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31 and trying...
Old 05-04-2010, 02:05 PM   #1
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31 and trying...

A little about me...

Due to genetics and my own perception, I stress too much over whether or not we are saving enough and I find myself not enjoying the little things because I am too focused on tomorrow. In addition to this, we hope to start the rest of our family this year so there is a focus on "tidying up" our finances.

Our current situation...

My wife and I turn 31 this year and are really beginning to crank up our savings. Right now, we are saving $400 per month each in Roth IRAs as well as 7% in 401k (wife) and 5% in 457 (me). Both have stable jobs plus we have an emergency fund of 3-4 months worth of expenses.

The one question that continues to elude me is - Are we saving enough? Can anyone really answer this for me or is it truly unique to the individuals involved?

Kristopher
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Old 05-04-2010, 02:15 PM   #2
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It's awesome that you are asking these questions! How much you need to save really relates to how much you spend (and what your future spending needs will be). Tell us more about your financial situation.

welcome!
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Old 05-04-2010, 02:38 PM   #3
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More info on our situation...

Annual income -

57K (me) & 47K (wife)

Debts -

House (1469.00 / month) 231K @5%

Student Loan (129.00 / month) 9500.00 @ 4.75%

Car Loan (387.00 / month) 14000.00 @ 2.9%

Savings -

Emergency fund - 10K

Retirement - 22K (Wife 401k)

10K (My IRA)

18K (My 457 / Pension)

We're saving $1600 per month - $800 for retirement, $400 for car fund, and $400 for emergency.
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Old 05-04-2010, 02:41 PM   #4
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Kristopher, welcome. The general rule is that you can withdraw about 4% of your total portfolio yearly, adjusted for inflation yearly. You can use one of many on line calculators to plug in your savings rate, expected returns and expected inflation rate to determine if you are on track to have enough for your expected lifestyle.
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Old 05-04-2010, 03:05 PM   #5
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Quote:
Originally Posted by kfindley79 View Post
The one question that continues to elude me is - Are we saving enough? Can anyone really answer this for me or is it truly unique to the individuals involved?

Kristopher
Aside form the replacement rate value issue (ie. 70% per the link or less than that per many on this forum), I find that the pasted image on debt and savings quite useful as a gauge. If you want to retire early then add some years to your age in the image and set aside extra savings to fund your SS payment before it kicks in.

Also check out the "Ballpark Estimate" calculator at Choose to SaveĀ® to see if you are on track.
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Old 05-04-2010, 05:13 PM   #6
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For what it's worth, I think it's cool that you're making a car payment *and* putting $400 a month away into a "car fund." Guess you want the current car loan to be your last. At 31, you figured that one earlier than most.
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Old 05-04-2010, 05:36 PM   #7
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That's a large mortgage payment for a low cost of living area like Alabama. How many kids do you plan to have. Buying too much house can be a retirement killer. If you plan to have a big family then you'll need the room but otherwise "less is more". Make sure you increase your savings when you get raises or pay off debt. Do either of you expect a pension? That can make a huge difference in what you need to save on your own. You seem to be doing okay but watch the debt.

Best wishes from a fellow soon to be 31 year old.
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Old 05-04-2010, 05:48 PM   #8
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That's a large mortgage payment for a low cost of living area like Alabama. How many kids do you plan to have. Buying too much house can be a retirement killer. If you plan to have a big family then you'll need the room but otherwise "less is more". Make sure you increase your savings when you get raises or pay off debt. Do either of you expect a pension? That can make a huge difference in what you need to save on your own. You seem to be doing okay but watch the debt.

Best wishes from a fellow soon to be 31 year old.
I agree about the house and I am really close to selling it.

Concerning the pension question...yes, I have a pension that is part of the Retirement Systems of Alabama.
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Old 05-07-2010, 01:58 PM   #9
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Kristopher:
Relax - you are saving more than enough to retire early. Right now you are saving $1,200 per month. You have already done the hard work, saving enough to put yourself on track to retire early, so now you can forget about tomorrow and begin enjoying today. Congratulations.
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