How am I doing for retirement?

I think you are doing quite well. At 32 you are probably only 6 to 8 years into your career. In the early stages you usually need to save for a home, cars and furnishings. It's harder to max out retirement accounts when you are young.

You have a good income and your assets will grow substantially over time. I'm a big saver, but I wouldn't sacrifice everything just to save more. Set a reasonable budget, be efficient with your money and you will be fine.
 
geoffblinks said:
Betterment / Wealthfront / Acorns all charge about .25% year in fees.
Most of my Fidelity is in FIDELITY FREEDOM 2050 which has .75% expense ratio.
Click to expand...

You may want to take a look Fidelity's index funds to lower your expense ratio.

https://www.fidelity.com/mutual-funds/fidelity-funds/why-index-funds

I'd take a long look at the advantages of a pension that can come from a teaching position.

The important thing here is that you're young and you recognize that you need to pay attention to retirement savings. You're farther ahead than I was at your age.
 
In the post # 3, Masterblaster provided one measure to test how you are doing. Another interesting data point is Scott Burn's Wealth Scoreboard developed from government data.

scaletowidth

ref: The Wealth Scoreboard: chasing the big dogs | Dallas Morning News

The more to the right of this table you are....the more frugal you would need to be to retire early. More to the left makes retirement easier. Also gives a pretty good view of how much a person's net worth would need to increase over the years to improve your chances of retirement. Another way to generate ideas on where you are would be to run tools such as FIRECalc: A different kind of retirement calculator with whatever assumptions you feel realistic in terms of salary increases, expenses, etc...
 
OP: You wrote you had $5000 in credit card debt to be paid off "soon." I suggest you change that to "now." It seems to me that most people carrying credit card debt never get out from under that, despite their best intention.
I don't see why you just don't take $5000 from your Money Market and pay it off. From my perspective, you should also pay off the student debt, but I don't want to see this get into an off-thread discussion about "good debt."
Paying off the credit card - and then paying in full each month thereafter - sets the right tone for your overall finances of Living Below Your Means.
Just my 2 cents, FWIW.
 
+1 mystang52 it's a mindset thing... in the 1st post he said "no debt" ..I think that was because he doesn't have car or house payments..but debt is debt....
 
Good discussion here that can apply to many younger persons. I do agree the pay yourself first is very important. LBYM on the rest, get rid of credit card and student loan debt. Once you have 401k eligibility, max that out. The value of compounding can not be dismissed. For now until you have 401k, do an IRA and get some deductibility.

Look at all areas of your budget. Starbucks for morning coffee? No, make your own, as an example. Every dollar you don't spend is one you can save.

Overall, I don't think you are in bad shape. You do need to increase savings though to be able to retire early, in my opinion. Also given your timeframe, you should be in pretty aggressive portfolio choices, and high percentage in stocks to maximize potential growth. Your role is to just keep putting money in, then let the market roller coaster do its thing; all that really matters is the price you buy and the price you sell. What happens between does not matter, so do not panic and sell off when it turns low, just ride it out. You will be better off in the end the less you interfere. Just pick good solid investments or funds and let it accumulate over time.
 
dand76 said:
You may want to take a look Fidelity's index funds to lower your expense ratio.

https://www.fidelity.com/mutual-funds/fidelity-funds/why-index-funds

I'd take a long look at the advantages of a pension that can come from a teaching position.

The important thing here is that you're young and you recognize that you need to pay attention to retirement savings. You're farther ahead than I was at your age.
Click to expand...


That is definitely true. Each individual teacher pensions systems are different though and need to be examined. However, I assume you are just thinking yearly salary, but not the retirement benefit of a pension that the teaching degree would provide. I have several friends who were teachers who retired with literally no money and live great on their pensions alone.
Although I drifted into administration later in my career thus increasing my pension, I could literally take my all investment cash today and throw it all out with the trash and it wouldn't effect my retirement lifestyle one bit.


Sent from my iPad using Tapatalk
 
FWIW I think you're doing way better than the typical household at your age, and the input from the previous posts backs this up, but I don't think that's the kind of question you're asking. You're probably wondering how long it will take to reach FI so that you can RE. In my opinion this depends on how long it will take you to accumulate an investment portfolio value, including financial assets and real estate except for what you live in, of 33x your total net annual expenses after pensions, social security, etc. This would put you at a 3% withdrawal rate which should be sustainable for life.

There are two ways to accelerate this process, and each household has to decide for themselves whether either is worth the effort-- one is to increase savings, and the other is to decrease expenses. Note that income won't matter in and of itself because if it doesn't increase savings, it doesn't help. In fact if savings increases less than expenses, a higher income could actually impede progress.

Your OP mentioned investment strategy, and I think the consensus here is that at your age a 100% allocation to low-cost widely diversified stock index funds available from Vanguard or Fidelity is the best home for your paper assets. Dollar cost averaging by regularly putting your savings into these funds will for most people outperform active trading over the long term. Since these kinds of assets tend to correlate, the breakdown of what percentages in which funds won't matter very much, I think what got most of us here was an unusually high savings rate.
 
I think you're doing just fine, geoffblinks. Heck, when I turned 32, I was not employed, and my net worth was just about zero. And when I did get a job, almost two years later, I made substantially less than you are making now, even adjusted for inflation. 25 years later, things are working out pretty well.

So my advice is simple -- stick with it, work hard and smart, advance in your career, watch your spending, save a reasonable amount, invest simply but wisely, live an honorable life. That's all it really takes.
 
The numbers might not be there right now, but if your DW is doubling her closings, she is on the right track. Real Estate is a tough market, but if she is enjoying it and moving up, it is more important that you to support her than to get to RE a bit earlier. That is something you and her need to decide. I think it is much more important than a specific RE date years in the future. If she continues to be more successful, her earnings will more than make up the difference later on.
 
Your savings seems light. Im guessing your expenses are really high?

To put in into perspective...im 33, wife 31...combined we bring in $140k...On jan 1, 2016 we had a combined net worth of $618,000. We do not own any properties...thats just 401's, roths, savings and taxable investments.

Not bragging...just showing that you do not need to make a lot of money to accumulate money. We're living proof.
 
Just max out the 401k & 2 Roth IRA's.
Cut your living expenses & you have it made.
 
At 32 I had a negative net worth. At 42 I retired with a comfortable 7 figure portfolio. To make that happen, I needed to take some risks (start a business), seriously improve my career skills, and save aggressively.

So, you could get on track, but you need to make some changes to what you are currently doing.

Sent from my SM-T237P using Early Retirement Forum mobile app
 
I think you're way ahead of the game just paying attention to it and educating yourself. You're bound to make improvements along the way now that you're aware of where your money is going.

To that end, I think the biggest help for us has been using a budgeting tool to actually make a budget each month because it gives us a plan to follow.
 
It's been some time since my last post, but I wanted to say thanks to everyone for your thoughts and opinions. Many of your posts were really helpful and encouraging.

Since this post:

  • I have rolled over my Fidelity IRA to Betterment, reducing my expense ratio from .75% to sub .25%.
  • My wife had an opportunity to join the #1 Real Estate team in LA as a Marketing Director. She is now making consistent income as well as a % of the transactions she works on. She went from break-even to positive earnings. She has a way to go in recovering from a few years of heavy expenses, but she's on her way to big savings and high earning potential within a few short years. Most importantly, she loves her job and it makes her happy.
  • My job started offering 401K matching so I signed up and currently divert 8%. I plan to jump to 10% next year and then gradually increase it until I max. Some will disagree with this, but I need time to adjust.
  • I have a $10-15K bonus coming in Feb. I plan to max our IRA contribution for the year and place the rest in Betterment.
  • I was granted a nice sum of RSU's from my employer. If I can stay at my employer and vest them over four years, they could be worth $35-70K (depending on the stock price), all of which will go towards saving.

All said, I'm currently saving at just under $2,000 a month.

The last few years, the wife and I have taken some risks with cofounding businesses, jumping into real estate sales, etc. While none have provided the wealth we're after and we lost 4 years of savings opportunity, we learned a ton and pushed ourselves to do things we never thought possible. This has contributed greatly towards our current and future earning potential. We wouldn't trade those experiences for all of the money in the world.

Wishing you all a Happy Thanksgiving.
 
Congratulations - you seem to be on the right track. When I was your age I was underwater financially, but I followed the "pay yourself first" strategy, saving as much as I could off the top. I then deliberately lived below my means, not buying the expensive house everyone told me I could afford, etc. It worked - going by that table posted earlier, I'm in the "top 5%" of net worth for my age and I will be retiring early in a few weeks.

You can do it - you've made a great start, just keep it up.
 
When we were DH 39 and myself 37, two kids. We moved to Seattle with $137,000 in our retirement accounts. 19 years later, DH retired with over 1,000,000 in our retirement accounts. Paid cash for DD to go to college. Son didn't want to go. We were able to retire at 57/50. Life is good. Just keep plugging away and you will be able to be FIRED. Don't let anyone tell you otherwise. You are on the right track.
 
Great job of making the changes. Around your age, I had my "oh s***" epiphany after buying a new house and a second new car, and staring at how much debt we were in, and after we made the decision for my DW to stay home to take care of our children.

My net worth was positive but certainly not enough to retire early. I made two decisions that forever changed my trajectory:
1) Keep tabs of your income, expenses, every month, and net worth every quarter. You will naturally change behavior from this transparency.
2) Whenever you get a raise, keep your expenses flat.

I find that if you do these two things, everything else will take care of itself.
 
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