Just turned 30, hope I'm doing ok

[nicedream]

I've been lurking for a while on this board, thought it might be time to make a 1st post

I just turned 30 a month ago, and my retirement account (457b) just passed $30k. A little more background on me:

• Married, no kids. Combined income is about 90k/yr. This is an estimate since the wife was working part time while in school and the hours are irregular. Now that she has graduated her new job will put our income at around 120k/yr, but along with that comes the student loans of course.
  
• I work for the state gov't. I have a little over 6 years in, and was vested at 5. So I am counting on a pension for part of my retirement income.
• Our mortgage is a 15 year @ 6.25%, with a little under 12 years to go. $58k of principal left. Yes, I know the arguments for and against the 15 year mortgage, and for me the psychological factor of not having a house payment is *very* big. I want it almost as much as I want ER.
• In addition to our state pension, I can get health benefits for life after 25 years of service. I will be just shy of 50 years old at that time, and would like to at least partially retire then.

Although I would like to have more money in my tax deferred account, I evaluate the situation and the job security+pension+benefits make the slightly lower pay in government well worth the trade off. Plus the fact that working for the government allows me to invest in a 457 plan, which I can withdraw at separation of service, without waiting till 59.5. I think I'm doing ok (but who among us doesn't worry if there are ways we could do better?).

Anyway, just wanted to make an official appearance and say HI. Any comments or advice would be welcome.

 

[DblDoc]

Welcome. You have time on your side and have started planning so you are ahead of the vast majority. Keep it up and you'll do fine.

DD

 

[nicedream]

Thanks Doc, that makes me feel great. With some of the high $ amounts I see on this board it can be intimidating at times.

I am putting just shy of 15% into my 457 and always trying to figure out if I can increase it, but a lot goes towards the mortgage that I want paid off within 10 years . By the way, you may wonder why I don't contribute an *even* 15%, it's because our enrollment form only gives you an option of a flat dollar amount, not percentages.

 

[boilerman]

Thanks Doc, that makes me feel great. With some of the high $ amounts I see on this board it can be intimidating at times.

If you haven't run some numbers in a spreadsheet, you should just so you can see how quickly it can grow. Add your contribution, any employee match, and the wonders of compounding with market-like returns and your $30K will surge before you know it!

 

[nicedream]

If you haven't run some numbers in a spreadsheet, you should just so you can see how quickly it can grow. Add your contribution, any employee match, and the wonders of compounding with market-like returns and your $30K will surge before you know it!

I look at some of the complex retirement spreadsheets, and some of them just have so many options that I either have no idea what to put in, or else the values would just be such wild guesses that I wouldn't have confidence in the projected results.

I am not a financial guru, nor do I pretend to be one. I have toyed around with some of the simpler calculators where you can enter principal, contribution amounts, years, and expected rate of return. I set my 457 portfolio at 100% aggressive because of my age, and will gradually get more conservative over time, but as far as picking individual stocks or funds, I don't really even try.

BTW, what is a typical rate of return for calculations? I usually use 8-10%, though I have been happy to be getting much higher lately.

PS-We have no employer match for our 457, so the 30k I have is entirely from my own contributions. Our "employer match" is our pension contributions. That's ok with me.

 

[Fireup2020]

Welcome!

NJ or PA state? (not sure if PA is 25 for bennies too)

 

[boilerman]

BTW, what is a typical rate of return for calculations? I usually use 8-10%, though I have been happy to be getting much higher lately.

I tend to use a more conservative 5 or 6% return for my projections since I have only 10 years to go, not 20+ years. I think the longer term you look, the closer to the average of 10% you could use. I am also new here and was told that the FIRECalc tool has options for projecting out capital accumulation that might be useful. In any case, I wish I was as on top of things at 30 years old as you are. That's most of the battle!

 

[GoodSense]

Welcome! Sounds like we are in similar situations - 30 years old with a 457 plan with no employer match, and a defined benefit pension. Except that my pension has no health bennies. In any case, I agree 457 is a very nice plan for precisely the reason you mentioned.

It sounds like you're in pretty good shape. With DW getting out of school, things will ease up quite a bit, too. Way to go!

 

[chinaco]

IMO - You are in good shape. Having an awareness is the first step. Sounds like you are managing your debt.

Here some advice. While you may be making $120k/yr Live like you are today and invest as much as you can. Use a diversified portfolio of low cost mutual funds stocks and bonds... and you are on your way. If I were you, I would put a stake in the ground for FIRE. This would include a target expense and Portfolio size (with inflation projections) to support the expense. I would identify an age for ER now. Plan the work and work the plan!

Do you intend to ER at 45, 50, or 55?

 

[BigBob]

I also like the idea of paying down the house and becoming totally debt-free. I would also suggest looking at contributing to a Roth IRA. You can put $4K for yourself and another $4K for your wife, and next year it goes up to $5K each. I like this option, because even if something changes (such as children, job loss, etc), you can draw out your contributions without any penalties. Something you might consider as you have more $$ coming in.

 

[TexasGal]

Welcome! I think you are doing a great job and are way ahead of most people your age. If you can live like you still just have one salary and save/invest the rest, you will be FIRE'd before you can blink. I know that from your perspective it seems like a long time to FIRE, but trust me, when you are on the other side looking back you will wonder how time passed so fast!

Do you plan to have kids? Have you decided what your target retirement age is yet?

Enjoy life along the way, too. That is very important.

TG

 

[Arc]

Save as much as you can while you are young and sleep well.

 

[nicedream]

Hi, original poster here checking back. It's been a really hectic past few days, but I wanted to come back and make a proper post to thank all of your for your replies. It feels good to hear other people validate your plans and tell you you're on the right track. I'm pretty sure we all have a little nagging doubt in the back of our mind from time to time.

Welcome!

NJ or PA state? (not sure if PA is 25 for bennies too)

PA. 25 years at any age gets you bennies (medical only though, not vision or dental)

IMO - You are in good shape. Having an awareness is the first step. Sounds like you are managing your debt.

Do you intend to ER at 45, 50, or 55?

Yes, we realy dislike debt. No credit card balance, our only debts are the mortgage and student loans, plus the wife's car. We were going to pay cash for it, but decided to borrow at ~4% for the car and pay off the 2nd mortgage which was 8.25% instead.

I am shooting for 50 years for ER because that would be when I get lifetime health coverage, although if kids end up in the future then I will have to re-evaluate at that point.

Enjoy life along the way, too. That is very important.

TG

Yes, we are trying to do that too. Living below your means should still be *living*

Thanks again for all the great responses here!