QOTD for Friday

iVillage Member
Registered: 01-25-2006
QOTD for Friday
6
Fri, 02-24-2006 - 12:57pm

Wow, it's quiet here today. Thought I'd throw something out there that's been on my mind and see what all of you are doing and thinking.

I have been pretty steadily contributing to 401k accounts through the years but I have no idea if I'm saving enough now(currently 10% of my gross w/a 4% match of the 1st 8% from my company) and if some periods where I didn't save or did so at MUCH lower levels need to be made up somehow. I have played with numerous calculators over the years but it always seems like they ask me questions I don't know how to answer (like, when they ask for retirement income, am I supposed to give it in today's dollars?). I'm never sure if I'm getting the 'right' answer and I never seem to get the same answer 2x. I definitely don't know how something like a Roth would affect all this (I only have tax deferred accounts so far).

Do any of you feel like you have a good handle on what you should be saving today for retirement or what the total amount needs to be by retirement and if so, how did you figure that out? If not, what sorts of strategies do you think we should employ to figure it out? Books, online resources????

Peggy

iVillage Member
Registered: 05-09-2005
In reply to: p7eggyc
Fri, 02-24-2006 - 2:16pm
I was reading Dave Ramsey's Total Money Makeover book last night. He says if you can live off of .08 of your nest egg, then you have enough and the rest is wealth building. He has some forms in his book that help you calculate how long it will take you to get as much as you need in order to live off of the .08%. I see that I would need about 4 times as much $$ as I have now -- yikes. And he doesn't want folks to count on Social Security -- he says it will be gravy if we get it. So onward and onward. I have to get rid of debt first, then hopefully snowflake what I have been paying into retirement. Or live to be 100 and keep working all that time. LOL.
Megan
iVillage Member
Registered: 06-23-2005
In reply to: p7eggyc
Fri, 02-24-2006 - 2:22pm

http://www.bankofamerica.com/financialtools/index.cfm?view=PRODUCT&tools=retirement

This might have some good info for you. I don't know that there is any one right answer. But I would imagine that most people absorb as much info as they can and use what feels right for them. You mentioned you are saving 10% now. Dave Ramsey suggests 15%- so that might give you a target number to work towards. If you know you have a lot of time you need to make up for, I would probably be even more aggresive and shoot for more than that.

Another source that we get excellent financial information from is Money Magazine. You can get some articles online at CNN-Money, but the magazine is full of great articles every month. We're in our mid-30's and starting to think far ahead, get super serious about debt, kids' college, retirement and I can't tell you how much we've learned from that magazine in the last year we've subscribed. Well worth the price of the subscription.

iVillage Member
Registered: 09-20-2004
In reply to: p7eggyc
Fri, 02-24-2006 - 2:27pm

You know what? I honestly have no idea. I read something about it in dave ramsey's Total Money Makeover, but it did not stick. We currently put in 5% of dhs pay, but the company matches it 100%. My company puts 4% in for me, whether or not i contribute, so i don't contribute. We are focused on paying our debts first, but with dh's company, we can't pass up free money.
Anyhow, my husband is 33 and I an 29. I have learned a couple of things from life experience. 1. No matter how much money you have, if you don't have good insurance, then everything can everaporate in a hurry. (This apples to not only health insurance, but also car insurance (liability), and disability insurance.) We pay out a lot for piece of mind. 2. You have to live a balanced life. you can do all the right things financially..be frugal, put off that vacation, etc, only to find out something at the drs that will change EVERYTHING. Like my mom with her lung cancer (at 52) and my Dad now, who is only 64. I am really trying not to sweat the small stuff, and not lose sight of what is really important. You have to LIVE your life while you are healthy enough to enjoy it. It was always my Dad's dream to go to Alaska. Four years ago, the financial picture looked ok, but he couldn't take that week off from work and just go (self-employed) if I took him to Alaska tomorrow, i doubt it would mean a thing.

Anyhow, i am sorry, I strayed from your original question. i think my answer is i don't know enough, am not doing enough to learn enough, and really i am just hanging on for dear life to try to get to a time a few years down the road where retirement planning will have meaning to me. Stuck in the present,
Heather

iVillage Member
Registered: 01-25-2006
In reply to: p7eggyc
Fri, 02-24-2006 - 5:51pm

{{{{Heather}}}} I know where you are coming from. I think I am at a good balance but it is easy to tip off that balance between living now and worrying about the future. I tend to tip the see-saw in the direction of living large today but I don't want that to bite me in the rear either. I'm sorry you are seeing such a stark example in your parents and I hope that your family is able to find some comfort and peace in the face of your mother's illness. Hang in there...I'm sure you and your husband will find a good balance for yourselves.

BTW, I totally agree about the insurance thing. One thing I am really going to have to consider is long-term care insurance. I'm unmarried without children and it is going to be particularly important that I have that taken care of.

Peg

iVillage Member
Registered: 01-25-2006
In reply to: p7eggyc
Fri, 02-24-2006 - 6:12pm

Thanks MyTwo! That site is awesome. I will have to spend some time digging through all of that information.

I haven't read Ramsey's book but does he include employer contribution in that 15% number? If I include their part, I'm darn close but if not, I've got a ways to go. I'm also sort of wondering about my ability to 'make up' some of this after my student loan is paid off (probably a 5-7 year endeavor unless a miracle happens) but I know I lose a lot of power of compounding interest that way. Kind of tough to figure out all the angles! I guess this is why people hire financial planners but I'm afraid of that too. Yikes! LOL

I used to get Money magazine but I didn't read it. I probably would now. Maybe I'll make a point to go to the library once a month and read it so I don't have the expense and clutter. That would be a good 'task' on my financial journey.

Peg

iVillage Member
Registered: 01-25-2006
In reply to: p7eggyc
Mon, 02-27-2006 - 6:34pm

That BOA site is AWESOME! And not just because it gave me good news. :) :) :)

It is by far the most comprehensive retirement calculator I have ever used and I feel so much better. Thank you so much!

Peg