I should 1.5x my income in 401k by age 35…?

[jasonrporter0316]

That’s what a quick search online says. I make about $170k per year and have been working for 6 years now. I have $40k. I’m maxing my match which is 4%. I really don’t want to put much more of my income into the retirement fund as I need it for the house, kids, cars, vacations, etc

Am I doing it all wrong?

 

[hopefulinthebayarea]

@jasonrporter0316 With $170k income you save $6.5k a year? Cut your expenses because you’re going to be eating cat food.

 

[derek1995]

@hopefulinthebayarea I'm assuming he's saving double that, when you factor in the ER match. Even then he should prob be at like 10%

 

[jasonrporter0316]

@hopefulinthebayarea Saving more than that. That’s just what ends up in 401k. I have some in a CD and some in savings (I know…bad)

 

[onetezza]

@jasonrporter0316 Stop using cds unless you’re 5 years out from retirement especially if you do it through a bank and go find a high yield money market like at vanguard/fidelity to at least earn 5% on your savings

 

[blueberry25]

@jasonrporter0316 ....and how long have you been making the $170k you have decided to use as your yardstick?

 

[ashleyripka]

@jasonrporter0316 There's no magic formula to stretching your dollars. You aren't doing it "wrong" per se but you are definitely prioritizing the "now" instead of the future. And that's your right to do so.

But most people have to sacrifice something because their level of income is not enough to fully fund all of the following:

• Maxing out retirement accounts
• Saving for kids/college
• Paying a mortgage
• Having enough money for hobbies
• Travel/Vacations
• Nice cars or multiple cars
• Good groceries/eating out
• etc.

People have to decide for themselves what they prioritize. It seems right now you prioritize everything but maxing out retirement accounts. That's your right to do so but you will most likely retire with about $1.1M if you continue at your current contribution rate and I really don't think that is going to keep up with your lifestyle 30+ years from now.

TLDR: You can pick to suffer now or later.

 

[tjh]

@jasonrporter0316 How are you saving so little with such an insanely high income?

 

[lcsparacio]

@tjh Their post history says they spend 10-15k a year on travel. Definitely living a bit above their means unless they plan to work until 70-75.

 

[jasonrporter0316]

@tjh 170k - 30% tax (state/fed) leaves $110k. Minus mortgage leaves $77k minus property tax leaves $67k minus two car payments and insurance $53k minus utilities $49k minus avg house repairs $47k minus vacations leaves $32k (I know that’s a big one but not willing to sacrifice that) minus going out to eat leaves $26k minus groceries leaves $20k. Etc etc. it goes fast

 

[meredithhww]

@jasonrporter0316 Easiest way to lower your tax burden is to max your 401K. If your effective tax rate is 30% then I just saved you $6,750

 

[ifiki8236]

@jasonrporter0316 Cap out your 401k and pretend like you don’t make any of that money. This is the definition of lifestyle inflation.

 

[shawnmari]

@jasonrporter0316 Seems like your main flaw is saving whats left over after all other expenses…need to deduct it off the top.

 

[tssalacious]

@shawnmari I think their main flaw is math

 

[ositez]

@jasonrporter0316 Bro quit fooling around and sober up financially. IDK what to tell you but your lifestyle needs major adjustment. It seems you don’t even have kids in the equation. Once that happens then your autonomous (expenses you ABSOLUTELY cannot defer) stacks up!

I hope you make it happen!

 

[jasonrporter0316]

@ositez I do have children but I agree we need to save more…

 

[jacklong]

@jasonrporter0316 You see the problem. Your retirement situation is not healthy. You've got to decrease expenses so you have room to increase retirement contributions.

Go through all your statements. Make a detailed, itemized budget. Figure out what fat you can trim to get you to where you need to be.

Maybe you don't need to go scorched earth. Maybe cutting a tip or making it a less expensive could give you room to increase contributions by several perceng. Eating out one fewer day a week could save another percent. Getting rid of or downgrading a car could go a long ways. Cutting down shopping could do a lot.

As things stand today, you won't have a retirement at 72.

But if you make steps to fix that today, you will be well on your way to a healthy retirement.

But you have to make some tough lifestyle choices

 

[daffers234]

@jasonrporter0316 Your living outside your means. I could let it slide a bit (except the vacations) if your car payments weren't so high. You need to practice some delayed gratification. You could very easily have saved the money up to purchase your cars cash. Instead you financed them and are paying over $1300/m to pay off a car loan.

Your car payments, plus what you are saving now would be pretty close to saving 20%. Realistically you could half your vacations (which still leaves plenty for normal people) and be doing quite well in the savings department.

 

[thyda]

@jasonrporter0316 Is that combined income or just yours? If your spouse doesn’t work and you have 2 kids (assuming spouse watches them) then your tax rate is too high.

Perhaps look at last years tax returns and reconfirm that it’s 30%. Your taxable income should be only 142k after standard deductions. Your math is correct wayy off.

If you max out 401k, you are already taking off fed taxes on it.

 

[snowmang]

@jasonrporter0316 Sounds like your 170k is your entire household income. How many people are in your household? I could see your house is too big. Cars are too luxurious. Vacations are wayyyy too expensive but at least this one is arguably more valuable than materialistic things. And you spend 1k a month on food... that food better be gilded with gold.

With this expense. You will need 3M in your nest egg if you want to retire at 60. Either start cutting back on your expense and invest more, or prepare to work until 80