#RetirementPlanning #401k #FinancialGoals
Understanding the Importance of Saving for Retirement
As you hit the milestone of turning 40, the realization that you need to start saving for retirement can be a sobering moment. It’s never too late to begin planning for your future financial security, and with some strategic steps, you can set yourself up for a comfortable retirement.
Assessing Your Current Situation
Before diving into the specifics of your retirement savings plan, it’s crucial to take stock of your current financial situation. In your case, having $7,000 in your 401k after one year at your company is a solid start. With a salary of $60,000 and a 3% match, you have a good foundation to build upon.
Calculating Your Retirement Goals
To determine whether you will be okay at age 67, it’s essential to calculate how much you need to save for retirement. By increasing your contribution to 10% of your salary, you will be able to boost your savings significantly over the next 27 years.
Using a Retirement Calculator
Consider using a retirement calculator to estimate how much you will need to save each year to reach your retirement goals. By inputting your current savings, annual contributions, and expected rate of return, you can get a clearer picture of where you stand.
Consulting with a Financial Advisor
If you’re feeling overwhelmed or uncertain about your retirement savings strategy, consider seeking advice from a financial advisor. They can provide personalized guidance based on your specific financial goals and help you create a plan that aligns with your needs.
Staying Calm and Focused
It’s natural to feel anxious about your retirement savings, especially as you approach a major milestone like turning 40. However, by taking proactive steps now to increase your contributions and educate yourself about retirement planning, you can set yourself up for a secure financial future.
Remember, it’s never too late to start saving for retirement, and with careful planning and commitment, you can work towards a comfortable and worry-free retirement at age 67.
🎉 Happy saving, and here’s to a bright financial future ahead! 🎉
My quick back of the napkin math says that if your are diligent about investing the amount you proposed, you are likely to have about $60,000-70,000 per year purchasing power in 27 years, assuming average social security income.
Edit: I assumed a monthly contribution of $1000 to your 401k
You have very little ability to save enough now without significantly increasing your salary. Unless you plan to retire at 95 years old you won’t be ready financially at 67 per your current state. Plan to work until you die and don’t worry so much about retiring is your best course of action.
id go 15% since you are starting so late. ive been doing 10% plus my employers 6% match for 15 years, im 42.
Yea you should panic, you’re very behind.
I think maxing out a Roth IRA ($7k/year) would
also be a good start. Get that tax free growth.
Most suggest investing 20-25% of your gross income.
So Roth + 10% in your 401k would really help you out.
look for a retirement calculator. Enter in what you have now and what you plan to contribute till you retire, see what it spits out. Try and estimate what you’ll get in Social Security. Add those together and figure out if it will cover your current living expenses. It’s largely on you to decide if 10% is enough but you’re behind the average that’s for sure.
Start saving, cut out nonsense spending, pay off your credit card debts/ student loans as fast as you can and be aggressive in saving for retirement
I just started this year in the same boat, we just gotta hustle
Posts like this don’t make me feel as bad at 26 with only $2k in credit card debt. I will be paying off the rest in the next month.
I go back and forth if I should contribute more to my 401k. I only have about $500 in there but I have been trying to have as much available cash to pay off my debt aggressively. I have $8k in debt overall *now* compared to January where I was at almost $20k.
Holy shit. Did I really pay off $12k? Damn.
Something you might look into…
I started working with a fiduciary at age 41. They took all my statements from all my accounts (savings, 401k, employee stock, Ira’s, military pension, tsp, and liquid) and gave me a really solid analysis of what retirement is going to look for me. And that part was free.
Ended up opening an Ira and a brokerage account with them, transferred my tsp and my Ira’s to theirs. Making good returns already on that Ira. And then they looked at my 401k and gave me some recommendations for switching to some more aggressive options.
Panic. How much money do you feel you need to achieve before retirement at age 67?
Start looking for a rich person to marry
Mortgage is debt. If your mortgage is high interest then keep an eye on rates and refinance. Find a new job that pays you at least 20k more…easier said than done I know but the most painless way to be able to save more is to earn more.
Panic won’t help. Immediately bump to 10%. 12% is better
Also get a roth ira. Put money in that once you budget everything. Pay yourself first, 401k and the roth ira.
All of our retirements will be dying in the water wars or whatever
I started saving at age 35 but I had a 6% match. By age 40 I was saving the most I legally could save. Â Retired at 61 with around 1.5m in 401k.Â
These comments are terrifying but don’t worry, you’re not alone. I’m 41 and have very little saved as well. I just opened a HYSA and am prioritizing having an accessible emergency fund equivalent to six months of earnings while also slowly increasing my investments. Once I have the emergency fund, I’ll bump them more. I have a 401k, I increased my donations to 16%, we’ll see if that’s too intense for me. I am also going to do a small recurring deposit into my Roth IRA bc until yesterday, I hadn’t touched it since 2019. :/
I’d save EVERY penny. I’ve been saving for 30 years (I’m 51) – both company match 401k and cash.
SS is great- but don’t rely on it.
get to 20% if you can
Fidelity has a really good calculator for estimating. I believe it’s free.
So $7,000 to start+ 10% of your salary $6,000 plus 3% match $1,800 means $7,800 per year for 27 years, if you assume an optimistic return on investment of 7% that’s a total of…. $643,000Â
Say you live another 30 years that’s $21,400 a year. Plus social security. If your house is paid off you should be ok. You won’t Be rich but you shouldn’t be living in poverty either.
10% savings rate is what someone who starts in their 20s can do and retire well. At your age I’d say you need to bump that up to 25-30%.
There is a chart on in the below link that shows savings rate and years until retirement. This is assuming you keep the same spending into retirement. Since you want to retire in 27 years with starting close to zero you need the same mindset as a 25 year who wants to retire early at 52 years old..
[https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/](https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/)
If you want to keep living in retirement approximately the same way you’ve been living now, then no… 10% is not enough. I highly suggest you make some tweaks to your lifestyle right now so that you can hit more like 20-25% savings. (If you have a partner you should also probably be talking about income, savings, and retirement with them.)
Better than waiting to 50 and starting
401k horrible product! Only do the maximum to the get maximum match from your employer. Then max out a Roth. Then invest a balance % managing it yourself.