pb4uski
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Oh.... misunderstood what you wrote before. Sorry.
How am I doing for retirement?
- Thread starter geoffblinks
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Just keep plugging away.
As pb4uski posted - pay yourself first and learn to live on the balance. With an income like yours you should be able to put some in 401k, etc.
As pb4uski posted - pay yourself first and learn to live on the balance. With an income like yours you should be able to put some in 401k, etc.
tmm99
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I think things will be easier once you can start contributing to your 401K since you will be paying less for taxes once you shelter some money in there.
I was making about the same as you working in Northern CA before I left to retire. I was putting the max amount (with catch-up) in my 401K, plus saving about 25K after-tax in addition, so even if you deduct the child support cost, you should be able to save a bundle, although, I don't know your spending habits, so it all depends on that. (I tightened the belt big time in the last 10 years of my wo*king years to achieve FIRE.) My yearly expense was about 53K (and almost half of that was for the apartment rental.)
I was making about the same as you working in Northern CA before I left to retire. I was putting the max amount (with catch-up) in my 401K, plus saving about 25K after-tax in addition, so even if you deduct the child support cost, you should be able to save a bundle, although, I don't know your spending habits, so it all depends on that. (I tightened the belt big time in the last 10 years of my wo*king years to achieve FIRE.) My yearly expense was about 53K (and almost half of that was for the apartment rental.)
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I have never ever looked back and thought to myself, "Gee, I wish I hadn't saved so much". Save as much as you can now. My wife and I are putting away 91K this year (and last year too). Believe me you will appreciate it when your portfolio starts to take on a life of its own. We make less than you and your wife combined (but not much).
I just wish I was more aggressive with my savings at 32 instead of waiting until I was 40. Almost everybody here will tell you that.
I just wish I was more aggressive with my savings at 32 instead of waiting until I was 40. Almost everybody here will tell you that.
This is my most recent pay stub. Note: there is not PII in this screenshot and "Geoff Blinks is not my real name (in case a mod is inclined to delete it).
A few notes:
- Medical / Vision / Dental is paid bi-weekly
- This does not include 2 Fed Exemptions (adjusted today)
- My 401K doesn't kick in until after 1 yr of employment
- $1K in child support (which is post-tax) is not shown here. This will double by summers end.
If you are getting paid bi-weekly (26 paychecks per year), then your monthly net is actually $3238.69 * 26 / 12 = $7017.16.
Your housing cost is $2150 / $7017 = 30% of net, so that's not particularly out of line. It's more than you paid in Boston, but presumably you earn more in CA too. Also, you have lower energy costs, lower food costs, need less clothing, etc. Overall, cost of living in Los Angeles is not going to be more expensive than Boston. (Actually a search I just did gave me Boston as 6% more than LA, though having your own house there does change the equation.)
What is "Ee Reimbursemen"? That is costing you over $6K per year. Can you reduce that?
Your max 401K contribution will be $673.08 per check. You may get a raise before you can start contributing. You could also look at directing the positive cash flow from the Boston house into that. It might be better to save than to pay down the debt right now.
The $2K in child support is high. That alone is going to be 28.5% of your net, but yeah, kids are expensive. Supporting them from afar is even more so. Can the child live with you for part of the year and you not pay child support for those months, or collect it from the other parent?
geoffblinks
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Ee Reimbursemen is a one-time deduction from an overpayment in my last check.
Re: Child support. Nope. She has me by the balls. Texas is very much biased towards the mother and I'd have to damn near prove she does crack and is abusive in order to get more visitation and lowered support. In addition, every three years she can request a review my income and adjust it to the court-ordered maximum.
They could care less that she doesn't work, is re-married with other kids, lives with her family, doesn't spend the money on my daughters well-being. They just don't care. They DO care if I don't pay and are quick to issue a warrant for my arrest if I don't! (which has never happened thank goodness).
As far as she and the state are concerned, my only value as a father is to write a check. This is unfortunate as it is distorting my 13 yr old daughters view of the value of men and fathers in general...but that's a whole other issue.
So yea...five more years and I'm free from that and can have my finances and my relationship with my daughter restored.
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You need to start playing catch up. You should have probably 2-4 times your income saved by that age, unless it just jumped up.
I'm 37, 550 saved. Make probably less than you do. It varies.
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You're pretty much my double except I'm 41 and my child support is less than your's (but I did have a hefty alimony at one point). I'm also in SoCal, make a bit less than you and my mortgage is approx what your rent is. The divorce without a question set me back 10 yrs financially (I calculated what I had to divide up, sell, time lost, lawyer fees etc).
At 32 you have lots of time on your side. What is your target retirement date/expenses?
After the dust settled from the divorce to get back on track I've been maxing out the pre-tax savings, and I invest $2k per mo in a Vanguard account I opened a couple of years ago- these are automatic payments. To give this a bit more numbers in 2013 at the age of 38 I think I had $240k to my name with not a lot of equity. I just passed the $430k mark (and $200k in home equity but I don't really count this) and hope to cross the $500k mark next year. My goal is to be FI by 50, it'll be close but we'll see. I'm happy to post my expenses etc if that helps you but I spend approx $55k per year and a big chunk of that is mortgage.
At 32 you have lots of time on your side. What is your target retirement date/expenses?
After the dust settled from the divorce to get back on track I've been maxing out the pre-tax savings, and I invest $2k per mo in a Vanguard account I opened a couple of years ago- these are automatic payments. To give this a bit more numbers in 2013 at the age of 38 I think I had $240k to my name with not a lot of equity. I just passed the $430k mark (and $200k in home equity but I don't really count this) and hope to cross the $500k mark next year. My goal is to be FI by 50, it'll be close but we'll see. I'm happy to post my expenses etc if that helps you but I spend approx $55k per year and a big chunk of that is mortgage.
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geoffblinks
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Thank you. I would love to hear how you manage to put away $2k / month as well as see your income/expenses. Do you own your home?
One of the things we're struggling with is that we want to buy a home here in LA but saving 20% or even 5% is going to take forever when, as evident by all of the posts here, we're behind and not saving enough for retirement.
This thread has me worried to say the least.
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geoffblinks
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How did you get to 550? Were there any major cash in-flows like inheritances or bonuses that helped speed things up? Is that inclusive of real estate?
ivinsfan
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I don't know how many hours a week your DW works as a realtor ,but if you want to get ahead money wise, she should think about a career change and a better paying job. All of her earnings can go to savings...
geoffblinks
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She does it full-time and we are thinking about this. The thing about her career is that we are already adjusted to essentially one income. If she can continue to double her closing as she has done over the last two years, she is going to help us greatly accelerate our earnings/savings. The question is, will she be able to and how long will it take...
She has her Masters in Special Ed and that isn't a field that makes a lot of money so even if she does switch careers at her age, it's not necessarily going to yield a substantial change in income.
papadad111
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I think you're approaching savings all wrong.
You seem to be saving based what you have left rather than saving first and getting by with a lifestyle based on you have left after saving for retirement first.
Make your retirement savings your top priority. Chuck 20. percent of gross into either 401k or IRA or taxable. That's 36 k per year or 3k per month. 18k in 401k for you and wife would do it. If wife can't do 401k then do Roth and traditional IRA's. Try to get 30k per year in there minimum.
Now pay your other bills in what ever priority order that you decide.
When the money runs out, items that didn't get funded get cut.
The concept is called zero based budgeting and it works.
Pay yourself first.
Period end of story.
Put on the big boy pants - Don't sniffle about how expensive it is or how hard it is in SoCal. There are trade offs for every place one chooses to live
Now, If You want results, that's what it's gonna take. Good habits. Income will grow. Don't inflate the lifestyle.
Dare to be different. Normal people work til they're 67 ...
You seem to be saving based what you have left rather than saving first and getting by with a lifestyle based on you have left after saving for retirement first.
Make your retirement savings your top priority. Chuck 20. percent of gross into either 401k or IRA or taxable. That's 36 k per year or 3k per month. 18k in 401k for you and wife would do it. If wife can't do 401k then do Roth and traditional IRA's. Try to get 30k per year in there minimum.
Now pay your other bills in what ever priority order that you decide.
When the money runs out, items that didn't get funded get cut.
The concept is called zero based budgeting and it works.
Pay yourself first.
Period end of story.
Put on the big boy pants - Don't sniffle about how expensive it is or how hard it is in SoCal. There are trade offs for every place one chooses to live
Now, If You want results, that's what it's gonna take. Good habits. Income will grow. Don't inflate the lifestyle.
Dare to be different. Normal people work til they're 67 ...
orangehairfella
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She's making $35k right now, and from what you say, spending it all on the costs associated with being a realtor. She's working, but not contributing.
Will she make a ton of money as a special ed teacher? The median salary for a highschool special ed teacher is $56k, for 9 months of work per year, without offering to teach summer school. But you're looking at it wrong anyway: It is not what you earn, it is what you keep.
She can work just about anywhere in the US and the work is stable, public sector, employment. The tax advantages of the public school system can be pretty impressive: 403b, 457b, pension. Depending on the district she can tax shelter nearly $50k a year. Thats $50k a year, into savings. You asked a previous poster how they managed to save $2k a month. That right there is how you save double that - and we haven't even gotten to your income yet, and you haven't had to modify your life style at all.
The above poster is absolutely correct, hike up your britches and figure out how to save as much as you possibly can. Don't figure out how much you can save based on how much you're spending, figure out how much you can spend based on what you want to save.
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It's all about setting goals and priorities so I don't think you need to worry per se but instead get serious about your financial goals. From an income perspective you're in a great shape- better than most and you still have time on your side -but don't let it get away.
As to your question- I do own my own home and was fortunate that I was able to buy my ex out of it. My first house required me to commute 45 miles one way but it was the only way I could buy a starter home. My second home required me to commute 60 miles one way, but it was a nicer and bigger house than the first and suited me and the ex better for starting a family. After selling those (in my mid thirties) we rented for a bit and when the market dipped I bought my current house closer to work and in a nicer part of town. One of my criteria was that I'd be able to afford the mortgage and run the household if the ex lost her job. Well she didn't lose her job but the end result was the same (worse because of alimony and child support) lol. A couple of years of ramen noodles and Del Taco's bean and cheese burritos later once the alimony disappeared things improved. I consider myself lucky that nothing worse happened like a job loss though it kept me awake many nights wondering if I made the right choice keeping the house on a single income and very little post-tax savings. Many years later I still worry but I have enough that I can sustain a job loss for a while without losing the roof over my head.
Anyway, I won't bore you anymore- here are my fixed expenses:
Mortgage: $2k
Utilities: $250
Transportation: $600 (includes gas, dmv fee, insurance and AAA)
Food: $700 ($400 groceries, $300 eating out)
Child support: $480
School expenses: $250 (pre/after school care)
Cell phone: $25 (+work provides $50 stipend)
Amazon Prime, Netflix = $20
Total: $4325 x 12 = $52k per year (take home is approx $85k so not difficult to save $2k per month)
I didn't include things like entertainment or hobbies etc but that varies- usually trips with DD and visiting family out of town etc. Also didn't include the cost of home maintenance- some years it's zero, other years it's quite a bit. Hope this helps.
Golden sunsets
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What about your daughter's college expenses and future wedding? You seem to be planning no more expenses once she hits 18. Is that your plan for your child/children with your current wife as well?
eytonxav
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Just remember your real estate holdings and income will likely increase as you age. From my perspective, I don't think your in bad shape for someone your age. I would target 15-20% of your income for retirement savings and budget the remaining $s to live on within reason.
ivinsfan
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..teenagers are expensive and you make an excellent wage. In this day and age very few 18 year olds can get by without parental money of some kind.
Child support is not the main issue in your household. Your spouse payed and trained for an advanced degree and is working outside her field for peanuts. As as a matter of fact if you have kids of your own and need daycare, your wife's job will almost go negative. Considering the high cost of housing in CA a successful agent should make a lot of money.....I imagine a teacher in CA will make more then the national average.
Markola
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What Papadad111 said. Like everyone else, you've made choices, those choices resulted in consequences and responsibilities, and life events happened beyond your control but nevertheless cost you money. In your case, as in mine, these things mean we cannot sit on a beach with a cooler and fishing rod everyday in our 40s. So what? My dad just retired at 75 and has no idea what to do all day, so your story could play out in an infinite number of unpredictable ways. Look around you and notice that your assets are already vastly larger than most Americans. That head start is worth something to you. Study personal finance, carve out half or more of every raise going forward and shove it in pre-tax accounts. Setbacks will happen but just stay out of needless debt and build your stash. Teach those kids in your life to start early, show them how to do it, and live by example, too. Age 59.5 will be on the horizon sooner than you can possibly imagine, yet you will have a large pile that your friends won't, which means you will have OPTIONS and can figure things out at that point. For example, maybe you won't be able to sit all day with your cooler at Malibu but you could in Mexico or Costa Rica, and invite all of your friends who will work till 70 to come visit during their vacations.
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No realestate in that number, just savings and investments. No inheritances. It's just years of putting savings before all else, putting it all in stock index funds, and working hard at increasing my salary.
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Markola
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PS Because I can't help myself: There is some typical American Consumer Nonsense above implying your retirement plan is miscalculated because you must pay for kids' expensive weddings. LOL! We paid for our own, had a blast without in-law interference, and are still married 20 years later. My brother just got married at the courthouse. And who says your kids' educations must cost you your retirement plans? Read some Dave Ramsey and think through your options for yourself.
Car-Guy
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I'm often considered an outlier on this forum so take this with a gain of salt. When I was your age, I made far less than you (inflation adjusted), was in debt, had a negative net worth, didn't live below my means and my wife was a stay at home mom. Less than 30 years later, I retired with millions and zero debt. Wife never worked, I didn't win the lottery, no inheritance, etc.
Life is somewhat a gamble and series of personal choices for most of us. I never practiced LBYM (still don't), but I did find a better paying job with great benefits and growth opportunities. Between that, hard work, "reasonable savings" and maxing out my 401k seemed to work pretty well for me. YMMV.....
Life is somewhat a gamble and series of personal choices for most of us. I never practiced LBYM (still don't), but I did find a better paying job with great benefits and growth opportunities. Between that, hard work, "reasonable savings" and maxing out my 401k seemed to work pretty well for me. YMMV.....
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ivinsfan
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I agree with what you wrote but there is a difference between paying for ALL those extras and assuming the day your kid turns 18 your child expenses will be over!
Golden sunsets
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Yes. Thank you Ivinsfan. I did not mean to imply that he should, but that the concept of no more expenses once a child hits 18, is not typical. And it is unclear to me if he has or will have children with his current wife. I thought I saw a reference to a fiancee as well as current wife.
