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Bxgell2
Perfection
Member since 5/05 16438 total posts
Name:
Beth
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Retirement planning...
For anyone that knows...
Is there a recommended amount/percentage of your yearly salary to put into your IRA/401k each year?
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Posted 2/19/09 8:20 AM  |
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Kara
Now Zagat Rated!
Member since 3/07 13217 total posts
Name:
They call me "Tater Salad"
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Re: Retirement planning...
I contribute the max every year. It's difficult to do by percentage of salary b/c the dollar amount varies so much.
At the absolute minimum, I'd put in whatever it takes to get your company's match (if your company matches - mine doesn't).
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| Posted 2/19/09 8:24 AM |
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Bxgell2
Perfection
Member since 5/05 16438 total posts
Name:
Beth
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Re: Retirement planning...
Posted by Kara
I contribute the max every year. It's difficult to do by percentage of salary b/c the dollar amount varies so much.
At the absolute minimum, I'd put in whatever it takes to get your company's match (if your company matches - mine doesn't).
I put more than what my company matches, but the issue is with DH - he has two jobs. The one is a firm, and he definitely puts into his 401k more than the match, but for his other business, that he owns, it's really up to him, at the end of the year, to decide how much to put into his SEP-IRA.
To reduce our tax liability, which is typically ginormous because he makes quarterly estimates to the IRS that are usually too low, we put a huge chunk of $$ into this SEP-IRA.
But I'm starting to think that, between being maxed out on our 401k's at work and the huge contribution we make to his SEP-IRA every year, that it's overkill.
So I'm wondering if there is a recommended percentage to compare and determine if we're putting too much in and should reserve some of that $$ for other investments.
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| Posted 2/19/09 8:31 AM |
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Blu-ize
Plan B is Now Plan A
Member since 7/05 32475 total posts
Name:
Susan
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Re: Retirement planning...
Beth, you need to sit down with a CFP and figure out what you'll need for retirement and how long you plan on working. He/she will need to run projections going out 20, 30 , 40+ years. Then you can back into the number. Say you put away $50,000 a year in your retirement accounts at 10% avg over the next 40 years..you need scenarios run for you.
You can do this yourself, but some of the software that is in the industry can do all kinds of manipulations in different scenarios.
I don't know if you've done this yet, but you need pro advice.
We are actually doing this right now. We max out the 401K and don't contribute to any other retirement accounts..we put away 30% of our gross income every year and I still don't think it will be enough but you have to live..pay for your kids education etc..
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| Posted 2/19/09 8:54 AM |
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KrisT
Two Boys for Me!!
Member since 1/07 5213 total posts
Name:
Kristin
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Re: Retirement planning...
There are retirement planning calculators online that can give you an estimate of how much you should save based on the desired annual retirement income (either a specific amount of % of your current income) plus they factor in your age, current income, etc. That may give you a better idea on how much you should save now.
Here is one from CNN Money:
Retirement Calculator
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| Posted 2/19/09 8:57 AM |
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MarathonKnitter
HAPPY
Member since 2/07 17374 total posts
Name:
EMBRACING CHANGE
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Re: Retirement planning...
my quick answer would have been 15%, but that's for someone who isn't putting anything away right now.
you seem to have a different "problem"... mind you, a good problem to have.
i would also advise you speak to a pro. remember that there are limits to how much you can do tax-deferred.
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| Posted 2/19/09 9:07 AM |
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Bxgell2
Perfection
Member since 5/05 16438 total posts
Name:
Beth
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Re: Retirement planning...
Posted by libby2595
i would also advise you speak to a pro. remember that there are limits to how much you can do tax-deferred.
Yes, I know. DH gets around that with the SEP-IRA which has a higher threshold under the tax law.
I am inclined to speak to a professional, but DH is a stick in the mud about it because, technically, he manages his own fund and is an accountant, and should probably know this stuff himself. But I just think we might be a little overconservative in some areas.
Thanks for the advice ladies....
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| Posted 2/19/09 9:30 AM |
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CookiePuss
Cake from Outer Space!
Member since 5/05 14021 total posts
Name:
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Re: Retirement planning...
If you are putting away all this $$$ in a tax preferenced way and it isn't causing you to alter your lifestyle and you have plenty of liquidity in an emergency fund, I'm going to say that you can't save TOO much for retirement. This is just compounded by the immediate tax benefits of a SEP contribution. If there is too much income in your retirement years, it will give you plenty of freedom for gifting and legacy planning.
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| Posted 2/19/09 9:40 AM |
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Kara
Now Zagat Rated!
Member since 3/07 13217 total posts
Name:
They call me "Tater Salad"
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Re: Retirement planning...
There are too many variables to just give a blanket percentage. I don't think any good financial planner WILL give a blanket percentage. I agree with those who say talk to a pro. I'm sure your DH knows a lot more than most of us, but sometimes having an outside perspective is really helpful.
This all depends on how long you both plan to work, the tax bracket you anticipate being in upon retirement, the amount of retirement savings you already have, the amount you'll need upon retirement, other assets / liabilities you have, the opportunity costs of putting that money into a tax-deferred retirement account versus investing that money elsewhere, tax liability, etc., etc.
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| Posted 2/19/09 9:50 AM |
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Kara
Now Zagat Rated!
Member since 3/07 13217 total posts
Name:
They call me "Tater Salad"
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Re: Retirement planning...
Posted by shamrock124
If you are putting away all this $$$ in a tax preferenced way and it isn't causing you to alter your lifestyle and you have plenty of liquidity in an emergency fund, I'm going to say that you can't save TOO much for retirement. This is just compounded by the immediate tax benefits of a SEP contribution. If there is too much income in your retirement years, it will give you plenty of freedom for gifting and legacy planning.
I think the question deals more with putting the money into a specific type of retirement account (401(k) or IRA) or investing that money for retirement / long-term in a different way... At least, that's what I took away from her question.
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| Posted 2/19/09 9:51 AM |
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CookiePuss
Cake from Outer Space!
Member since 5/05 14021 total posts
Name:
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Re: Retirement planning...
Posted by Kara
Posted by shamrock124
If you are putting away all this $$$ in a tax preferenced way and it isn't causing you to alter your lifestyle and you have plenty of liquidity in an emergency fund, I'm going to say that you can't save TOO much for retirement. This is just compounded by the immediate tax benefits of a SEP contribution. If there is too much income in your retirement years, it will give you plenty of freedom for gifting and legacy planning.
I think the question deals more with putting the money into a specific type of retirement account (401(k) or IRA) or investing that money for retirement / long-term in a different way... At least, that's what I took away from her question.
ETA: I just read the follow up information that made it clearer that she was addressing investments outside of the qualified arena.
That is why I specifically addressed funds being invested in a tax preferenced account...investing in accounts that defer taxes and/or lower current income tax liability not just saving money in non qualified accounts.
Message edited 2/19/2009 3:45:09 PM.
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| Posted 2/19/09 9:56 AM |
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lullabella
LIF Adult
Member since 5/05 2246 total posts
Name:
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Re: Retirement planning...
When do you plan on retiring? You have to be 59 1/2 before you can start taking money out. We max out our 401(k)'s but we also save in seperate accounts because our goal is to be retired by 55... hey we can dream right???
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| Posted 2/19/09 10:31 AM |
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Bxgell2
Perfection
Member since 5/05 16438 total posts
Name:
Beth
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Re: Retirement planning...
I can't imagine retiring at 55 - my work gives me a lot of satisfaction - I just don't know what I'd do with myself!  I'll probably end up like my mother, who is close to 70 and STILL working 
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| Posted 2/19/09 10:33 AM |
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Bxgell2
Perfection
Member since 5/05 16438 total posts
Name:
Beth
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Re: Retirement planning...
Posted by Kara
Posted by shamrock124
If you are putting away all this $$$ in a tax preferenced way and it isn't causing you to alter your lifestyle and you have plenty of liquidity in an emergency fund, I'm going to say that you can't save TOO much for retirement. This is just compounded by the immediate tax benefits of a SEP contribution. If there is too much income in your retirement years, it will give you plenty of freedom for gifting and legacy planning.
I think the question deals more with putting the money into a specific type of retirement account (401(k) or IRA) or investing that money for retirement / long-term in a different way... At least, that's what I took away from her question.
That is kind of the question - though I'm realizing there's really nobody on here who can help me answer it.
The issue is I think we may be putting too much towards our retirement. While we do have liquid savings/investments, I think it might better to allocate some of what we are putting towards retirement to just regular investments, whether it be the market, or even real estate. But, in order to make that determination, I need an idea of what is an appropriate amount we should be socking away in our retirement accounts, whether it be 401ks, IRA's or SEP-IRA's, every year.
I think I'll just go home and harass DH and if he doesn't have the answers, convince him it's time we seek some professional advice.
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| Posted 2/19/09 10:35 AM |
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CookiePuss
Cake from Outer Space!
Member since 5/05 14021 total posts
Name:
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Re: Retirement planning...
Posted by Bxgell2
The issue is I think we may be putting too much towards our retirement. While we do have liquid savings/investments, I think it might better to allocate some of what we are putting towards retirement to just regular investments, whether it be the market, or even real estate. But, in order to make that determination, I need an idea of what is an appropriate amount we should be socking away in our retirement accounts, whether it be 401ks, IRA's or SEP-IRA's, every year.
Okay, I see the question differently now.
If you go to any major mutual fund company's website or brokerage house, they will have calculators that will help you with all different projections. Here's a link to Fidelity's...Link
As far as an amount, it is going to vary for each and every one of us. Today's general rule is that you should base the calculation on 70-80% of today's income for what you will need to maintain your lifestyle in retirement. Personally, I find a lot of faults with that generalization but it's a good starting point.
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| Posted 2/19/09 10:46 AM |
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