Retirement Savings

[Phanuthier]

Just trying to get some info on what the norm is, now that I'm a working man, I'm trying to figure out how much I should save. My max contribution to my 401k is 30%, my company stock purchase plan is 10% which puts me at 40% of my paycheck. Running a few back of the envelope numbers, and looking purely at just my base salary (i.e. not including other investments, company bonus's et al) and looking at my monthly expenses, I'm only a few hundread bucks free a month... is 40% a bitch much or is it the norm? How does everyone go about choosing how much they allocate for long term savings?

[Slava]

10% for the longer term is more or less the norm. Some people save more due to the company plans and the like, but 10% of your salary is more than it sounds because its after-tax dollars.

[Cowperson]

Originally Posted by Phanuthier

Just trying to get some info on what the norm is, now that I'm a working man, I'm trying to figure out how much I should save. My max contribution to my 401k is 30%, my company stock purchase plan is 10% which puts me at 40% of my paycheck. Running a few back of the envelope numbers, and looking purely at just my base salary (i.e. not including other investments, company bonus's et al) and looking at my monthly expenses, I'm only a few hundread bucks free a month... is 40% a bitch much or is it the norm? How does everyone go about choosing how much they allocate for long term savings?

Live comfortably, live the adventures you can afford as the years go by and save what you can beyond that.

I know some people sitting on some very valuable farmland just out side the city limits who had decided to work like dogs for about 40 years, then had big plans to tour the world and live the high life when they turned 60.

About two months before they were going to move out of farming, the wife is suddenly on a kidney dialysis machine and is dead not so long after. The husband is heartbroken and their plans were never realized.

It's not in any financial manual anywhere but the principal lesson there is do the safari's, trips to Europe, etc, etc, as the years go by instead of waiting until the final moment. Because you have no idea when the final moment is going to come.

If, in that scenario, you can save 40% then go for it. But it might be a lower number.

Cowperson

[Slava]

Originally Posted by Cowperson

Live comfortably, live the adventures you can afford as the years go by and save what you can beyond that.

I know some people sitting on some very valuable farmland just out side the city limits who had decided to work like dogs for about 40 years, then had big plans to tour the world and live the high life when they turned 60.

About two months before they were going to move out of farming, the wife is suddenly on a kidney dialysis machine and is dead not so long after. The husband is heartbroken and their plans were never realized.

It's not in any financial manual anywhere but the principal lesson there is do the safari's, trips to Europe, etc, etc, as the years go by instead of waiting until the final moment. Because you have no idea when the final moment is going to come.

If, in that scenario, you can save 40% then go for it. But it might be a lower number.

Cowperson

Over the past year or two I've seen that similar scenario more than once. Its certainly made me change somethings in my mindset....its really heartbreaking to see people go through that.

[MoneyGuy]

Originally Posted by Phanuthier

... is 40% a bitch much or is it the norm?

Rarely do I tell people they're saving too much but you are. Maybe bitch was a Freudian slip and you meant it's a bitch to save that much?!? Why not cut it in half and see how that goes. I'm a big believer in living for the present and saving for the future. How much of your savings does your employer match? That should be your minimum and increase it as you deem it appopriate but don't make huge sacrifices today for a tomorrow you don't know you'll ever see. However, save aggressively because you likely will see retirement and you need to be prepared. My personal philosophy (since you asked) always has been to save as much as I could while living well. As my income has grown a lot I live better but still save a lot of money. I wouldn't be comfy if I wasn't saving every month. Make sure you have proper insurance also, depending on your personal situation.

[Phanuthier]

Originally Posted by MoneyGuy

Rarely do I tell people they're saving too much but you are. Maybe bitch was a Freudian slip and you meant it's a bitch to save that much?!? Why not cut it in half and see how that goes. I'm a big believer in living for the present and saving for the future. How much of your savings does your employer match? That should be your minimum and increase it as you deem it appopriate but don't make huge sacrifices today for a tomorrow you don't know you'll ever see. However, save aggressively because you likely will see retirement and you need to be prepared. My personal philosophy (since you asked) always has been to save as much as I could while living well. As my income has grown a lot I live better but still save a lot of money. I wouldn't be comfy if I wasn't saving every month. Make sure you have proper insurance also, depending on your personal situation.

Haha oops! Right now, I live a pretty simple life and thats fine... I'm really not into nice cars or big houses or anything, anything is fine to me... but I do have plans in the next 5 years of doing some more expensive stuff, like getting my pilots license and sailing and stuff. My employer matches 150% up to 4% of my paycheck, and I do have a pool of money saved up from my own personal investing, but I was hoping a lot of the excess money from my paycheck I would be able to manage on my own. Theoretically speaking, I could put away the 40% of my paycheck and continue living my current lifestyle with $600/month extra, but I was expecting that extra money (i.e. $600) be a lot more so I was just sort of wondering what average joe saves (i.e. Slava saying 10%).

[Clarkey]

Originally Posted by fotze

Fata thats a good post, especially since you are in the business that profits from people saving as much as they can.

I'm saving 37%, maybe thats excessive.

Buy a recreational property.