Hello All. New to the forum after browsing around the last couple of weeks. Has been a great resource so far, reading from afar, and wanted to jump in and share my situation and gain whatever advice I can.
Family Details:
Me - 32, Wife - 32, Young Daughter with Plan to probably have one more in the next year or two.
Retirement Goals:
Main Goal: Wife and I retired by 55.
Stretch Goal: Wife and I retired by 50.
Realistic Goal: Wife and I retired by 60.
Financial Details:
Before Tax Household Income - $120,000 (75,000/45,000)
Debt Details (The Bad):
Roughly $150,000 in Student Loan (104,000), Car (6,500), and Debt Consolidation Loans (39,000).
We weren't very smart with our money for a few early years of our relationship compounded with some massive student loans and extended ourselves further than we should have. The consolidation will be paid off by 2020, the car by Dec 2018, and the student loans anywhere from 5-25 years from now. The loans will be prioritized as income comes available from other debts being paid off.
Savings Details (The Good):
401k
Me: Contribute 20% to company 401k. 17% PreTax, 3% Roth. 6% company match. $112,000 saved. Contributions set to increase 2% each year until 401k maxed out.
Wife: Contributes 5% to company 401k, all pre-tax. 5% company match. $14,000 saved. Contributions set to increase 1% every year until 12% reached (this is the year we expect her to stop accumulating raises, salary capped as a teacher).
Pension
As is currently stands, wife will get around $17,000 per year at age 60. If I pull my pension at 60, I would get around $36,000 per year. If I wait until 65 that would raise to $50,000 per year. I expect both values to increase if pension remains, as it's based on average salary, which I expect to increase through future raises.
Salary
Wife will top out at $60,000 at her job. Using historical company annual salary increases (well established Fortune 500 company) at or above inflation, with two raises before retirement (very structured with technical promotion levels). Next pay raise should put me around $85,000-$90,000 (hopefully next year) followed by ~$110,000 that I'm targeting to reach within 10 years.
Real Estate
We bought in a gentrifying area of our town for $96,000 5 years ago and have seen comparable houses selling for around $160,000 right now. Still have $85,000 left to pay off which I think will be done in 20 or so years. Paying off the house isn't a top priority right now as the interest rate is low and the payments are low compared to what we're shelling out for loan repayments.
Money priorities now are to knock out the bad debt as fast as possible, without impacting our contribution rates. My parents nailed home the concept of compound interest at a young age and while the bad debt stinks, in my opinion its worth less than the eventual value of future saved dollars, if that makes sense. Perhaps I am thinking about it all wrong, which is why I am here. Lack of an emergency fund also makes me somewhat worrisome, but I hesitate to pull back from retirement contributions because of the missed compound interest.
We have strictly used our 401ks as our retirement savings platform. My next goal, after maxing out my 401k is to create an emergency fund of 6 months expenses. Once done, the plan is to contribute towards a Roth IRA and attempt to max for both my wife and I. Will also plan on maxing out 401k and Roth IRA increases at 50 as well.
I am currently using an account manager for my 401k and am curious what peoples thoughts are on here about it. Charge is 0.4%, and it runs the algorithms based on retirement date, current status, risk profile to set fund percentages and scale back risk later in my working years. I guess it gives me piece of mind to not have to think about where or how to invest, but that 0.4% is going to be a big chunk of change in the future. Would it be wiser to just stick with a Target Date Fund or just eliminate the management right now until say, 40 years old, and then have them run the scenario again. I can opt out of the account manager at any time.
Ideally we'd like to have around $75,000/year in current dollars to spend in retirement, and I think I have a decent start to achieving that by my realistic goal, and maybe even the main goal.
Would appreciate any and all thoughts.
K
Family Details:
Me - 32, Wife - 32, Young Daughter with Plan to probably have one more in the next year or two.
Retirement Goals:
Main Goal: Wife and I retired by 55.
Stretch Goal: Wife and I retired by 50.
Realistic Goal: Wife and I retired by 60.
Financial Details:
Before Tax Household Income - $120,000 (75,000/45,000)
Debt Details (The Bad):
Roughly $150,000 in Student Loan (104,000), Car (6,500), and Debt Consolidation Loans (39,000).
We weren't very smart with our money for a few early years of our relationship compounded with some massive student loans and extended ourselves further than we should have. The consolidation will be paid off by 2020, the car by Dec 2018, and the student loans anywhere from 5-25 years from now. The loans will be prioritized as income comes available from other debts being paid off.
Savings Details (The Good):
401k
Me: Contribute 20% to company 401k. 17% PreTax, 3% Roth. 6% company match. $112,000 saved. Contributions set to increase 2% each year until 401k maxed out.
Wife: Contributes 5% to company 401k, all pre-tax. 5% company match. $14,000 saved. Contributions set to increase 1% every year until 12% reached (this is the year we expect her to stop accumulating raises, salary capped as a teacher).
Pension
As is currently stands, wife will get around $17,000 per year at age 60. If I pull my pension at 60, I would get around $36,000 per year. If I wait until 65 that would raise to $50,000 per year. I expect both values to increase if pension remains, as it's based on average salary, which I expect to increase through future raises.
Salary
Wife will top out at $60,000 at her job. Using historical company annual salary increases (well established Fortune 500 company) at or above inflation, with two raises before retirement (very structured with technical promotion levels). Next pay raise should put me around $85,000-$90,000 (hopefully next year) followed by ~$110,000 that I'm targeting to reach within 10 years.
Real Estate
We bought in a gentrifying area of our town for $96,000 5 years ago and have seen comparable houses selling for around $160,000 right now. Still have $85,000 left to pay off which I think will be done in 20 or so years. Paying off the house isn't a top priority right now as the interest rate is low and the payments are low compared to what we're shelling out for loan repayments.
Money priorities now are to knock out the bad debt as fast as possible, without impacting our contribution rates. My parents nailed home the concept of compound interest at a young age and while the bad debt stinks, in my opinion its worth less than the eventual value of future saved dollars, if that makes sense. Perhaps I am thinking about it all wrong, which is why I am here. Lack of an emergency fund also makes me somewhat worrisome, but I hesitate to pull back from retirement contributions because of the missed compound interest.
We have strictly used our 401ks as our retirement savings platform. My next goal, after maxing out my 401k is to create an emergency fund of 6 months expenses. Once done, the plan is to contribute towards a Roth IRA and attempt to max for both my wife and I. Will also plan on maxing out 401k and Roth IRA increases at 50 as well.
I am currently using an account manager for my 401k and am curious what peoples thoughts are on here about it. Charge is 0.4%, and it runs the algorithms based on retirement date, current status, risk profile to set fund percentages and scale back risk later in my working years. I guess it gives me piece of mind to not have to think about where or how to invest, but that 0.4% is going to be a big chunk of change in the future. Would it be wiser to just stick with a Target Date Fund or just eliminate the management right now until say, 40 years old, and then have them run the scenario again. I can opt out of the account manager at any time.
Ideally we'd like to have around $75,000/year in current dollars to spend in retirement, and I think I have a decent start to achieving that by my realistic goal, and maybe even the main goal.
Would appreciate any and all thoughts.
K