Do I stand a chance at a decent retirement given where I currently am?

Submitted by TyperMcTyperson t3_127odxf in personalfinance

So I feel like I try various retirement calculators and some say I'm on a good path and others say I won't have enough.

The details:

Wife and I are both 45.

Salary is $182k. I get a bonus and stock as well, but I'm not counting them as they fluctuate.

$15k HYSA

$415k in various investment funds

$35k in 401k. Just started this job last year, that's why it's low

I max out 401k with 50% company match all the way.

I do another 10% into a backdoor roth every month.

House note is at $250k with most recent rough value at $725k

Hoping to retire around 65. Was aiming to live on no more than around 60% of current salary.

Feels like I should be on a path that provides a decent retirement, but 20 years doesn't seem like very long from now to get to what I assume I would need; roughly $3 mil or so.

0

Comments

You must log in or register to comment.

petrock85 t1_jef26pd wrote

The retirement calculators depend heavily on the exact assumptions going in. Having more money certainly helps, but most people retire with less than you already have.

Your expenses will be less once you've paid off the house. If needed you could later sell the house and move someone cheaper, or get a reverse mortgage on it.

7

TyperMcTyperson OP t1_jef3eek wrote

But retiring with my current balance wouldn't be what I consider at decent retirement lifestyle. That would be like $20k a year at the 4%. How can anyone live on that even if they have no mortgage. Let alone travel or have hobbies.

1

telionn t1_jefekx6 wrote

Your current balance should balloon to over 1.5 million by age 65 if you don't touch it.

3

alwayslookingout t1_jefspes wrote

But you’re nor retiring today with your current balance- you’re retiring in 20 years. Additionally, 60% (~$109K) of your current salary is a lot. If you’re hoping to spend up to that much without a mortgage then you need to save up a lot more.

2

limitless__ t1_jef4hc2 wrote

"doesn't seem like very long from now to get to what I assume I would need; roughly $3 mil or so."

Your issue is you are basing this entire thing on an arbitrary number. All you can do is invest as much as you can and whatever you have in 20 years, that's your retirement number if you decide to call it quits at 65. So much depends on what you plan to do in retirement. Society sells us this image of retirees jetting off around the world after grafting for 40 years when the reality is most retirees just want to sit on the porch, enjoy the sunshine and pet their dog. I don't know about you but I don't need 3 million dollars for that!

2

TyperMcTyperson OP t1_jef4sh8 wrote

Well, it's back of the napkin math using the 4% rule of withdrawal for the annual income I mentioned above that I assume I'd need to afford the things I want to do in retirement. Travel is one thing, but hobbies aren't free.

0

clearwaterrev t1_jef7dt1 wrote

If you are investing around $40k per year (between your contributions and your employer's match), you will likely get to around $3M by age 65. No one can know what future market returns will be, but if you assume a 6% return, the future value of your investments is $2.9M.

1

TyperMcTyperson OP t1_jef81cd wrote

Ok. So currently I'm on target for like $51k per year including the backdoor roth. So sounds like I'm on a decent trajectory. Does that number you quoted include my current balance of around $415k?

Do you have a retirement calculator you are using for this? Or just basic compounding interest calc?

1

clearwaterrev t1_jef8bmv wrote

I used the future value formula in excel, and included a present value of $450k (your 401k balance and other investments).

2

PetraLoseIt t1_jeffimk wrote

You might get to $3 million. You have about $460k now. If you keep adding $24k per year, I come to $2.8 million twenty years from now, assuming a 7% return.

What would help is:

  • socking away more money, starting as soon as you can. The longer that money can grow, the more it will become. Saving an extra $10k now is better than saving $10k when you're 60.
  • reducing your expenses now and also when you're retired
  • pay off debt and reduce your ongoing liabilities/bills. If you plan to continue to live in your current house, this could include making the house more energy efficient and buying/building things that last forever instead of just ten years (so good quality furniture and appliances and things like that).

By the way, I'd take social security into account for say half of the currently promised amount. If that gives say $40k/year after age 67, that means that by that age it represents about 25 x $40k = $1 million of net worth that you don't need to save up.

1

TyperMcTyperson OP t1_jefgle7 wrote

Right now I'm saving about $51k per year with full 401k + match + backdoor roth.

Yeah. I go back and forth with including SS. I like the idea of just counting half of my currently monthly estimate though.

1