Facts:
Divorced Female
age 34.5
Custodal Parent of a nearly 8 year old.
Homeowner with a 30 year Mortgage
134,000 loan balance 29.5 years remaining
ALL housing costs total 22.5% of gross income
My House Value approx: 206K
Utilities, Property Taxes and House Insurance currently is $500 per month.
The median home here costs $166,320. Home appreciation the last year has been 2.07 percent.
Compared to the rest of the country, My City's cost of living is 4.00% Lower than the U.S. average.
Emergency Fund of 8.5 Months Total Household Expenses
Current Retirement
TSP (401K) $75,923.01 Current Value
Roth IRA $7,925.39 Current Value
Total: $83,848.40
The Questions:
How much or what percent of my income do I need to be putting into retirement? I get confused with complicated retirement calculators. I want to live in my paid for home but take a few Nice Vacations a year. By Nice I mean a week or two in duration and to places out of the US, or all exclusive cruises (could be US based). I am not sure how much to budget for those kind of vacations Because I have NEVER taken one. :0(
Am I still BEHIND in investing or am I where I should be and can just invest normally instead of playing catch-up?
Did I forget any information you would need to calculate your answer?
Thank you!
Help Please, Retirement % question.
April 28th, 2011 at 02:35 pm
April 28th, 2011 at 03:54 pm 1304006040
For reference, I am same age and have about $110k in retirement at the moment. I have ALWAYS contributed 10%. Sometimes more.
I think your income is much lower than mine and you are doing well on less. Thus, I think you are fine. 15% is the "rule of thumb" if you are on track, or even slightly behind.
I also wouldn't get so caught up in the house. Don't buy up, and don't borrow a dime against it, of course. But, with inflation, the payment will become easier with time. Spending a lot of today's dollars to pay off the mortgage may put your further behind in the end. I'd answer different if you had a HUGE mortgage or were upside down. But, doesn't seem to be your case.
It's hard to give good advice without knowing your financial picture 100%.
I am also not saying to never aim for more in retirement, but I think 15% is much more reasonable given your circumstances. If you are intent on retiring young, etc., then you have to do more than that. Just depends what you want.
April 28th, 2011 at 06:36 pm 1304015809
The retirement calculators are complicated because really who knows what the future will bring. You generate a number in dollars, but who knows what the strength of a dollar will be. A million isn't going to be all that and a bag chips if it costs $1000 to fill your fridge.
But you do know that you are feeling stretched right now, and you have concerns about your job right now. I don't read that you want to drop the retirement % to 0, just trim it from the absolute max to something less max. I think dropping to some more comfortable %, and perhaps changing to a slightly riskier asset allocation mix (you are 34, so you have 25 years of growth before the magic 59 1/2) can give a similar feeling of moving forward while freeing up some cash for the here and now. What sort of things can you invest in in your TSP?
April 29th, 2011 at 01:03 am 1304039032
Without having read any of the other answers, I would say 10% minimum - 15% maximum. HTH. Good Luck as well.