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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: aneel on December 22, 2014, 08:03:30 AM

Title: Contributions Vs Balance
Post by: aneel on December 22, 2014, 08:03:30 AM
Hi Mustachians, I'm still very early in my path to FIRE, and I'm enjoying the MMM lifestyle and watching my stache grow.  I have set my goal of saving up 25x my retirement budget, and that can seem an impossibly large amount at times, even knowing the power of compounding interest.  To further demonstrate the power of compounding growth, do any of you keep a running track of contributions vs balance?  Currently, in my main retirement vehicle (401k) I have contributed only about 52% of the balance.  I have an employer match of 4%, which would skew those numbers and lead you to believe I have had amazing growth in less than three years of employment.  If I lump employer contributions in with my contributions, that still only accounts for 82% of the balance.  I assume that these numbers will go down as I amass more wealth and my money works harder for me.  For those of you farther along in your pursuit of fire, what kind contribution vs balance numbers do you have? 
Title: Re: Contributions Vs Balance
Post by: bogart on December 22, 2014, 08:46:14 AM
Well, not to alarm you, but I've been doing this since 1997, so, almost 6 times as long as you have and my numbers are ...

I contributed a little less than 30% of the total value of my retirement savings. 
Lumping in my employer contributions (I've contributed a total of 65% of what's in there, my employer, 35%), I have slightly more than double what's been contributed over that time.

I've been close to fully invested in stocks over the duration during which there have been significant ups and downs in the market (I have not sold, or bought, to try to time anything, and my account's with TIAA-CREF, so reasonable account expenses). 

I have pretty much always (with 2 years that were exceptions) contributed the maximum allowable, but that's increased over the interval in question; when I started, the most I could contribute was $10K and of course now it's $17.5K soon to be $18K.  My employer match has gone up over time (changed employers); for the past decade or so they've been contributing almost half as much as I do (in the $8K range).  So the over-time-rate-of-growth looks lower than it might, in the sense that more of that money I (and my employer) have put in, have been there for shorter amounts of time.

I was happy to see the balance in my account hit 200% of (total) contributions, and I do remember watching to see when it would happen -- but it was after 16 years of employment/contributing. 
Title: Re: Contributions Vs Balance
Post by: Cheddar Stacker on December 22, 2014, 08:50:33 AM
My contributions, plus employer match, make up 66% of my 401k. This is about 12 years into starting the account. It could be much better. Fees are somewhere in the 0.60-0.75% range in total, and I didn't have a clue what I was doing for the first 10 years.

I don't have details on me vs. employer, but the employer match is nothing spectacular. I'd bet my contributions are 50% and ER contributions are 16%.

Good question.
Title: Re: Contributions Vs Balance
Post by: aneel on December 22, 2014, 10:25:27 AM
Nothing alarming about those numbers bogart. They're so encouraging - its much easier to think that I need to save *approximately* 1/2 of my end goal - as long as I give it time to grow.  The question of "how much do I need to contribute/how long will it take" is one of the bigger unknowns when I consider time to FIRE.  Thanks the input from both of you!