Author Topic: I thought I was doing really well saving, but it's not enough  (Read 10527 times)

Daisyedwards800

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I thought I was doing really well saving, but it's not enough
« on: November 19, 2019, 12:42:09 PM »
Current situation.  Renting in a HCOL area where the calculator said renting is a better option (NYC).

Age 37/F.  Salary is $132k plus 5% 401k contribution and little bonus.

401K and Roth IRAs:  $310K
Student Loan at 2.2%: $11K
Emergency Fund:  $5K

Boyfriend (we probably are going to stay together forever but not get married) has a pension starting in 8 years if he takes it then, and has about $320K in retirement accounts.  He owns a home outright ($225k condo of which he would pay out his mom $100k for her down payment help if she asked for it), and has about $50k saved otherwise.  We've been together for 15 years.  I'm behind him because a) no pension at my private sector jobs b) I had to pay off $75k in student loans and c) my degree required a masters which I paid for in cash (about $30k) while working.

How the heck can I retire at 45 with him if I only have $315K saved up now?  I haven't been scorched earth, so to speak, but I have a 1998 car, an old apartment with no amenities and live an hour from work by public transport (it's very cheap to use).  If I lived closer my apartment costs would double so it's not an option.  I do bike sometimes.

Anyway, now that I am age 37, I don't have the option of using compound interest as much to my advantage and the wage savings won't add up to enough I don't think.  Am I just going to have to work longer ?

The other MAJOR issue is that we are trying to have kids now, and I might have to ease up on the gas at work. 


« Last Edit: November 19, 2019, 12:44:26 PM by Daisyedwards800 »

Chris @ Saturday Financial

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Re: I thought I was doing really well saving, but it's not enough
« Reply #1 on: November 19, 2019, 12:55:03 PM »
What your annual expenses? With 310k already in tax-advantaged accounts and a 132k salary, you might be closer than you think to begin able to pull the plug in ~8 years.

Daisyedwards800

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Re: I thought I was doing really well saving, but it's not enough
« Reply #2 on: November 19, 2019, 12:59:56 PM »
They are pretty low for the area.  I just started making $132k last year.  Prior to that I was living on well below $100k a year and the only expense I've increased is getting rid of my roommate.  So my rent went from like $1000 to $2000.  My fixed expenses are very very low.  $70 for electric/gas, $70 for internet, $20 for various tv subscriptions, $20 for gym, $114 for workout classes, $67 for student loan minimum.  If I really wanted to get transportation lower I could but it runs about $250-400 a month depending on how much I travel home to visit family.  It's more my discretionary expenses like food and going out that get me.  I have to work on that.  I maxed out my 401k this year by June, and I'm putting more into a Roth (my MAGI is low enough to do some there).  I paid off most of my debt in life. 

But even if I save say 60% of my gross (which actually might not be doable with my current rent), is that even enough?
« Last Edit: November 19, 2019, 01:01:36 PM by Daisyedwards800 »

Chris @ Saturday Financial

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Re: I thought I was doing really well saving, but it's not enough
« Reply #3 on: November 19, 2019, 01:15:52 PM »
They are pretty low for the area.  I just started making $132k last year.  Prior to that I was living on well below $100k a year and the only expense I've increased is getting rid of my roommate.  So my rent went from like $1000 to $2000.  My fixed expenses are very very low.  $70 for electric/gas, $70 for internet, $20 for various tv subscriptions, $20 for gym, $114 for workout classes, $67 for student loan minimum.  If I really wanted to get transportation lower I could but it runs about $250-400 a month depending on how much I travel home to visit family.  It's more my discretionary expenses like food and going out that get me.  I have to work on that.  I maxed out my 401k this year by June, and I'm putting more into a Roth (my MAGI is low enough to do some there).  I paid off most of my debt in life. 

But even if I save say 60% of my gross (which actually might not be doable with my current rent), is that even enough?

I just plugged in some of your numbers at the When Can I Retire calculator at Networthify.com. https://networthify.com/calculator/earlyretirement?income=138600&initialBalance=299000&expenses=55440&annualPct=5&withdrawalRate=4

Annual Income: $138,600 (132,000 + 5% match)
Savings Rate: 60%
Current Portfolio Value: $299,000 (310,000 - 11,000 debt)

According to those assumptions, you'll be FI in 9 years if your investments grow at a rate of 5%. A 60% savings rate assumes that you are saving and investing $83,160 per year, including your 401k match. That leaves $55,440 for spending, including all taxes. That might be a little tight, but if you can manage the 60% savings rate, you won't be far from retiring at the same time as your boyfriend.

Because your taxes can change a lot in retirement, all of the above is a really rough calculation. A lot can also change in 9 years, but hopefully this gives a good framework for where to target your spending levels.

spartana

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Re: I thought I was doing really well saving, but it's not enough
« Reply #4 on: November 19, 2019, 01:18:53 PM »
Can you and BF live together at his place now? I assumed you would if you are trying to have kids now. That shared housing could cut both your expenses quite a bit. Also if he needs to repay his Mom the $100k down payment loan will he still be able to FIRE on his planned income? If not then you both may need to work longer.

As for FIREing together, it may not be something you guys can do unless you can save more and lower your expenses. Or, as other couples do (although not me), combine finances or split expenses based on a ratio of each persons income rather than 50/50.
« Last Edit: November 19, 2019, 01:25:01 PM by spartana »

Daisyedwards800

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Re: I thought I was doing really well saving, but it's not enough
« Reply #5 on: November 19, 2019, 01:23:24 PM »
We make the same amount of money - just happens he has a sweet pension and I don't.

His mother lent him $100k for the down payment so he would owe her that (but she might not ask for it).  It's only a studio apartment so we can't live there together, especially with kids.  He is probably going to sell it, we are likely going to buy a house together (my share of the mortgage wouldn't be much more than my rent now though - maybe $500 more). 

So you're saying if I save 60% of my gross for 9 years, I can retire with him?   I need to plot this out.  Should I be saving solely in after-tax now, or should I still take advantage of the 401k?

eudaimonia

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Re: I thought I was doing really well saving, but it's not enough
« Reply #6 on: November 19, 2019, 01:24:45 PM »
One big question you might want to answer is what do you plan to have your retirement expenses at? For example, if you were to plan to move to a LCOL area like the mid-west after retirement, you are well on your way to being on target by 45.

Daisyedwards800

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Re: I thought I was doing really well saving, but it's not enough
« Reply #7 on: November 19, 2019, 01:27:30 PM »
I think this depends on family.  I love the area in the spring/summer/fall.  Winters are tough so I can see us owning a place somewhere else and then coming back for 4-5 months of the year.  This means our housing expenses would be next to nothing (we'd arbitrage and have a paid off home in a LCOL area) but the travelling expenses would be more (either renting multiple months, or travelling elsewhere).   

bbates728

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Re: I thought I was doing really well saving, but it's not enough
« Reply #8 on: November 19, 2019, 01:29:45 PM »
Hi Daisy! Congratulations on the nest egg so far!!!

Whether or not you will be able to grow that in the next 8 years is a great question to ask. It really breaks down into two components. First, how much do you need? Second, how much can you put away?

Let's tackle the first one. You haven't listed out what your budget each month really looks like yet. If you don't know what it is off the top of your head, I would suggest beginning to track your expenses. There is a  website, Mint, that will sync up with your bank accounts/credit cards/etc. that really helps when you are just getting started. A lot of this forum uses it including me, so feel free to ask questions along the way as you get it started (if you opt for this method).

Once you have your budget sorted, convert those monthly figures into an annual budget. That number is how roughly how much your current lifestyle costs. If you are anything like me, it may surprise you. If you do not want to change anything about your lifestyle, then you can multiply that number by 25 and get how much you need in your accounts before conventional wisdom says you are good to go on retiring.

Once you have your number, then you can start socking away however much you need. Feel free to reply with what your number is and we can help you sort out what that translates to.




To add some color to all this, I started this journey last July with -$70k net worth, comprising mostly student loans. My wife and I bring in about $110k before tax and we live in the Seattle area. When we started tracking expenses we were spending at about $50k/year pace, even though I had already become fanatical about cutting expenses. Who knows what it was before we started..... I was 25 and wanted out ASAP. We are now spending about $40k/year and saving about $60k/year.

The math works out to me needing(wanting) roughly $1M which I expect to be able to save roughly 10 years after getting to a $0 net worth. That isn't even factoring in that I expect I will probably earn raises in the next 10 years and that I expect my expenses to gently continue to decrease.

Now update to current and we are out from under student loans and are at about $40k net worth. We are progressing well and so can you! You have 8 years before you are 45 and have a huge leg up on the savings already! Let's crush our goals and get to our number!

Daisyedwards800

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Re: I thought I was doing really well saving, but it's not enough
« Reply #9 on: November 19, 2019, 01:30:22 PM »
Saving $80,000 a year would be $6,666 a month.  My take-home paychecks are $3,880 and $3,650 without any 401k = $7,530.  That leaves only like $900 for all my expenses if I tried to do that only after-tax. 

mozar

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Re: I thought I was doing really well saving, but it's not enough
« Reply #10 on: November 19, 2019, 01:36:31 PM »
The low hanging fruit is to get a roommate again. That's 1000 a month of free money. Or move into the studio. My cousin lived with her partner in a 400sq ft studio for years. I also knew someone who grew up in a 1 bedroom apt in nyc. Her parents had the bedroom. You have to make sacrifices to live in nyc. Also is your boyfriend on the same page about all of this?

Daisyedwards800

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Re: I thought I was doing really well saving, but it's not enough
« Reply #11 on: November 19, 2019, 01:37:09 PM »
Deduction    Pre-tax    Current    YTD
401(k)   Yes   $0.00    $19,000.00
DMO Pre   Yes   $10.54    $221.34
FSA Health   Yes   $25.00    $525.00
Group Term Life   No   $3.69    $77.49
Grp Life   Yes   $0.00    $0.00
Gym NYSC   No   $0.00    $120.84
LTD Premium   No   $29.15    $612.15
Med Pre   Yes   $67.00    $1,407.00
Vision Pre   Yes   $2.87    $60.27

Taxes    Current    YTD
Employee Medicare   $78.70    $1,604.80
Federal Income Tax   $979.85    $15,384.87
NY Paid Family Leave Employee   $0.00    $107.97
NY Income Tax   $325.20    $5,179.12
Social Security Employee Tax   $336.50    $6,861.91

That is about $41,300 in taxes/SS per year off the top.  $138,500 - $41,300 = $97,200.

Less my pre-tax deductions which equal about $3000 or so a year = $94,200

That leaves me with about $7,850 a month to work with to save $80,000.

$7,850 - $6,666 a month  =$1,183 month of spending money to save at that rate.  That does seem a bit unrealistic.



« Last Edit: November 19, 2019, 01:41:27 PM by Daisyedwards800 »

spartana

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Re: I thought I was doing really well saving, but it's not enough
« Reply #12 on: November 19, 2019, 01:46:35 PM »
The low hanging fruit is to get a roommate again. That's 1000 a month of free money. Or move into the studio. My cousin lived with her partner in a 400sq ft studio for years. I also knew someone who grew up in a 1 bedroom apt in nyc. Her parents had the bedroom. You have to make sacrifices to live in nyc. Also is your boyfriend on the same page about all of this?
Yes to this. Forum member @Zikoris and her BF live in a studio and save a ton of money on their lower incomes. She has a blog and has been featured in several media outlets and is a good "public face" of those trying to get to FI and RE on lower incomes. My ex-DH and I lived in small places ourselves (including on our sail boat) as we tried to save for FIRE. Definetly doable.

The other things to consider is ALL your expenses in RE. How will you cover medical insurance, for yourself, BF and kids? How much more retirement income will you need to support kids? Bigger house? Higher bills? College expenses? Etc... Lots of things you will need to pay for once you are FIRE that you aren't covering now.

Daisyedwards800

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Re: I thought I was doing really well saving, but it's not enough
« Reply #13 on: November 19, 2019, 01:50:44 PM »
His pension will be about 2/3 of his current salary ($132,000) at the least since presumably his salary will go up.  We would get a 15 year mortgage, so we'd have 8 years of mortgage payments after retirement.  We should be able to do the compound interest thing for the kid/s' colleges if we start when they are born so that would be an expense.  Daycare would be something we'd have to do pre-retirement - I'd rather not do that at all but it is what it is.

Health expenses, we would need to discuss this.  We'd be willing to do a domestic partnership to share health benefits.  I have to see how his plan works after retirement, but I know they are covered.  Otherwise, I would have to buy on the market.

Here4theGB

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Re: I thought I was doing really well saving, but it's not enough
« Reply #14 on: November 19, 2019, 02:00:42 PM »
Why do you think you should be able to retire at 45?

spartana

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Re: I thought I was doing really well saving, but it's not enough
« Reply #15 on: November 19, 2019, 02:06:20 PM »
And don't forget the possibility of death or seperation. I'm not sure of laws in you area but if you are somewhat dependent on his future pension and other passive income you'll need to figure out how to cover that amount should you seperate or he dies since as a non-spouse you may not be entitled to his pension or part of his pension or any other assets. Unless he dies and unless you are the beneficary.
« Last Edit: November 19, 2019, 02:08:54 PM by spartana »

Daisyedwards800

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Re: I thought I was doing really well saving, but it's not enough
« Reply #16 on: November 19, 2019, 02:09:55 PM »
The point is that I won't be dependent on his pension or anything.  Not sure where you got that I operate as a dependent on him?

I mentioned that if I didn't do that I would have to buy on the market.  If we split up I'd move to a LCOL area (he's the reason I'm even in the city right now)...I'm the beneficiary of his accounts and vice versa.  If we had kids we'd get life insurance.

spartana

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Re: I thought I was doing really well saving, but it's not enough
« Reply #17 on: November 19, 2019, 02:16:42 PM »
The point is that I won't be dependent on his pension or anything.  Not sure where you got that I operate as a dependent on him?

I mentioned that if I didn't do that I would have to buy on the market.  If we split up I'd move to a LCOL area (he's the reason I'm even in the city right now)...I'm the beneficiary of his accounts and vice versa.  If we had kids we'd get life insurance.
I got that but just wanted to put it out there as something to be aware of. I'm divorced and ex-DH and I had same income and separate finances with expenses being split 50/50 and each FI independant of the other. No kids either. But even with that, taking a 50% reduction in income and still having almost the same expenses to cover alone following our divorce was tough. Doable and I FIREd single but it was much leaner than planned.
« Last Edit: November 19, 2019, 02:46:38 PM by spartana »

robartsd

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Re: I thought I was doing really well saving, but it's not enough
« Reply #18 on: November 19, 2019, 02:44:17 PM »
It almost always is better to save as much as possible in tax advantaged accounts. Since you're tax advantaged space is small relative to the savings rate you need to retire at 45, you'll still have plenty of after-tax savings to build your 5-year Roth conversion ladder to bridge you to age 59.5.

His pension will be about 2/3 of his current salary ($132,000) at the least since presumably his salary will go up.
That's a pretty sweet pension for an early retiree. Is it for a military/law enforcement/safety type career? What age and how many years of service is required for that pension rate? In my governmental office worker plan, a retiree at age 50 with 30 years of service would get about 1/3 of final salary.

Daisyedwards800

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Re: I thought I was doing really well saving, but it's not enough
« Reply #19 on: November 19, 2019, 02:50:25 PM »
The point is that I won't be dependent on his pension or anything.  Not sure where you got that I operate as a dependent on him?

I mentioned that if I didn't do that I would have to buy on the market.  If we split up I'd move to a LCOL area (he's the reason I'm even in the city right now)...I'm the beneficiary of his accounts and vice versa.  If we had kids we'd get life insurance.
I got that but just wanted to put it out there as something to be aware of. I'm divorced and ex-DH and I had same income and separate finances with expenses being split 50/50 and each FI independant of the other. No kids either. But even with that, taking a 50% reduction in income and still having almost the same expenses to cover alone following our divorce was tough. Doable and I FIREd single but it was much leaner than planned.

Oh yeah I hear ya.  We live separately now so I am pretty good with my own expenses, but we plan on being able to live on one income if it came down to it - we won't overbuy a home.

Daisyedwards800

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Re: I thought I was doing really well saving, but it's not enough
« Reply #20 on: November 19, 2019, 02:52:12 PM »
Actually, I misspoke in a way.  The pension is 50% of his last year's salary, but using future salary as an estimate it will be about 2/3 of his CURRENT salary.  In 8 years it will be 50% of whatever he is making then.

Daisyedwards800

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Re: I thought I was doing really well saving, but it's not enough
« Reply #21 on: November 19, 2019, 02:56:45 PM »
It almost always is better to save as much as possible in tax advantaged accounts. Since you're tax advantaged space is small relative to the savings rate you need to retire at 45, you'll still have plenty of after-tax savings to build your 5-year Roth conversion ladder to bridge you to age 59.5.

His pension will be about 2/3 of his current salary ($132,000) at the least since presumably his salary will go up.
That's a pretty sweet pension for an early retiree. Is it for a military/law enforcement/safety type career? What age and how many years of service is required for that pension rate? In my governmental office worker plan, a retiree at age 50 with 30 years of service would get about 1/3 of final salary.

I may need your help with this Roth ladder thing.  I have a Roth but it only has some money in it, and I am fast becoming too highly paid to contribute!

Watchmaker

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Re: I thought I was doing really well saving, but it's not enough
« Reply #22 on: November 19, 2019, 03:13:28 PM »
It almost always is better to save as much as possible in tax advantaged accounts. Since you're tax advantaged space is small relative to the savings rate you need to retire at 45, you'll still have plenty of after-tax savings to build your 5-year Roth conversion ladder to bridge you to age 59.5.

His pension will be about 2/3 of his current salary ($132,000) at the least since presumably his salary will go up.
That's a pretty sweet pension for an early retiree. Is it for a military/law enforcement/safety type career? What age and how many years of service is required for that pension rate? In my governmental office worker plan, a retiree at age 50 with 30 years of service would get about 1/3 of final salary.

I may need your help with this Roth ladder thing.  I have a Roth but it only has some money in it, and I am fast becoming too highly paid to contribute!

You don't need to contribute to a Roth account right now for the Roth ladder. What you do is: once you retire you roll your 401(k) into a traditional IRA and then each year convert some from traditional to Roth. You'll have low income these years so you'll pay low taxes on these conversions. Once those Roth funds have sat in that account for 5 years, you can withdraw them with no more penalties or taxes. This way you can pull funds out of retirement accounts early, but you'll need at least 5 years of expenses in taxable accounts while you wait for the Roth funds to "season".

See here for another description, or google 'Roth conversion ladder': https://www.madfientist.com/how-to-access-retirement-funds-early/

spartana

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Re: I thought I was doing really well saving, but it's not enough
« Reply #23 on: November 19, 2019, 03:37:44 PM »
There'ss also the Coast FIRE route. Basicly leave the stash untouched and allow it to grow until you reach a more traditional retirement age and just work enough (part time, seasonal, whatever) to cover your living expenses until older. This can work well for single people but I don't see why it can't work for a couple too. As long ascan earn.enough to cover your share of joint expenses, and as long as you don't mind working to cover those expenses, I can't see why it wouldn't be fine.

ETA: You might want to do a case study on your expenses now (and perhaps projected for the future with kids, SO and FIREd) and let everyone take a whack at it. Most will probably say the same things we here have though: Why aren't you living with SO to save money? Why doesn't SO sell or rent his place and move in to your rental or get a new rental together? Especially if you are trying to have kids now. Why not get another roommate if you or SO don't want to do those things yet and use that extra $1000/month towards FIRE? Etc... They will give good advise about how to cut expenses and invest as well.
« Last Edit: November 19, 2019, 04:22:07 PM by spartana »

Daisyedwards800

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Re: I thought I was doing really well saving, but it's not enough
« Reply #24 on: November 19, 2019, 05:23:04 PM »
He pays just $600 a month for his place and itís very small.  I would have to spend $350 a month for a train ticket plus a 2 hour plus commute from there.  If he moves in with me, weíd each pay $1400 for a place commutable for both of us so itís really not worth finding a new rental.  Mine is rent stabilized.

Roland of Gilead

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Re: I thought I was doing really well saving, but it's not enough
« Reply #25 on: November 19, 2019, 06:20:16 PM »
It looks like you say you are putting $19,000 in your 401K, which is great! 

But you also said something like you were doing 5% to your 401K, which is not great.

Which is it?

I would put all you can into 401K and traditional IRA to reduce your taxes as much as possible.  There may be times in the future where you can convert that 401K and IRA money to a Roth with little or no tax due.  I am always a bird in the hand type of person and if you can avoid tax now while your bracket is pretty high, do it!

The employee 401K contribution limit for 2020 is $19,500.  In 2020  you should contribute....$19,500

ApacheStache

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Re: I thought I was doing really well saving, but it's not enough
« Reply #26 on: November 19, 2019, 06:37:43 PM »
The low hanging fruit is to get a roommate again. That's 1000 a month of free money. Or move into the studio. My cousin lived with her partner in a 400sq ft studio for years. I also knew someone who grew up in a 1 bedroom apt in nyc. Her parents had the bedroom. You have to make sacrifices to live in nyc. Also is your boyfriend on the same page about all of this?
Yes to this. Forum member @Zikoris and her BF live in a studio and save a ton of money on their lower incomes. She has a blog and has been featured in several media outlets and is a good "public face" of those trying to get to FI and RE on lower incomes. My ex-DH and I lived in small places ourselves (including on our sail boat) as we tried to save for FIRE. Definetly doable.

Not to mention, many people outside of North America have raised children in sub 1000 sq. ft residences. Don't underestimate your ability to cope :)

Have you explored passive income options like purchasing a rental property or two? You may not have your FIRE number by 45, but you'll continue to generate income post-FIRE on top of your existing FIRE stock gains.

Cassie

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Re: I thought I was doing really well saving, but it's not enough
« Reply #27 on: November 19, 2019, 09:01:31 PM »
I wouldnít have kids with someone unless I was married.

charis

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Re: I thought I was doing really well saving, but it's not enough
« Reply #28 on: November 19, 2019, 09:33:08 PM »
It looks like you say you are putting $19,000 in your 401K, which is great! 

But you also said something like you were doing 5% to your 401K, which is not great.

Which is it?

I would put all you can into 401K and traditional IRA to reduce your taxes as much as possible.  There may be times in the future where you can convert that 401K and IRA money to a Roth with little or no tax due.  I am always a bird in the hand type of person and if you can avoid tax now while your bracket is pretty high, do it!

The employee 401K contribution limit for 2020 is $19,500.  In 2020  you should contribute....$19,500

I don't understand the 401k discrepancy either. Also curious about your reasons for not living together currently or getting married (as life long partners). No judgment in the question, but there can be important financial advantages. Living in a studio together is how lots of couples can afford NYC,  FI aside.
« Last Edit: November 19, 2019, 09:34:48 PM by charis »

ApacheStache

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Re: I thought I was doing really well saving, but it's not enough
« Reply #29 on: November 19, 2019, 09:38:49 PM »
It looks like you say you are putting $19,000 in your 401K, which is great! 

But you also said something like you were doing 5% to your 401K, which is not great.

Which is it?

I would put all you can into 401K and traditional IRA to reduce your taxes as much as possible.  There may be times in the future where you can convert that 401K and IRA money to a Roth with little or no tax due.  I am always a bird in the hand type of person and if you can avoid tax now while your bracket is pretty high, do it!

The employee 401K contribution limit for 2020 is $19,500.  In 2020  you should contribute....$19,500

I don't understand the 401k discrepancy either. Also curious about your reasons for not living together currently or getting married (as life long partners). No judgment in the question, but there can be important financial advantages. Living in a studio together is how lots of couples can afford NYC,  FI aside.

I think the 5% was the employer match, but I could be wrong.

monarda

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Re: I thought I was doing really well saving, but it's not enough
« Reply #30 on: November 19, 2019, 09:49:26 PM »
It looks like you say you are putting $19,000 in your 401K, which is great! 

But you also said something like you were doing 5% to your 401K, which is not great.

Which is it?

I would put all you can into 401K and traditional IRA to reduce your taxes as much as possible.  There may be times in the future where you can convert that 401K and IRA money to a Roth with little or no tax due.  I am always a bird in the hand type of person and if you can avoid tax now while your bracket is pretty high, do it!

The employee 401K contribution limit for 2020 is $19,500.  In 2020  you should contribute....$19,500

I don't understand the 401k discrepancy either. Also curious about your reasons for not living together currently or getting married (as life long partners). No judgment in the question, but there can be important financial advantages. Living in a studio together is how lots of couples can afford NYC,  FI aside.

I understood the 19,000 401K contribution, a fraction of that is matched by employer (5%).

I totally get not wanting to get married. There's no reason for us to do so. We're together 22 years and not married. I don't care one way or the other, but he doesn't want to marry.

Cassie

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Re: I thought I was doing really well saving, but it's not enough
« Reply #31 on: November 19, 2019, 10:32:04 PM »
I totally agree with not getting married if you arenít having kids. Having kids is a much bigger commitment than marriage.

Hula Hoop

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Re: I thought I was doing really well saving, but it's not enough
« Reply #32 on: November 19, 2019, 11:29:21 PM »
I wouldnít have kids with someone unless I was married.

That was uncalled for.  Not everyone has the same view of marriage and people can be just as committed as a married couple without the piece of paper.

spartana

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Re: I thought I was doing really well saving, but it's not enough
« Reply #33 on: November 20, 2019, 01:18:54 AM »
He pays just $600 a month for his place and itís very small.  I would have to spend $350 a month for a train ticket plus a 2 hour plus commute from there.  If he moves in with me, weíd each pay $1400 for a place commutable for both of us so itís really not worth finding a new rental.  Mine is rent stabilized.
Totally understandable. Is there some kind of midway point that would make it both an easier commute but allow you to live together and share expenses?

Malcat

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Re: I thought I was doing really well saving, but it's not enough
« Reply #34 on: November 20, 2019, 05:06:19 AM »
I wouldnít have kids with someone unless I was married.

I also wouldn't have kids with someone without adequate legal protections and contracts in place...I'm assuming that's what you mean by "marriage", right?

Not some antiquated ideological nonsense about people who have children needing to be maritally bound to each other, I'm sure.

charis

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Re: I thought I was doing really well saving, but it's not enough
« Reply #35 on: November 20, 2019, 05:46:52 AM »
Are you going to continue living apart after you have kids?  Or is he planning to sell/rent his place soon and move in with you?   I don't think you have to be married to have kids, obviously people do it all the time, but what type of partnership is in place, financial and otherwise?  Because you describe yourself as "behind" your bf, retirement wise, live in an expensive apartment in a HCOL city (because of him?) with completely separate finances while trying to have kids, which may affect your income.
« Last Edit: November 20, 2019, 06:34:02 AM by charis »

KBecks

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Re: I thought I was doing really well saving, but it's not enough
« Reply #36 on: November 20, 2019, 05:52:18 AM »
Regarding easing up on the gas at work, I'm reading Lean In, and the author says that many women give up on their careers too early, even before having kids, while just thinking about it.  Her point of view is to go for it, and not put the career on the back burner.

Do you and your boyfriend live together? 

You might have to adjust the retirement date, and you have to figure the kid expenses into the equation.


KBecks

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Re: I thought I was doing really well saving, but it's not enough
« Reply #37 on: November 20, 2019, 05:58:00 AM »
I wouldnít have kids with someone unless I was married.

+1

albireo13

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Re: I thought I was doing really well saving, but it's not enough
« Reply #38 on: November 20, 2019, 06:23:57 AM »
If you decide to have kids, your baseline spending will increase dramatically for a looooong period of time.
Also, will you be saving $$ for college for your children?

Both these things will essentially hammer any plans for such an early retirement.

charis

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Re: I thought I was doing really well saving, but it's not enough
« Reply #39 on: November 20, 2019, 06:39:11 AM »
If you decide to have kids, your baseline spending will increase dramatically for a looooong period of time.
Also, will you be saving $$ for college for your children?

Both these things will essentially hammer any plans for such an early retirement.

Not necessarily.  After having kids, we've spent more on them but much less on travel and going out. Plus we became more frugal in general (buying in bulk, etc), so spending did go up, mainly due to daycare, but not a lot.

Daisyedwards800

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Re: I thought I was doing really well saving, but it's not enough
« Reply #40 on: November 20, 2019, 08:05:10 AM »
It looks like you say you are putting $19,000 in your 401K, which is great! 

But you also said something like you were doing 5% to your 401K, which is not great.

Which is it?

I would put all you can into 401K and traditional IRA to reduce your taxes as much as possible.  There may be times in the future where you can convert that 401K and IRA money to a Roth with little or no tax due.  I am always a bird in the hand type of person and if you can avoid tax now while your bracket is pretty high, do it!

The employee 401K contribution limit for 2020 is $19,500.  In 2020  you should contribute....$19,500

I max out my 401k.  I get a match of 5% of my salary to my 401k from my employer.

Roland of Gilead

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Re: I thought I was doing really well saving, but it's not enough
« Reply #41 on: November 20, 2019, 08:09:26 AM »
Ok sweet.  So between your 401K, employer match, and maxing out a IRA you are putting $30k+ a year into a retirement fund?

You should have around half a million more in 10 years just from doing that + compounding.

Might be enough all by itself when added to your current accounts + any taxable saving.

Daisyedwards800

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Re: I thought I was doing really well saving, but it's not enough
« Reply #42 on: November 20, 2019, 08:10:36 AM »
Ok sweet.  So between your 401K, employer match, and maxing out a IRA you are putting $30k+ a year into a retirement fund?

You should have around half a million more in 10 years just from doing that + compounding.

Might be enough all by itself when added to your current accounts + any taxable saving.

Yes that's about right.  I just am kinda lacking in the whole 5 year taxable savings amount, as well as not owning an apartment or home.  We are house shopping though.

GoCubsGo

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Re: I thought I was doing really well saving, but it's not enough
« Reply #43 on: November 20, 2019, 08:37:14 AM »
I guess my main thought would be:

-  What are your expenses (combined) projected to be after a child and buying a house?  How much will you save until 47 combined?

Just do the basic math and project that out and multiply it by 25 for the 4% rule.  You really need to add in his income and expenses  to get a realistic picture.

 What's his is yours right?  It's all one pot, so figure out what that FIRE number is for both of you combined and then do your projection.  You'll obviously need a smaller amount due to his pension but you have to figure out what combined expenses and savings project to be once you've settled into family life in a home.  Not sure if healthcare was factored in or not for the family in retirement.

EvenSteven

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Re: I thought I was doing really well saving, but it's not enough
« Reply #44 on: November 20, 2019, 08:49:22 AM »
I wouldnít have kids with someone unless I was married.

I also wouldn't have kids with someone without adequate legal protections and contracts in place...I'm assuming that's what you mean by "marriage", right?

Not some antiquated ideological nonsense about people who have children needing to be maritally bound to each other, I'm sure.

Yes, that's how I read the comment, and I think it makes a lot of sense. Marriage comes along with over a thousand legal rights, benefits, and privileges, many of which pertain to children. It's one of the main reasons gay marriage was such a big deal; it wasn't just some piece of paper, it was the thousands of legal rights that came along with that piece of paper.

If you are going to plan to have children and co-parent outside of marriage, just be aware that the US legal system isn't really set up for that to be easy.

ChpBstrd

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Re: I thought I was doing really well saving, but it's not enough
« Reply #45 on: November 20, 2019, 09:32:00 AM »
Would the following be a good summary of your challenges?

1) Because you live in a HCOL area, your savings rate is low and your FIRE number is high.
2) Because you live in a HCOL area, transportation and housing costs make it cost prohibitive to move in with your SO, a move that would help both of you increase your savings rates.
3) Because you live in a HCOL area, it is unclear how you can accomplish life objectives such as kids while having a high-pressure job and a multi-hour daily commute.

You see the common denominator? I know you might like the NYC area, but at some point having control of your own life (the point of FIRE) is more important than a specific apartment, job, lifestyle, or climate. Itís your choice to make, but hereís how to make it an informed choice rather than just accepting your defaults:

First, go to one of the dozens of sites that compares cost of living across cities. Estimate your COL in places like Kansas City, Oklahoma City, or Indianapolis. Gaze at these numbers in astonishment.

Next, go to salary.com to see how much you could earn in those places. Shockingly low, I know, but bear with me.

Third, do the math on the difference between salary and COL. Note the difference is WIDER in these smaller LCOL cities. That translates into less time until FIRE - several years of your life back just like that. Plus, lower housing costs and smaller cities mean you and the SO can choose to live closer to work in a wide variety of arrangements. Saving time and building equity become real options.

Fourth, calculate your new, reduced FIRE number in these cities. You might be shocked to discover how close you already are. Example: My family of 3 spends less than $60k per year, owns our 3BR home, has a 10-15 minute commute to downtown, and is socking it away at about a 50-60% savings rate, rapidly nearing our roughly $1.3M FIRE number. Build out a budget if that adds confidence.

All this adds up to the easy way to resolve the above 3 challenges. The hard way is your status quo.

Daisyedwards800

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Re: I thought I was doing really well saving, but it's not enough
« Reply #46 on: November 20, 2019, 10:37:26 AM »
I could earn a lot and even maybe 75-100% of what I do now (my skills would land me a higher position in a smaller market) but he is a civil servant (hence the pension) and tied to this city until age 45.

Daisyedwards800

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Re: I thought I was doing really well saving, but it's not enough
« Reply #47 on: November 20, 2019, 10:48:54 AM »
I guess my main thought would be:

-  What are your expenses (combined) projected to be after a child and buying a house?  How much will you save until 47 combined?

Just do the basic math and project that out and multiply it by 25 for the 4% rule.  You really need to add in his income and expenses  to get a realistic picture.

 What's his is yours right?  It's all one pot, so figure out what that FIRE number is for both of you combined and then do your projection.  You'll obviously need a smaller amount due to his pension but you have to figure out what combined expenses and savings project to be once you've settled into family life in a home.  Not sure if healthcare was factored in or not for the family in retirement.

Thanks I will on the basic math.  We will definitely move farther away from the city at this point and have lower expenses upon retirement.  I just have to figure out what those expenses will be at 45.

Cassie

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Re: I thought I was doing really well saving, but it's not enough
« Reply #48 on: November 20, 2019, 10:56:07 AM »
Hula, marriage is a legal contract that protects women and children. If you can accomplish the same thing with a partnership agreement, etc thatís fine too.  I am not talking about the romantic aspect of marriage but the legal rights.  Frankly I donít understand people acting like itís a bigger commitment to get married than have kids.  Kids are a lifetime commitment and marriage may not be. Itís usually men that donít want to get married but they still want kids.

honeybbq

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Re: I thought I was doing really well saving, but it's not enough
« Reply #49 on: November 20, 2019, 12:05:44 PM »
I totally agree with not getting married if you arenít having kids. Having kids is a much bigger commitment than marriage.

Which has nothing to do with the discussion. They have been together 15 years which is longer than many, many marriages where children are produced.