Am I saving enough for retirement?

Submitted by pharmagirl26 t3_10pcsaq in personalfinance

I turned 30 this year and I’m afraid I might not be saving enough or have enough saved. Below is a breakdown of my budget and investment balance. They are monthly expenses Any advice? Anything I should do differently?

Car Payment $575 - have $29k left on the loan @3.49%

Rent(includes utilities) $1800- I live in a HCOL with a roommate

Renter’s Insurance $15

Phone $30

Car Insurance $100

Personal Loan $1250 - have 25,000 left @1.49% interest

Gas $250

Tolls to work $19.25

Groceries $200

Emergency Fund $1000- in HYSA with Ally Goal is to have $25k- currently have $19k then will invest that $1k into a brokerage

Investing $600- I buy a mix of VTI and QQQ shares quaterly

Allowance/Fun Spending $2000

I Contribute about 12% to 401k- goal is to max out this year

Paid off Student loans and pay off CC in full every month

401k Balance $36,945

Roth $4610.79

HSA $880- but can no longer contribute. I no longer have a high deductible plan

Salary is about $178k before taxes(FT job) Also have a per diem job that can bring an additional 5-10k/year depending on how much or how little I work

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Rave-Unicorn-Votive t1_j6jnymw wrote

How long have you been earning $178k? If you've been >$100k for several years, you're behind on retirement savings. If you went from $70k to $178k in the last 90 days, it's not that bad.

>I Contribute about 12% to 401k- goal is to max out this year

At $178k income, maxing it out shouldn't be a "goal" it should just be a given. Same with an IRA, which I don't see listed as a monthly expense.

>Allowance/Fun Spending $2000

That's quite a bit of fun for an incomplete emergency fund and someone concerned about retirement savings.

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pharmagirl26 OP t1_j6ko8cr wrote

I just got this position in May of past year. I was a student before and was making less than 20k.

I have a ROTH that I plan on maxing out via the backdoor. Wasn’t sure I could do both the roth and IRA.

I thought 2k for allowance was small. I could adjust to 1.5k

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Rave-Unicorn-Votive t1_j6kpalt wrote

>Wasn’t sure I could do both the roth and IRA.

A Roth IRA is an IRA.

>I thought 2k for allowance was small.

You thought 20% of your net pay on entertainment was small? That's more than your housing expense. That's a dangerous level of lifestyle creep for someone who was making $1500 a month just 9 months ago.

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alwayslookingout t1_j6ktmwz wrote

$2K/mo for allowance/fun is a lot especially when you have $54K of debt, even if they’re low-interest debts. You’re essentially borrowing at 1.49 to 3.49% each year for fun money by just keeping those loans around to spend 10% of your take home every month.

At your income level there’s no reason why you cannot max out your 401K and IRA unless you’re paying off high-interest debts or saving for a big purchase.

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Liquidretro t1_j6jokql wrote

No, but you are close and doing most things pretty well.

The general recommendation is to save at least 15% to retirement. With your income you should aim for maxing out your tax advantaged accounts before taxably investing. Your close on your 401k before the match but not quite there and this doesn't bring you to 15%. Many people are suggesting this 15% number be bumped up to 20% these day too.

The other general recommendation is to have 1 years income saved by the age of 30. So you are behind, but I'm guessing you haven't been making $178k for 5+ years either, so this isn't unheard of at this age. The important part is to catch up and keep lifestyle inflation in check.

You should probably look at doing a traditional IRA (no income limit) to increase your tax-advantaged accounts before taxably investing. You maybe able to convert this to a backdoor roth IRA too.

How did you come up with the $25k need for an emergency fund?

I would redirect your taxable investing to tax deferred accounts until those are maxed out, and take a look at your fun spending each month to divert some of it into increasing your ability to invest. The prime directive in the wiki has a great flowchart you should follow for the order of operations on your money.

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