Calculating unseen income & investing (Child Support)

[sdavis]

Currently we are saving 15% of our income into 401(k)s. (I know, not ideal, I'm a Dave Ramsey Convert) lol.

Anyway, about 1/3 of my husbands income goes to child support currently. So we don't live on it, and won't for 10 years. So, when calculating what percent of income we are saving total, should I exclude this amount? Or include it? Or does it really not matter?

Thoughts?

[seattlecyclone]

If you just want to plug your savings rate into the "shockingly simple math for early retirement" table, I would exclude the child support from both income and expenses when calculating your savings rate.

The reason is the formula basically assumes you'll spend the same amount in retirement as you spend now (adjusting for inflation), and figures out how long until you have enough saved up such that 4% of your stash matches your current spending. In your case the child support is an expense you don't plan to have in retirement, so the table will give you the best approximation of your time to retirement if you assume that this expense (and the income used to pay it) just didn't exist at all.