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Llyadd
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Retirement Advice  Reply with quote  

Hello everyone. I would like a little bit of advice as I am new to setting up my retirement. I Recently started contributing to my 401k with a 100% employee match up to 6 %. I am currently contributing 4% of my jobs paycheck (around 88000 annually) towards that to go along with 20% of my national guard Check (around $7,000 per year) towards a TSP account. As of right now I plan on retiring from the military and should get somewhere around 30 - 35% of my base pay at retirement age of 60. Currently that is around $3,125 a month. On my current plan I should have around $1 mil in my 401k and about $250k in my TSP.

I am currently 32 and want to start my retirement in my late 50's to early 60's. With all that and social security (if it is around) will I be ok or should I plan on struggling when i retire? Also is there any advice that anyone can give me? I know I should have started earlier in my life but when I was Active duty military there wasn't too much extra income to put away.
Post Wed Sep 16, 2015 12:26 pm
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blixet
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With close to 3 decades to go, there is no way of knowing. It depends not only on what you will have accumulated and what guaranteed income you will have, but what your expenses will be. Until you know that, it is all a guess.

But it looks like you are saving close to 11.5% of your current total income, including the employer match. And that is pretty good. I would think you'll want to bump that up as you are able over time. Maybe shoot for a total of 15% in the next couple of years if that is a possibility. 15% - 20% for someone in your circumstances would certainly be good.

One thing that you might consider is getting the rest of that employer match. There is $1760 of free money going unclaimed by not contributing up to the full 6% level. Maybe look at dialling back on the TSP by that amount and raising your 401k instead.

I wouldn't worry too much at this point. With the amount of uncertainty you face, you are doing fine. Keep saving as much as you can and things will be clearer the closer to retirement you get. Frankly, even 5 years out has a lot of uncertainty left. But you'll have a much better handle on your expenses and liabilities at that point.

Information is more valuable sold than used – Fischer Black
Post Wed Sep 16, 2015 2:35 pm
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Llyadd
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Thanks Blixet. I knew it was far out and with the uncertainty of the market you can never be sure. I think that the thing that will help me most is the military retirement. I would like to think that close to 1.5mil would be more than enough for a lengthy retirement but with inflation and stuff you just never know. Also I know people have hounded me for not starting earlier and I was begining to doubt my plan.

I will start contributing more as I get debts paid off and pay raises. I just recently got a pay raise and bumped up my contributions to my 401k.
Post Wed Sep 16, 2015 2:44 pm
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oldguy
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Keep in mind - the 'match' is free money. 2% of $88k is $1760 that you are leaving on the table. Max the 401k to 12%, that is $10,560/yr going into the account. You will be getting about a $1000/yr tax refund so you out-of-pocket for the $10,560/yr is only about $4280/yr.

The generic US Market has an average return of 11%/yr, longterm - and you have almost 30 years available. Your $10,560/yr @ 11%/yr for 30 yrs = $2.3M.

quote:
I will start contributing more as I get debts paid off and pay raises.


You could - but that is 'wrong thinking'. There are millions of 50 & 60 year-olds that are still saying " as soon as I get this last car paid off and kill that credit card, I am going to start investing". I became wealthy by doing the opposite - during my working years I borrowed at low rates so that I could invest my income at 11%.
Post Wed Sep 16, 2015 3:53 pm
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Llyadd
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Great Advice oldguy. I know people say that they are going to after they pay debts off all the time but I like to think that I have the commitment to do it. I have already upped my contributions after 1 debt has been paid off and then later upped it after I got a pay raise. I will take your advice into consideration though. Awesome advice.
Post Wed Sep 16, 2015 4:05 pm
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chrispitmen
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Oldguy makes a good point. I would take any free money you can get. There aren't too many companies that I know of that still do that. One of the best places to go for general tips is They usually have good articles that give advice. I would also check out some of the wealth management blogs too. There are some very knowledgeable bloggers nowadays.
Post Tue Dec 08, 2015 7:16 am
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TerryB
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Old guys insight was very sound. Its best to contribute / save and/or payoff as much as you can while youre still young and working.
Post Mon Feb 08, 2016 10:13 pm
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