Starting in January, my household will be saving at least 25% of our income for retirement and the original plan was to save 31%. I am wondering if the original plan of 31% might be a little too agressive given that we will be adapting to owning a house and maybe needing to fix up things. Not to mention our emergency fund will be depleted after buying a house...Hmmm...
Maybe I won't worry about funding DH's Roth IRA until next year. That way we can save for our short and mid-term goals as well as for retirement.
If I only do 25% to retirement, we can do 12.5% for our EF to replenish it. I figure we will need between 14k-19k in the EF to cover 6 months comfortably. At the rate I have it, that would take 16-22 months to do.
Another 3% could even go towards vacations because we love to travel. My big concern though is getting the EF replenished.
We are shooting to be financially independent in our 50's so that we can have whatever type of job we want (workaholics with lots of interests) so that is probably something to keep in mind.
So what do you think is a reasonable percent of a budget to save solely for retirement?
What are you saving for retirement?
September 26th, 2008 at 03:00 pm
September 26th, 2008 at 04:54 pm 1222448081
September 26th, 2008 at 05:24 pm 1222449891
September 26th, 2008 at 05:55 pm 1222451722
Me and hubby (33 and 35) max out all of our options, 401k and roth for him and IRA for me.
September 26th, 2008 at 06:00 pm 1222452032
September 26th, 2008 at 06:57 pm 1222455460
Oh, yea ... and since you asked, we currently save over 50% of our income. BUT we are in our mid-40's and are temporarily living on the super-cheap. When I was your age, I am ashamed to admit that I was saving almost nothing for retirement. You are certainly ahead of where I was back then! Over the years, I have steadily increased the percentage. And once my husband got his business up and running ... we paid off our mortgage ... and then our retirement savings really skyrocketed.
September 26th, 2008 at 08:16 pm 1222460163
25%, at your age, should really more than suffice for an early retirement. Particularly if you expect your income to grow, over the next few decades, and you think you may be able to contribute more with time.
I think we have averaged 12% since we were about 23 (just out of school) and it has been pretty decent since we started young. We have a pretty substantial nest egg for our age.
It also depends how conservatively you invest.
September 26th, 2008 at 10:31 pm 1222468309
Before retiring, the minimum I always saved was 15% but in later years (after my kids were raised), I saved as much as 45%.
September 27th, 2008 at 05:28 am 1222493287
25% is fantastic!
September 27th, 2008 at 07:15 pm 1222542923
I'm doing 15% and i'm much older than you. But i have other expenses and am throwing an extra $425 toward my mortgage each month.
September 29th, 2008 at 07:49 pm 1222717755
No worries about us resting on our laurels. I have been poor and have no intention of every being poor again if I can help it so that means saving as much as possible.
As of February, all of our debt will be in the form of a 15 year mortgage and student loans that will be paid in full in 8 years. Once those are gone they can go into longterm savings as well.
October 24th, 2008 at 11:11 pm 1224889892