Am I as far behind as I feel?

[rodi]

As Gumby mentioned - the second best time to start saving for retirement is NOW. And you're doing it. One of the 'benefits' of getting serious about retirement savings is the more you don't spend, but put in saving you get 2 benefits... 1) bigger savings. (duh), and 2) reduced spending. If you are spending less (because you're saving more) then you don't need as large a nest egg to retire on. The key is to figure out how to have a quality of life that makes you happy, and still allows saving. Once I got serious about this (at about your age) I increased my savings significantly by finding simple ways to save money each month. (Change cell phone carriers, renegotiate cable or cut cable, mow my own lawn, start cooking gourmet food at home instead of eating mediocre food at a restaurant.)

Welcome to the forums.

 

[Dash man]

You’ve received a lot of good advice. Remember you are in your prime earning years and be sure to save your pay increases.

 

[Red Badger]

A lot of good guidance for you already. I would add that (if you haven't already) you might want to binge read "mr money mustache" one week end. I'm not a member of his cult, but you can cherry pick ideas to reduce expenses, and thus help secure your goals.
Best of luck!

 

[copyright1997reloaded]

Lots of great advice. Just to emphasize, your desire to max out your savings is also an opportunity to see how you really need. You need to seriously look at your ongoing expenses and look for ways to reduce them.

Do you need a new vehicle every x years, or can you make do for a longer period of time.
Do you need a new smart phone? Do you need the unlimited data plan? Do you need the $160/month cable plan? And so on. These things make a big difference over time.

Remember, if you need 25X to produce X $ in retirement, the lower the X the lower the amount needed in total.

For example: I am constantly amazed at some of my nieces and nephews and the "need" to get a new (leased) vehicle every couple/few years. Compare that to (cheap) me, who made a lot more $ than them while working, but would buy a fairly middle of the road vehicle and keep it ten or more years. That is just one of many, many examples of why the typical person isn't able to retire early.

I'm not saying you have to eat rice and beans every night for the rest of your life. But rice and beans once a while is fine. (The generalization here is that another area where many people spend lots of money is in dining out and entertainment. A side benefit is that prepared from scratch home cooked meals can taste great and you have more control over what is in them, e.g. sodium, etc.)

 

[jollystomper]

To the OP, you are ahead of this game. A quote from this article (https://www.fool.com/retirement/2017/10/22/heres-how-much-the-average-50-something-american-h.aspx), in October 2017:

So how much does the typical worker in his or her 50s have saved for retirement? The Economic Policy Institute reports that for households between 50 and 55, the average savings balance is $124,831. For those between 56 and 61, that number comes in a bit higher, at $163,577.

But these figures don't tell the whole story. Because a select pool of strong savers can bring up the average and compensate for poor savers, it's often more helpful to look at the median savings amount for these age groups. For households between 50 and 55, the median retirement account balance is just $8,000. For those between 56 and 61, it's $17,000 -- not much better. And when you have a situation where the median is considerably lower than the average, it means that most 50-somethings have less than average

Consider yourself ahead, and with lots of runway to improve. At your age we had less in retirement savings that you do, and where dealing with kids in and about to go to expensive colleges. As everyone says really get to know what your expenses are, figure which ones are truly needs vs. wants, LBYM, do not raise your lifestyle with any income increases, delay some gratification, if married do not get divorced, and you will do well.

13 years removed from age 47, our savings + investments have more than tripled and I am retiring. The bulk of that growth was not due to picking spectacular investments, but from increasing our savings rate from the mid-teens to 25-40% of our gross income over those 13 years, and steady investing in basic index funds.

 

[brucethebroker]

If you are only going to have one income for a couple then it helps that that one income is equal to more than 2 average incomes. You should be just fine if you keep your expenses down and savings up.

Yep. But remember that the USA is filled with unemployed/underemployed former 6 figure earners who were "downsized" in their 50's, then never able to come close to that income when re-hired (if re-hired). Age discrimination is alive and well. Plan on your current income until age 50, then have a plan B and C ready (downsize your home?? One auto?? Add a PT job??) on the ready.
It has happened to a number of us here....

 

[Dtail]

Yep. But remember that the USA is filled with unemployed/underemployed former 6 figure earners who were "downsized" in their 50's, then never able to come close to that income when re-hired (if re-hired). Age discrimination is alive and well. Plan on your current income until age 50, then have a plan B and C ready (downsize your home?? One auto?? Add a PT job??) on the ready.
It has happened to a number of us here....

Big +1 especially depending on how "young" your industry is.
I took a package but was eventually going to be laid off just due to my age and comp. No one in my office was over 60 years old.

 

[Mdlerth]

401kmart is the savings place

I'm currently at $435k in my retirement accounts...

...Am i really as far behind as I feel?

I can't comment on how you feel, but if it's any consolation you're miles ahead of where I was at 47. I was a paycheck-to-paycheck guy for 20 years before getting serious with retirement planning. I'm now streaking toward 60 and expect to be in position to FIRE in December.

I will, however, offer an observation about savings. Based on my own life experience, having amassed approximately thirty four cents, two slugs and a bottle cap by age 42, a critical element in my later financial story was that the money needed to be invisible and unreachable.

Invisibility via automatic deductions meant it never showed up in my paycheck. Instead of having to deliberately impose painful cuts to the household budget (which might have caused friction in our storybook marriage) our p-to-p lifestyle adapted itself to what was in the bank.

Depositing the savings into tax-deferred vehicles, with their concomitant restrictions on early withdrawals, meant that we were strongly discouraged from reaching into the retirement pile to meet The Big Nonrecurring Expense (BNE) when it would show up.

Surely you've seen The BNE: heat pump craps out, car dies, unscheduled medical bill, etc. It attacks without warning, and demands immediate attention, i.e., $$.

BNEs are particularly pernicious, since they wear the camouflage of legitimacy. They aren't extravagances; who could possibly argue that repairing a leaky roof is wasteful? Or that replacing the water heater which is busily turning your basement into an indoor pool wouldn't be a wise thing to do?

But you must resist the temptation to raid your retirement to fund the BNE. However you do it, you need to keep your RE kitty out of reach. Add a line item to your budget for BNE accruals, build an emergency fund, lock up your IRA statement in a safe... whatever you do, just make sure you leave the long term savings alone so they can grow.

Good luck!

 

[dvalley]

Ha! in comparison to the avg folks here (on ER) most people would feel they're behind. I'm 43 with $650k in savings+investments and trust me I feel way behind when I see others post their milestones. However, realistically for my expected expenses and my retirement date I'm on track (according to the calculators, including Person Capital which btw I highly recommend you start using, it's free and tracks all of your savings, investments, expenses and gives you nice monte carlo predictions, you can add life events like marriage, college, SS payouts etc). Based on your expected expenses and your retirement date I think you should be fine- especially if you start putting away even more now.

 

[samcat]

If you leave the company, can you roll the NQDC into an IRA instead of paying taxes on it right away?

 

[dvalley]

If you leave the company, can you roll the NQDC into an IRA instead of paying taxes on it right away?

No, NQDC is not 401k. It's usually offered by companies that don't meet the 401K requirements. NQDC is simply tax deferred until the employment ends and you can either elect to take a lump sum or defer it another 30yrs (or such which is not a good idea in case the company goes under).

 

[Mulligan]

Machine, Are you also maxing out for your spousal Roth also? This can be done despite the fact she does not work.

 

[Machine99]

Machine, Are you also maxing out for your spousal Roth also? This can be done despite the fact she does not work.

I opened a Roth IRA in her name last month and plan on maxing both of our Roth IRAs each year.

 

[Machine99]

I really dislike my NQDC plan. I plan on dropping my contribution from 15% down to 6% (for match) at the end of the year (can only make changes once at the end of each year). I'm going to invest that money in a taxable account instead.

 

[Mulligan]

I really dislike my NQDC plan. I plan on dropping my contribution from 15% down to 6% (for match) at the end of the year (can only make changes once at the end of each year). I'm going to invest that money in a taxable account instead.

Your plan is looking good Machine.... I did everything backwards. I borrowed money to retire early and have contributed more money to my Roth in the past 9 years I have been retired than I did when I was working.....Having a pension allowed me to chase ER in a way the real world doesnt have an opportunity to do. Yep, I would still be in the salt mines without that, lol.

 

[mistershankly]

I did everything backwards. I borrowed money to retire early and have contributed more money to my Roth in the past 9 years I have been retired than I did when I was working

Any details on what/how you did this, and what was the path that led you to borrowing? Was there a particular opportunity that arose or did you choose to maintain a mortgage, etc while investing aggressively in the market (and into retirement)?

 

[Mulligan]

Any details on what/how you did this, and what was the path that led you to borrowing? Was there a particular opportunity that arose or did you choose to maintain a mortgage, etc while investing aggressively in the market (and into retirement)?

Machine it was just an odd set of circumstances. Due to the fact WEP slashes my SS, I was able to buy 4 social security service years onto my pension so I could retire early, as in my 40s. It was abit under a 100k to buy them. Good ol US Bank made a mistake and offered me a 0.99% credit card cash advance for duration of payment (no time limit), so I maxed it and made them pay for that dumb offer. So I borrowed about a third of that money on my CC and was still paying it off in retirement.
Im really just a cash flow guy, not a wealthy person. But cash flow is very good. Im pretty low maintenance person, but I only spend about 60% -65% of my monthly pension and its Cola’d. I didnt really have a lot of money when I retired compared to others here and certainly not enough for an early retirement at any age, maybe 70, lol. But it grows monthly and the day I die will probably be the most money I have ever had.
I still have 20 years or so to go on my mortgage and pay full rack rate individual health insurance from crappy exchange (dont take meds or get sick, so deductible doesnt hurt me). Mortgage payment which includes all escrows is only $750. Rural fly over country homes are cheaper, lol.

 

[Oakster]

This is something I've been trying to figure out. So many variables. I know this is not the home we will retire in. I've been reading about paying cash vs mortgage and keeping money invested.

Then I wonder is social security will even exist in 13 years....

I'm probably over worrying. I'll just stick with trying to save as much as possible for now...

I like the idea of having the plan. Estimate what you are going to need to have annually when you retire and create a plan to get there. The problem with not knowing is that you can get paralyzed by trying to analyze stuff without enough data. Its hard to save a lot to make a difference when you have debt, want a new house etc. With a good plan, you can know if you should knock out your debt and save little for the next year or two and then really crank it up, or what the next step may be.

 

[Perryinva]

Good stuff here. If $450k saved by 47 is behind, then either you have some lofty goals or I was WAY behind at 47. We have 2 pensions so that makes a difference but dang, don’t beat yourself over that! I had half that at 47 and could retire today at 60 if that was my goal.

 

[COcheesehead]

I just looked back at when I was 47. I had $1,335,000 put away. Today I have over 4x that. Signs of a good stock market, continued aggressive saving, rising RE values.
No pensions other than SS.

 

[kgtest]

If I were you I would plan to payoff Credit card debt within a year, and your mortgage before you retire.


Even at 7% avg returns on your current balance at 60 you would have almost $1million.


If you use 3% SWR that kick out 1,000,000 *.03 = $30k/yr for 30yrs.
If you use 4% SWR which is not as conservative, than $40k/yr for 30yrs.


Of course your COL should go down slightly after you quit working, most in the forum here have said this, with some stating medical or travel was more than they expected.



If you own a home, at some point you will downsize and can capture some equity minus LTCG.



So ask yourself, even if you had no home, and didn't travel, without any SSA, could you survive on $3,333 /month? My grandma lives on far less at 88yrs old and has for quite some time.


Anything more is a raise, which means you can blow more dough. So if you take SSA at 62, or 65 or whenever that is a raise.

 

[kgtest]

I just looked back at when I was 47. I had $1,335,000 put away. Today I have over 4x that. Signs of a good stock market, continued aggressive saving, rising RE values.
No pensions other than SS.

How many years have passed since you were 47? I hear if you aren't taking withdrawals, you can expect your folio to double about every 5years on a conservative guesstimate.


If that is the case roughly 10years have passed?

 

[COcheesehead]

How many years have passed since you were 47? I hear if you aren't taking withdrawals, you can expect your folio to double about every 5years on a conservative guesstimate.


If that is the case roughly 10years have passed?

I am 55 now. Keep in mind that includes savings, not just market returns.

 

[FreeBear]

Yep. But remember that the USA is filled with unemployed/underemployed former 6 figure earners who were "downsized" in their 50's, then never able to come close to that income when re-hired (if re-hired). Age discrimination is alive and well. Plan on your current income until age 50, then have a plan B and C ready (downsize your home?? One auto?? Add a PT job??) on the ready.
It has happened to a number of us here....

Probably some of the best non-obvious career advice I have heard. I figured this out for myself only 5 years into my profession because my employer started offshoring. Between increasing chaos and general miserly added to my limited shelf life inspired me to near double my savings rate. I FIRE'd 15 years later. Having big savings and being willing to adapt will make all the difference and give you reasonable choices. I have been sounding a similar warning to young folks starting careers today.

Big +1 especially depending on how "young" your industry is.
I took a package but was eventually going to be laid off just due to my age and comp. No one in my office was over 60 years old.

I w*rked in electronic tech. I was looking long in the tooth in my 40's. The 60 year olds were long gone and the 50 somethings were following them. Actually, this was a great gift since the ugliness compelled me to FIRE on my schedule and get on with the rest of my life instead of waiting the to decide for me.

 

[FreeBear]

But you must resist the temptation to raid your retirement to fund the BNE (The Big Nonrecurring Expense). However you do it, you need to keep your RE kitty out of reach. Add a line item to your budget for BNE accruals, build an emergency fund, lock up your IRA statement in a safe... whatever you do, just make sure you leave the long term savings alone so they can grow.

Yep, an emergency fund to "budget" for the "unknown unknowns". Agreed that we must make spending beyond the budget as inconvenient as possible.

Tons of good stuff on this tread. Will use many ideas to help some young friends who are just starting to get their career bearings. Must get to them before a life of max consumption takes hold.