I haven't thought too much about retirement and we would just contribute directly to our 401k. I've been looking into whether this is enough. THere is this article on cnn that says by 35 you should have 1.4 times your salary, by 45 it is 3.7 times your salary. We don't have this but we have a lot of time to still catch up. It makes me think that we should downsize our spending a lot even though I think we don't spend too much. We could have really cheap mortage, older cars, etc that would allow us to save more. But we would have to swallow our pride and not have those nice things our friends do.
http://money.cnn.com/2011/12/22/pf/expert/retirement_savi...
We just max out retirement savings every year between 401k and IRAs - so whatever that max is (I think 401k is 16k ish and the IRAs are around 5k each a year). I sometimes wish we didn't put so much money away now, but my husband says I'll appreciate it when we retire.
We've always maxed out our 401k contributions.
The problem we're having right now is we're not getting raises anymore (not in 5 years) and the 401k investment choice options are not doing that great either.
The 401k concept sells on 'it's going to grow and grow and grow' and we're finding out that is just not so.
No more raises is going to hit us when they calculate social security (is based on your 3 highest earning years), too - so we're plenty worried even though the mortgage is the only debt we have.
Downsizing your spending and saving the most you can is always a great idea.
Let go of wanting 'those nice things' your friends have.
Pride and an empty sack is worth the empty sack - and it's not going to feed you when/if you can retire.
I started putting 8% in my 401k to take advantage of the comapny match and every year when I get a raise (regardless of the fact that it may not have covered cost of living increases) I added that percent to my 401K. I figure that I mananged on X per week and I could keep doing that.
The result is that I now max out my 401K contribution for the year... Granted it is tough seeing other folks buy "new" things that I can't.. but I know that I should be okay for retirement - I have almost 20yrs with the company I am with and God willing 20 more....
It is about choices... not all are easy but I think it it will be worth it...
Good luck!
There are so many things that go into retirement you can't just look at one and think oh I effed this up! We put in 10% which is not maxing but we should be able to retire and keep our lifestyle at 65 and isn't that the goal?
Our house will be paid off when we are 58 then we can go bananas with saving for retirement.
If you are one of those people that can't pull together the big picture find a friend with a financial background, talk to your bank, just don't fly off the handle reading an article that is written to freak you out. :)
most people don't. dave ramsey has a retirement calculator, and i'm sure there are tons online for you to google, but bottom line, you want to save enough so that you can live comfortably. take what you expect to live on (at retirement) and do the math. it's scary!
ps - we have just started. but my theory is if i can live without 3%, i can live without 5%. we just keep upping our donated amount that goes into our 401k. haven't missed it yet...
Not sure whether their figure was for all assets or just retirement specific savings. I probably have a net worth of that amount but not that amount specificially set aside for retirement. (In other words, the equity in my house, other savings, retirement savings, vehicle, etc. would exceed my debt by that amount.) Plus, I hope to retire when my daughter starts college, so I need to be saving for both items. You do have to be pretty agressive in your 401k savings...do more around the max than around the minimum. At the very least, contribute the amount that your employer will match.
All that said...I live in a small house with a small mortgage because that's what I an afford while being able to save for other things. Until this spring, I drove a 2003 basic model sedan because that's what I could afford without incurring debt. (I paid cash for he replacement.) My household has one television, no gaming system, no personal cell phone, no Tivo/DVR, one pc, and I just invested in an iPad. I do not have all those nice things that some of my friends have, but they may be in debt up to their eyeballs. What I do have is a house that I could payoff if i lost my job and an emergency fund that allows me to pay for the invevitable appliance repair, unplanned illness, etc. I don't consider that to be "swallowing my pride"; I consider that to be appropriate prioritization. At the same time, my dad died suddenly at age 68, so I also believe in budgeting money for fun and entertainment vs. scrimping to put every dime into future savings (not going into debt for those items, but working it into the budget along with savings). If you are spending too much on material items without saving for the future, start saving more.
http://www.daveramsey.com/article/will-your-savings-give-...
Start contributing to your 401K IMMEDIATELY!!!
The BEST think you could do is talk to a financial planner. They will often do a free analysis of your portfolio for you, and help you figure out what you need to do (of course, then they hope that you will choose them to be the investment firm to help you accomplish those plans). But really, having a person who can really look at your particular situation - how much debt you have, what kind of job you have, your existing 401k, do you have young kids you'll need to put through college, etc, is invaluable.
There a lots of firms. I used to be with Merrill Lynch, now I talk to Hefren Tillotson. Ask around your area and find someone. Once you talk to them and see what you need, you can decide whether or not you want to actually use the firm to manage your retirement.
