Thread: How much should one save?

I think before you can clearly determine how you need to save, you must decide how you want to live when you retire. Assuming you want to have about the same quality of life as you do now, most suggest you will need about 70-80% of your income. Do you plan to travel, what hobblies do you have, are they expensive, do plan to continue into retirement?

You and your wife need to set a goal, start a plan, and then take steps toward your goal. Granted your goal/plan may change, but at least you won't be starting from scratch.

How must to save, as much as you possibly. 15-20% if you can afford, would be great. You and your wife have to set an amount that is right for you.

Well, i'm off to a pretty good start I think. I have roughly 55K in TSP/Roth IRAs so far. I think my goals are about as you said - i'd like to have total available funds around the 80% mark of what we earn today (Since i'm contributing 10-15% now, im already living on 85-90% of what i make now).

To complicate matters more, i have parents that are worth quite a bit (over a million), and even despite having 2 siblings, I stand a good chance of inheriting a lot of that, but as with life, there are no guarantees. My dad has been a frugle man for 30+ years now, and to be quite frank, I dont think he could ever emotionally bring himself to spending much of it. Its easier said than done for a lifelong miser to become a spendthrift simply because the money is there.

anyway...... ive heard you shouldnt base investment decisions on "possible" inheritances, so I dont.

When I drop us down to 10% savings, i get afraid that i'm going to push our retirement age to maybe 65 or beyond, or that the market just isnt going to do that well from 2004-2030. Conversely, when i shoot for 15% or more even, i feel like i'm putting the squeeze on my family too much, and my wife silently growls at me for being such a miser. I'm going to feel a little silly if I hit 60 and have 2 Million+ in investments on top of a paid-for mortgage, and have no idea how to spend that kind of cash considering that we are easy-to-please kind of people.

How much should i save for me and my family. I dont want to have to struggle in the here and now anymore than's necessary. However, I do have the discipline to do what's necessary to ensure a reasonable retirement.

Welcome azanon. Thanks for joining us!

Judging by your posts I've read, you seem to have a pretty good grasp of investing. The key to investing is to start early. Get a chunk in your account that can start churning and burning on its own. As your balance and earnings pick up steam, you eventually get to a point where your contributions are hardly significant.You always want to take advantage of any matching contributions but the total amount after that could depend on your current financial situation. If you live in San Francisco for instance, you may not be able to invest the max 14%but if you live in a small town in Wisconsin... you get the picture.

One good practice to build up your contribution amount when you are young (or old) is to increase when you get a COL raise. You won't even notice the difference in your pay.

Bottom line, get the max matching and if possible start a Roth IRA. We had a discussion here a few weeks ago about what is better, contributing to a roth IRA or maximizing your TSP.The TSP contributionsbenefit your current tax situation and a Roth helps yourretirement tax situation (you never pay tax onRoth withdrawals if you keep it in for 5 years and don't use the money before a certain age etc., but you make your contributions with after tax money).

Thanks again for stopping by. We look forward to hearing more from you.
Tom

Well, i could probably afford up to 15% of family pretax earnings, but it naturally will mean..... ole, a compact car instead of maybe a BMW 3-series, or maybe a private club/health facility membership vs public facilities, fancy house upgrades vs keeping it like it is, that sort of thing.

I guess, ideally, i'd like to have the same standard of living now, as i do in retirement. I dont want it tilted one way or the other. Balance throughout my life is my ultimate financial goal.

And you can use Warren Buffett's barber. It will save you a bunch.

Ok, well, howbout some of you guys just volunteer what % you are going with, if you are comfortable doing that. Putting your age down would help too :-).

(guess i'm expecting the older folks to be putting more away cause maybe they put it off :-) )

This is interesting. We're just starting out so maybe I'm doing things differently but I'll share my plan.

My savings in my mind is separted into different categories. I'm not sure if you were thinking of strictly extra money or not but for us our savings is....

1. Money in savings for insurace deduct. (car, car, home) We've met this goal $2,000

2. Savings for vacations... we need to discuss this and start... I feel this should be separted from the irregular payments that one has that comes up throughout the year.... What I mean is I save for our car insurance to pay it all at 6mths and other regular pmts (that are irregular, kwim?) that I know we have (car registration, etc). We've met the goal of the irregulars but I probably need to do some updates as needed. I'm going to look at it over this week and see if I've forgotten anything.

3. Also, I need to figure out how much E.R. money we need to have in case somethinghappened. Like money for mortage.... Anyone have any suggestions... I've read several different guidelines -- 3mths, 6mths, etc... We have now only $1,000 but I do know we'll start working on this. That's more than our mtg pmt.

4. TSP/Roth/Investments--- right now only TSP, Roth... eventually would love to do investments. We've met the goal of 1 Roth Max for this year and plan to do the other one too hopefully but we'll see.

Not sure if this is what you met and I'd have to look at over our numbers to give you a % because I'm not sure off the top of my head since I have everything separated. After rereading your post I'm thinking now you were only talking about savings for the future but I'll leave my post since I thought it all out and will make notes to look at things this week. Oh, also, right now my dh is only currently working so we're pretty frugal right now to accomplish these savings on his small salary.

I'm so impressed with some of you who've shared how much you've had in your TSP so I keep reminding myself we've just started and learning.

My question was for retirement funding only.

I actually use just one money market fund to accomplish #1-3 of what you listed there. I have to keep it more simple, simply because what you plan never turns out exact. Our goal is to put ~ $500 dollars in our general money market account for "intermediate-term expenses" per month, and let that account build up. The account for us covers emergencies/unpredicted expenses, vacations, large home items (furniture, TV, stuff like that), home repairs, etc. I basically just let it build up to 5-10K, and I feel pretty comfortable.

If i feel in the future $500/month isnt covering all that adequately, then i'll just increase the contribution amount.

I also keep a separate, taxable single mutual fund (currently aggressive stock) to save for my next car purchase. Sure interest rates are low now, but by the time I want to buy a newcar down the line, ratesmay be much higher, and i'd prefer to pay a good portion of it in cash, if not pay for it outright.

I have used the 75-80% pre retirement income as a basis for my retirement fund calculations for 15 years. It is not a bad figure and it gives you a ball park idea of how much to save. There are many onlineretirement calculators that will walk you thru how much to save to reach that goal. Recently I have discovered through a early retirement message board that mostpeople do not require 75-80% to live in retirement, while others choose to travel and are over 100%. So who knows, for now use the 75-80% and as you get older you will decide what you may want to do in retirement.

If you can, max out on TSP. If you can't, do what Tom said and every Jan when you get your raise, up your annual contribution until you max out. Once you have maxed the TSP start to work on Roth IRA's.

Your young enough that your TSP should be 100% C, S, and I.

Keep these questions coming.

Your young enough that your TSP should be 100% C, S, and I

I'm not a buy-and-hold investor, and IMHO, there's never an appropriate age where its wise to willfully lose a lot of money. "IF", or more correctly, "WHEN" the market once again gets into a position where it is very likely stocks will either lose for the year, or a crash is impending, my money will be elsewhere.

But for now, i'm with you - 100% stocks is the place to be.

azanon wrote:

Your young enough that your TSP should be 100% C, S, and I

I'm not a buy-and-hold investor, and IMHO, there's never an appropriate age where its wise to willfully lose a lot of money. "IF", or more correctly, "WHEN" the market once again gets into a position where it is very likely stocks will either lose for the year, or a crash is impending, my money will be elsewhere.

But for now, i'm with you - 100% stocks is the place to be.

Being able to identify the "if and "when" puts you in a unique category. Maybe even

in another profession. Rest assured, you will not have to worry about that 2 million

in your TSP with no idea how to spend it.:^