Retirement Targets

[Cyclones_R_GR8]

My work switched to a high deductible low premium option under ACA. My wife and I were skeptical at first. We made the switch. We max out the HSA every year. I have it invested in a couple mutual funds. We pay all medical costs out of pocket. There is no timetable to reimburse yourself for medical bills. Our HSA has nearly $50,000 in it now. This was something the government got right and more people need to take advantage of when they are young

We were given the High Deductible option about 12 years ago or so. I have tried to max it out each year. I figured overall the payroll deduction was about the same as the other insurance but I was paying half of it to myself instead of the insurance company. I now have it set to keep $8000 in cash and the rest is invested. It's at about $46k total.

 

[DeereClone]

Ya dogg, I’m not going back in time 20 years and driving a Honda Civic again.

I try to keep total vehicle investment under about 15% of taxable income. We are at about 7% right now. I drive junk vehicles and invest what most people spend on vehicles into appreciating assets. I figure it is the best chance for me to "get ahead" financially.

And the farm truck is a 1996 that is probably worth $2,000, before you accuse me of driving my family around in a $70,000 diesel "farm" truck!

 

[Gunnerclone]

How do people factor in pensions? If someone has a pension how do you adjust what you should be saving. Obviously you don't ignore the pension as then you would way over save, but how do you adjust for it? Do you just take the replacement value of the pension and adjust your wages and act normally based on that adjusted wage?

My wife and I both have Pensions. They are both cash balance plans though so it’s easy to figure in. If I had a traditional pension I would just pretend like it doesn’t exist. Then you know you’re good and it’s a bonus.

 

[BCClone]

OK, what is her first name and phone number?

My grandma was a Roth, so pounding one would be incest for me.

 

[CycloneDaddy]

let's say you turned 40 in 2021 and starting working in 2004. The average college grad salary that year was $42,108. So we'll take that x2 (assume you get married) then x3 as they suggest. To get that amount you'd need to save/invest $715.25 each month, assuming 6% growth. And that's also assuming you don't get any raises or lose money to inflation.

I am not arguing with what experts suggest, only saying that's it's much harder to do in reality than we think it is on paper.



We have 529s for both my kids - ages 6 and 3. If we stopped contributing now, assuming 6% growth, we'd have $90k for the youngest and $131k for the eldest. I better boost the youngest's contributions.

Dont forget that the money in the 529 will keep making some money why they are in college since you wont be taking it out all at once. I would be thinking of a different vehicle to invest in instead for a few years and can always come back to 529 once they hit high school.

With the eldest having $130k projection I would think there would be some left over to move to the youngest. Kudos on starting early though as we got a late start on ours and playing catchup is no fun.

 

[dmclone]

How do people factor in pensions? If someone has a pension how do you adjust what you should be saving. Obviously you don't ignore the pension as then you would way over save, but how do you adjust for it? Do you just take the replacement value of the pension and adjust your wages and act normally based on that adjusted wage?

I don't even factor it in. If it's still there when I retire, I know that it won't look like it does today. In the last 2 years, the company I work for pretty much made it about 30% less valuable to those with 10+ years with the company. Oh and they also removed early retiree health care in the last 5 years.

When I factor in my retirement, I only use what I have in MY accounts. When I get closer to retirement (2-3 years out) then I may start counting on things like pensions.

 

[JP4CY]

A quick side question- are many of you actively saving for your kids’ college? My wife and I don’t have a dedicated fund. We plan to help them if need be, but haven’t saved for that part. Anybody else doing that or are we missing something...?

I have several reasons:
1. No one paid for my college and it forced me to be more cautious in my college choices and taking on debt.
2. College isn’t the end all. Many people make 6 figures without college.
3. I want my kids invested in their education, not just going because it’s paid for.
4. It’s hard to value things that are free.

I've been maxing 529 while they're young.
If you're worried about them screwing off in college, you probably waited too long to discuss how life works. It probably helps that I had an older sibling so when my parents filled out the FAFSA for her, that they also showed me what it was about.
I probably worked too many hours in college to keep up with rent and bills, and I'm sure my grades were affected by that. I'm of the opinion that just because I dealt with most of my college costs on my own doesn't mean I can't help out my kids.

 

[BCClone]

I've been maxing 529 while they're young.
If you're worried about them screwing off in college, you probably waited too long to discuss how life works. It probably helps that I had an older sibling so when my parents filled out the FAFSA for her, that they also showed me what it was about.
I probably worked too many hours in college to keep up with rent and bills, and I'm sure my grades were affected by that. I'm of the opinion that just because I dealt with most of my college costs on my own doesn't mean I can't help out my kids.

I agree with you on the bolded. I paid for most of mine (folks would give me money for books sometimes in the first couple years). Neither of my parents went to college so guidance was very weak. I was too young to understand money at that point and I was ahead of most of my peers at that age, I don't want my kids working to pay bills if I'm going to pay for it anyhow. Take the stress off them and let them focus on school is my opinion.

 

[yowza]

My work switched to a high deductible low premium option under ACA. My wife and I were skeptical at first. We made the switch. We max out the HSA every year. I have it invested in a couple mutual funds. We pay all medical costs out of pocket. There is no timetable to reimburse yourself for medical bills. Our HSA has nearly $50,000 in it now. This was something the government got right and more people need to take advantage of when they are young

There is a definite fear factor to it with the higher deductibles, and you have to be at a point where you can save to put in it. Have been maxing it out and will use for Medicare supplement plan premiums later on.

 

[yowza]

My advisor at ISU was on a submarine during WWII and was depth charged several times. Obviously never sank but he was all but deaf from the noise inside the sub while depth charges are going off outside.

Amazing. They have one docked at the Pearl Harbor deal of that era. Most of the time I could not even stand up straight in it. Brave SOBs for sure.

 

[JP4CY]

I agree with you on the bolded. I paid for most of mine (folks would give me money for books sometimes in the first couple years). Neither of my parents went to college so guidance was very weak. I was too young to understand money at that point and I was ahead of most of my peers at that age, I don't want my kids working to pay bills if I'm going to pay for it anyhow. Take the stress off them and let them focus on school is my opinion.

My parents helped me out some at the end. They wanted me to enjoy my Sr year and told me that they wanted me to find a work study job that maxed out at paying out 1k per semester, so it was basically 10hrs a week. I feel like that was close to the right balance. Could have been a couple more hours honestly.

 

[cowgirl836]

I've been maxing 529 while they're young.
If you're worried about them screwing off in college, you probably waited too long to discuss how life works. It probably helps that I had an older sibling so when my parents filled out the FAFSA for her, that they also showed me what it was about.
I probably worked too many hours in college to keep up with rent and bills, and I'm sure my grades were affected by that. I'm of the opinion that just because I dealt with most of my college costs on my own doesn't mean I can't help out my kids.

100% agree.

We funded our own retirement first (because kids can always take loans, at this point at least) but we started funding 529 within year 1. I got a ton of federal aid and scholarships that made my loan amounts manageable. It didn't make me ungrateful for anything. The advantage in life is huge. I want to be able to help my children in the same way. If my kids are ungrateful for college assistance at ages 18-22, we screwed upon those life lessons long before that point.

 

[1100011CS]

My work switched to a high deductible low premium option under ACA. My wife and I were skeptical at first. We made the switch. We max out the HSA every year. I have it invested in a couple mutual funds. We pay all medical costs out of pocket. There is no timetable to reimburse yourself for medical bills. Our HSA has nearly $50,000 in it now. This was something the government got right and more people need to take advantage of when they are young

I feel like these high deductible and OOP plans with HSAs wouldn't work well for people with major medical issues. Am I wrong?

 

[CascadeClone]

So she needs to become an influencer on SM, got it!

The real money is on Only Fans.

 

[cowgirl836]

I feel like these high deductible and OOP plans with HSAs wouldn't work well for people with major medical issues. Am I wrong?

my company offers it but I've avoided opting in because being in a timeframe of life where pregnancy and childbirth can happen means it's not a great option.

 

[coolerifyoudid]

I've been maxing 529 while they're young.
If you're worried about them screwing off in college, you probably waited too long to discuss how life works. It probably helps that I had an older sibling so when my parents filled out the FAFSA for her, that they also showed me what it was about.
I probably worked too many hours in college to keep up with rent and bills, and I'm sure my grades were affected by that. I'm of the opinion that just because I dealt with most of my college costs on my own doesn't mean I can't help out my kids.

Exactly this. If you raise your kids to appreciate the value of money and an education, they will appreciate both. There's a big difference between spoiling a kid and clearing away certain obstacles.

My life was easier than what my parents had to endure. I know this and appreciate it immensely. If I can make it so my daughter has an easier life and still be a caring and productive person, then I'll have done what I set out to do as a parent.

 

[Urbandale2013]

I don't even factor it in. If it's still there when I retire, I know that it won't look like it does today. In the last 2 years, the company I work for pretty much made it about 30% less valuable to those with 10+ years with the company. Oh and they also removed early retiree health care in the last 5 years.

When I factor in my retirement, I only use what I have in MY accounts. When I get closer to retirement (2-3 years out) then I may start counting on things like pensions.

I just have concerns about oversaving and not spending when I am young. If the pension is set to pay over 50% of wages and stays in effect then I would have way to much if I saved assuming nothing.

 

[BCClone]

I just have concerns about oversaving and not spending when I am young. If the pension is set to pay over 50% of wages and stays in effect then I would have way to much if I saved assuming nothing.

Then you retire 5-10 years earlier, live off the saved money until the pension hits.

 

[Urbandale2013]

Then you retire 5-10 years earlier, live off the saved money until the pension hits.

I'm not sure I'm a retire early type of person.

 

[BCClone]

I'm not sure I'm a retire early type of person.

If you are worried about over saving, you will be.