bought a 4 Plex and lives in one of the units.

DC3509
Posts: 280
Joined: Wed Jul 12, 2017 7:25 am

Re: Amount saved by age

Post by DC3509 » Tue Mar 13, 2018 7:36 am

chicagoan23 wrote:
Mon Mar 12, 2018 3:53 pm
Cycle wrote:
Mon Mar 12, 2018 3:01 pm
It is challenging to keep a high savings rate. It requires an engineered lifestyle, understanding exactly where the big costs are and how to minimize them so you don't have to worry about the little stuff. We don't coupon clip. Minimalism is enormously helpful in this efficient lifestyle, which we've been dabbling in the last 2 years.
The biggest expense for most high income couples is federal income taxes. Based on your descriptions it seems like at $300k or so you're paying around $70k in federal income taxes. and living on $50k? Any thoughts on how to best minimize that expense?
The $70K tax estimate is very low -- should be more like $90K.

smitcat
Posts: 2126
Joined: Mon Nov 07, 2016 10:51 am

Re: Amount saved by age

Post by smitcat » Tue Mar 13, 2018 8:36 am

DC3509 wrote:
Tue Mar 13, 2018 7:36 am
chicagoan23 wrote:
Mon Mar 12, 2018 3:53 pm
Cycle wrote:
Mon Mar 12, 2018 3:01 pm
It is challenging to keep a high savings rate. It requires an engineered lifestyle, understanding exactly where the big costs are and how to minimize them so you don't have to worry about the little stuff. We don't coupon clip. Minimalism is enormously helpful in this efficient lifestyle, which we've been dabbling in the last 2 years.
The biggest expense for most high income couples is federal income taxes. Based on your descriptions it seems like at $300k or so you're paying around $70k in federal income taxes. and living on $50k? Any thoughts on how to best minimize that expense?
The $70K tax estimate is very low -- should be more like $90K.
Federal tax for MFJ on $339K adjusted income is about $64K.
If we were grossing $300K I can say that our Fed. taxes would be well under that $64K (closer to half) with the pre tax savings that we do in 401K's, HSA and 529's.
For DC3509 - I would take some time and research accountants in your area that specialize in working with small business's like yours. Often your local SCORE office or the SBA will have folks that can give you some ideas on your plans and refer tax profesionals that match your needs. We do not know what your business is, if you have employees or not, if you have a connerical loaction, inventory or even the form teh business is listed under.
All of these thinsg will affect the best approach for your business's approachto retirement saviuings, taxes and even yoru salary level.

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