If I have 50K in my retirement fund at the age of 28, am I on the right track for my retirement?

Question

I just want to know if I am on the right track for my retirement, or if I need to be saving more. I am currently putting 5% of each paycheck in to my 401K.

Answer 1

In addition to retirement, you should be out of debt (besides the house). Without this information, I assume you are on the right track. You need to be at 15% of your income. But before I do more in the 401k, I would max out a Roth (you still have time to max out 2006 before you do your taxes, and then also max out your 2007 Roth). And then what ever is left (to equal 15%) add to your 401k.

I suggest you read:
The Millionaire Next door by Stanley. He has a great calculation on where you should be for retirement and great ideas on how to build wealth

Also read
The Total Money Makeover by Ramsey to stay on a budget, make sure you are saving for other things and to stay out of debt.

Good luck and great job!

Answer 2

Only you can decide that...you didn't tell us how much that 5% is. How much you are currently making. How much you want to be making when you retire. When you want to retire...These all factor in.

If you were to never contribute another dime and earned 9% on your money for the next 39 years you will retire with 1.6 million dollars in your retirement fund. That equates out to 60k each year or about 45k after tax each year. That amount will ensure that your account will never deplete and you'll have enough to pay for regular medical care.

Since you're still contributing that amount will go up to likely about 2 mill or 80k.

But, if you want to retire early...let's say at 55? Well that's only 22k a year and you'll have to step it up a bit.

Use EXCEL to figure out how much you need. Use 8 or 9% on your return...nothing more! Then use 4% as your distribution amount. You can take 4% a year and never deplete you balance. Anything more and you run the risk of depletion which is not good when you're 95 and homeless.

Answer 3

You are definitely on the right track, but don't get off the track. I would recommend putting in at least as much as what your company will match. If your company will match more than 5%, I would up it to whatever that maximum amount is. I would also suggest having a professional look at your investment choices and make sure you are doing the most with your money. Many 401k providers offer this service free of charge. At age 28, I would suggest a pretty aggressive portfolio. You want to make sure you are staying ahead of the rate of inflation. This usually means taking on more risk, but historically higher yields in the end. You should definitely be commended for taking an early interest in your retirement, Good Luck.

Glen

Answer 4

You've got a good start. A rule of thumb I've heard is that 15% of your gross income should go towards retirement, provided you have no debts.

So, in addition to the 5% in the 401K, you can also set up a Roth IRA and max it out each year. If that doesn't cover the entire 15%, you can put the rest into your 401K to round it out.

Answer 5

Depends upon how much you feel you will need to live off when you hit retirement. Where you will live, what will be your pass time, and if you will have NO home mortgage to pay for, all play a part in what you will need for $$$.

A simple formula : Take any amount, divide it by 2 and then drop a zero.

We will do ONE MILLION for the example :
$1,000,000.oo divided by 2 = $500,000.oo DROP a zero = $50,000.oo.

Can you life off $50,000.oo a year?? If so then you will need to have one million dollars in an investment account and NOT a bank savings account.

If this does not sound like much, you then need to re-adjust your saving. "MSN money central" has a calculator that will help you figure the amount of money you need to put away to get to the desired amount you want to have over a certain period of time
Hit that site and calculate what YOUR needs are.

Does your employer match any of that 5% ?? IF not then stop contributing to it and start an IRA by yourself. IF they do match and to a higher percent then increase your contribution to that %. It's like doubling your money when they match.

Do your math and see whats right for you and good luck in building your dream retirement.


Happy Monday !!

=^,,^=

Answer 6

I like to use this "rule of thumb" calculation when determining if a person is "wealthy."

Your age multiplied by your monthly income.

Therefore, if your monthly income is less than $1,785 ($50,000 divided by 28).then you're in pretty good shape. If you make more than $21,429 a year then you're a little behind (but not by much).

I also think it's a good idea to save at least 10% of your income for retirement and invest that money in some good diversified stock mutual funds.

Answer 7

You're doing great! Open up a Roth IRA as well - by doing so you will be diversifying your portfolio. 401ks are great - you put in pre-tax dollars, and then pay taxes when you withdraw during retirement (hopefully at a lower rate). Roth IRAs are great as well b/c you put in after tax dollars and have TAX FREE growth.

Answer 8

If you can live monthly on less I would put more money into IRAs, or other interest bearing accounts. By the time our generation is ready to retire it is going to cost a great deal more to do so.

Answer 9

5% is ok for your twenties but you should up it to the max
by the end of your thirties. when the kids go to college it's tuf.
are you also saving for the kids' college?

Answer 10

$50 Grand and you're worried? Maybe you should forget about wasting your money on glutony~ save some starving children in Africa.