Lately, I’ve been updating you all on our debt and savings plans, so I figured that it was finally time to explain our long term savings strategy (retirement). Right now, I’m just going to go over the accounts that we have, and I’m working on a series of articles that will deal with both the cost cutting aspect of it, and the income aspect of it. While I’m working on that though, I figured I’d share a few updates with my retirement savings.
Last I mentioned it, I was just getting involved with the deferred compensation plan at work. I had gone to a retirement seminar at work and decided to hear what the guy had to say, and he informed me that there was a $20 match if you contributed just $20. I had forgotten about this when I got hired on, so I quickly went to work and started the process to open an account. I decided to go with a pre tax account because I already had a roth IRA that I rolled over from my first job. I started with the minimum contribution of $20, and just recently upped my contribution to $80/month (It starts in october), for a total deposit of $100 per month. This is all going into a pre-tax account.
Now that our housework is winding down, we are going to have a bit more spare cash to work with. We have already started to throw large amounts of cash at our debt, and should have everything but the house paid off in 8 months or less. Since we are in such a good position there, I decided to start contributing to my roth again. I maxed out the contribution in 2011, and didnt fund it at all in 2012. This year, I’ll try to get about 2500 in there, but since the year is almost out and our main focus will still be our debt (most likey) come tax time, I dont know if I’ll be able to hit that mark or not.
Even if I dont hit the $2,500 goal for the year (which is $3k short of max for my age), I’ll still get around $1,000 in there because I set up an automatic deduction for 300/month. I had thought about just doing it straight through the HR department at my work so I’d never really see the money, but they said it wouldnt start until november, so I figured I’d just set it up myself and have it draw myself. It would give me more control over adjusting the amount, which is good for when I want to move it up (the full year max I’d need ~458/mo) but would also be a bit easier for me to turn off if I ever felt the need, which is both good and bad.
In addition to those two accounts, both H and I have pension plans through our employers. They are nice to have, but at this point, she is vested and I am not (though I will be in ~18 months). Unfortunately, given our young age, there’s really no telling about the viability of these plans (they are fine now, but who knows about 5, 10 or 15 years from now). The legislature in our state seems pretty proactive about ensuring these are funded properly, and have raised contributions from me (phased in over the next 2 years) and are looking at raising them again in february.
Outside of that though, H does not have anything set in a tax advantaged account, so right now we are looking at her options. It looks like her employer offers a 403(b) plan, and also offers the deferred compensation plan that I’m enrolled in. When she gets the papers from her HR department, we will look at those and decide which makes the most sense to start contributing to for her. It will all depend on what she’s comfortable doing, and she may not even decide on one of those and may use a plan with someone like vanguard (where my roth IRA is) instead.
I’d wanted to take care of stuff like this as soon as we were married, but it seems like we let other stuff get in the way. We are now at a point where most of our housework is winding down, leaving more time for us to research and act when it comes to retirement saving (as well as lowering our monthly nut). Obviously, I regret not putting anything in last year (my return was ~15%) but that’s just the way things go sometimes.
Readers: What does your retirement picture look like, and how far away from retirement are you? Have you started yet, and if not, how come?