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Will this work out to be enough?
Old 01-27-2006, 02:03 PM   #1
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Will this work out to be enough?

I am currently 50 and have 16,000 in a 401K plan, mostly stocks. I currently contribute 1716.00 a year to the plan and my company contributes 1144.00 additional to the plan. Total 2860.00 a year. I have no other savings. If I retire at age 65, how much would I have saved and can I make it with that and SS?

My current income is 43K a year. My home is newly built 4 yrs ago and I pay half my salary to a mortgage payment . Rate is 6%. I am looking for a roommate so I can save more a month. But if I can't. Would like to know where I stand as outlined above.

You all seem to have such great skills in figuring this out, so I thought I would see what you came up with.
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Re: Will this work out to be enough?
Old 01-27-2006, 02:14 PM   #2
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Re: Will this work out to be enough?

Judging from the responses to my thread on someone else's situation, people might need to know:

--how much your house is worth
--how much equity do you have in the home
--what is the mortgage payment
--how many years are left on the mortgage
--how many years do you anticipate being retired.

Edit: and what do you anticipate your expenses to be in retirement
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Re: Will this work out to be enough?
Old 01-27-2006, 02:27 PM   #3
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Re: Will this work out to be enough?

House worth 133K
No Equity in home
Mortgage payment 1146.00
27 years to payoff mortgage
I would estimate 20 years being retired.
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Re: Will this work out to be enough?
Old 01-27-2006, 02:42 PM   #4
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Re: Will this work out to be enough?

Cat, I did find a couple of online savings calculators you might want to try. Others can say if they might be bogus. Math is not my forte

http://cgi.money.cnn.com/tools/savin...vingscalc.html

http://moneycentral.msn.com/investor...avapp/main.asp

Using these calculators, putting in the $16,000 you have now, the $2880 a year you save, and assuming you earn 7% a year on your money over 25 years, you will have about $270,000 after 25 years. This doesn't account for any increase in your savings over time.

But as I said, I don't know the first thing about math.
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Re: Will this work out to be enough?
Old 01-27-2006, 03:05 PM   #5
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Re: Will this work out to be enough?

Thanks Martha,* Math isn't my strong point either, however, I don't have 25 years to retirement. Only about 15 to 17 years.

Not sure if that is enough.* I will have a pension from this company, if I work here until I retire.* *I just don't count on it.* Job usually don't last as long as they use to.*
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Re: Will this work out to be enough?
Old 01-27-2006, 03:58 PM   #6
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Re: Will this work out to be enough?

Cat,

To expand on what Dave has done, I suggest first making gross estimates of your retirement income and spending.

It sounds like your income will come from three possible sources:

(1) Social Security
(2) Pension
(3) 401k

You can get your social secuity benefits from your annual statement or from the following web site, http://www.ssa.gov/retire2/AnypiaApplet.html

You company HR should be able to help you with the value of the pension. (You are the only one that can make a guess as to if you will actually get the pension.)

For the 401k the calculation that Dave showed is a good start but I believe it assumes a constant annual return of 7.5%. That is a big assumption. The return on "safe" investments such as money market is usually much less than that and even the interest rate on money markets goes up and down. The return on stock is usually a bit higher than that but they are also more volatile. I think that you should take a look at the investment options in your 401k. See what kind of return they have generated over say the last 10 years.

After you learn a little bit more about the numbers you might want to take a shot at using FIRECALC. It accounts for some of the uncertainty in returns and can also include the effect of changes in expenses and income such as paying off your mortgage.

Many on this site have more experience than I on the expense side of the equation. A rule of thumb to start with is that you will need 80% of your pre-retirement income during retirement. But this is only a very gross rule (many may be much lower, some may be higher) and I think that everyone need to look at their own situation.

Good luck,

MB

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Re: Will this work out to be enough?
Old 01-27-2006, 04:48 PM   #7
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Re: Will this work out to be enough?

Thank you sooooo much. You guys are amazing.

I feel better now. I plan on increasing my savings at some point. So this should help make the numbers better.

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Re: Will this work out to be enough?
Old 01-27-2006, 05:30 PM   #8
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Re: Will this work out to be enough?

The 80% "rule of thumb" means NOTHING!. You need help.
Luckily you found this site.

JG
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Re: Will this work out to be enough?
Old 01-27-2006, 05:47 PM   #9
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Re: Will this work out to be enough?

I guess I need 2 roommates than or live in a tent.
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Re: Will this work out to be enough?
Old 01-27-2006, 05:51 PM   #10
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Re: Will this work out to be enough?

Quote:
Originally Posted by catramsey
I guess I need 2 roommates than or live in a tent.
I think JG is saying you may very well need less than 80% of your preretirement income.
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Re: Will this work out to be enough?
Old 01-27-2006, 06:02 PM   #11
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Re: Will this work out to be enough?

Quote:
Originally Posted by Martha
I think JG is saying you may very well need less than 80% of your preretirement income.*
Yep!

JG
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Re: Will this work out to be enough?
Old 01-28-2006, 04:29 PM   #12
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Re: Will this work out to be enough?

Quote:
Originally Posted by catramsey
I am currently 50 and have 16,000 in a 401K plan, mostly stocks. I currently contribute 1716.00 a year to the plan and my company contributes 1144.00 additional to the plan. Total 2860.00 a year. I have no other savings. If I retire at age 65, how much would I have saved and can I make it with that and SS?

My current income is 43K a year. My home is newly built 4 yrs ago and I pay half my salary to a mortgage payment . Rate is 6%. I am looking for a roommate so I can save more a month. But if I can't. Would like to know where I stand as outlined above.

You all seem to have such great skills in figuring this out, so I thought I would see what you came up with.
Based on your 401(k) balance and your annual contribution rates, it appears that you have been at your present employer for roughly 5 years.

You should check with your Human Resources department (or your boss if there is no HR dept) for the pension details - each company has very black-and-white rules on the pension. Granted, the formula might be confusing at first glance, but get a copy of the pension formulas and post it to the board to find out what you would be elligible for.

All companies have different pension forumulas, but if you're already been there 5 years, there's a good chance you've become elligible for it and should be getting something when you retire.
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Re: Will this work out to be enough?
Old 01-30-2006, 09:53 AM   #13
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Re: Will this work out to be enough?

I do have a pension plan. Based on my calulations, if I work here until I am 65 or 66 I would qualify for approx. 1500.00 to 1800.00 a month pension. Being realistic, with the way companies merge these days, I don't expect to work here that long. Just never know.

I'll go see if there is a formula per sa. There is a fill in the blanks worksheet where I plug in the numbers and that is were I got the number above.
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