What should I do with my 6% raise?

[Anonymous]

Anonymous wrote:These people telling you your $650,000 in 401k is too low are fucking insane, OP. Ignore them. Especially the ones who are 10 years younger and already have twice that -- who the hell locks up that sort of money in illiquid accounts?

Agree. Your retirement savings are fine, but do max out the 401k when the raise kicks in. And keep the car loan.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why ask for help if you already have your own plan for want you want to use the additional funds for?

Your emergency fund and retirement savings are scary low. If I were in your position, I would try to build up the emergency fund and take advantage of the tax benefits of the 401K.

I didn't already have a plan. I stated that plan once I heard what other people thought, which was that we needed to focus on 401k first and foremost.

I'm really not that concerned with our emergency fund. We have $25k in savings and another $25+k in stocks we can access, plus two stable jobs.

I don't consider my retirement savings "scary" low, given our salaries and the fact that we've had to pay for daycare for the last several years, but we will work on it.

Given your ages and your HHI, I do think that your retirement is scary low. Forget the vacations, you need to save, save, save.

New PP- given the HHI, what should the OP be saving per year? We are in a similar situation.

[Anonymous]

Anonymous wrote:These people telling you your $650,000 in 401k is too low are fucking insane, OP. Ignore them. Especially the ones who are 10 years younger and already have twice that -- who the hell locks up that sort of money in illiquid accounts?

Amen. They are nuts. You are fine.

[Anonymous]

Anonymous wrote:

Anonymous wrote:These people telling you your $650,000 in 401k is too low are fucking insane, OP. Ignore them. Especially the ones who are 10 years younger and already have twice that -- who the hell locks up that sort of money in illiquid accounts?

Amen. They are nuts. You are fine.

Agree! $650k compounded over the next 20 years is a healthy number for retirement.

[Anonymous]

Anonymous wrote:These people telling you your $650,000 in 401k is too low are fucking insane, OP. Ignore them. Especially the ones who are 10 years younger and already have twice that -- who the hell locks up that sort of money in illiquid accounts?

I'm 10yrs younger than the OP and have just under 1M in retirement already. It hardly is locking up a ton of money at 18k/yr per earner. My company matches 100% of my contributions and DH'S matches 6%. It is absolutely foolish not to take advantage of those tremendous benefits, especially since I'm seeing double digit gains for the last few years. To put it in perspective in 2015, we contributed 36k, employers contributed 30k and we saw an overall return of 112k. So this year, at age 37, we saw a total increase of 179k on an out of pocket expense of 36k...absolute no brainer.

We've both been maxing out since we graduated college and got our first jobs at 22.

[Anonymous]

Anonymous wrote:

Anonymous wrote:These people telling you your $650,000 in 401k is too low are fucking insane, OP. Ignore them. Especially the ones who are 10 years younger and already have twice that -- who the hell locks up that sort of money in illiquid accounts?

I'm 10yrs younger than the OP and have just under 1M in retirement already. It hardly is locking up a ton of money at 18k/yr per earner. My company matches 100% of my contributions and DH'S matches 6%. It is absolutely foolish not to take advantage of those tremendous benefits, especially since I'm seeing double digit gains for the last few years. To put it in perspective in 2015, we contributed 36k, employers contributed 30k and we saw an overall return of 112k. So this year, at age 37, we saw a total increase of 179k on an out of pocket expense of 36k...absolute no brainer.

We've both been maxing out since we graduated college and got our first jobs at 22.

That's very nice that your company matches 100%! Curious what your balance would be if your company has only ever matched 6% like your husband's.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:These people telling you your $650,000 in 401k is too low are fucking insane, OP. Ignore them. Especially the ones who are 10 years younger and already have twice that -- who the hell locks up that sort of money in illiquid accounts?

I'm 10yrs younger than the OP and have just under 1M in retirement already. It hardly is locking up a ton of money at 18k/yr per earner. My company matches 100% of my contributions and DH'S matches 6%. It is absolutely foolish not to take advantage of those tremendous benefits, especially since I'm seeing double digit gains for the last few years. To put it in perspective in 2015, we contributed 36k, employers contributed 30k and we saw an overall return of 112k. So this year, at age 37, we saw a total increase of 179k on an out of pocket expense of 36k...absolute no brainer.

We've both been maxing out since we graduated college and got our first jobs at 22.

That's very nice that your company matches 100%! Curious what your balance would be if your company has only ever matched 6% like your husband's.

I've been at my company 6 years, my balance would be lower, but that wouldn't stop me from investing at max. The market had been so good. In 2014 I got an 18% return. Even at 0 match, I'd be all in. Iwe've been doing this since day one of working professional jobs.

It is in our nature to be big planners. We even have long term care insurance. We don't want to even end up in a medicaid facility.

[Anonymous]

That's great, million dollars at 39 years old. But don't knock $650k at early 40s. You only have a $million due to a generous match. Market is great but you get astronautical returns because of your big balance. $650k will get those returns in time, which op still has.

[Anonymous]

OP here, thank you to the PPs for making me feel better about our current savings! Unfortunately we don't have the same kind of crazy good matching (mine is set at 5%, husband's is paltry 2%) so we have never had the same kind of inventive to contribute more. And with graduate school, student loans, saving for a house down payment (no family support there), and daycare, we could never afford to contribute more. Now we can, and we will, but I'm glad to hear we aren't in terrible shape.

[Anonymous]

Anonymous wrote:

Anonymous wrote:These people telling you your $650,000 in 401k is too low are fucking insane, OP. Ignore them. Especially the ones who are 10 years younger and already have twice that -- who the hell locks up that sort of money in illiquid accounts?

I'm 10yrs younger than the OP and have just under 1M in retirement already. It hardly is locking up a ton of money at 18k/yr per earner. My company matches 100% of my contributions and DH'S matches 6%. It is absolutely foolish not to take advantage of those tremendous benefits, especially since I'm seeing double digit gains for the last few years. To put it in perspective in 2015, we contributed 36k, employers contributed 30k and we saw an overall return of 112k. So this year, at age 37, we saw a total increase of 179k on an out of pocket expense of 36k...absolute no brainer.

We've both been maxing out since we graduated college and got our first jobs at 22.

2015 most funds were flat. How did you earn such high returns on a 401k? Are you active trading/market timing in your 401k? All the funds offered by my 401k were flat-- all of them b/c they are broad index. What is your secret?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:These people telling you your $650,000 in 401k is too low are fucking insane, OP. Ignore them. Especially the ones who are 10 years younger and already have twice that -- who the hell locks up that sort of money in illiquid accounts?

I'm 10yrs younger than the OP and have just under 1M in retirement already. It hardly is locking up a ton of money at 18k/yr per earner. My company matches 100% of my contributions and DH'S matches 6%. It is absolutely foolish not to take advantage of those tremendous benefits, especially since I'm seeing double digit gains for the last few years. To put it in perspective in 2015, we contributed 36k, employers contributed 30k and we saw an overall return of 112k. So this year, at age 37, we saw a total increase of 179k on an out of pocket expense of 36k...absolute no brainer.

We've both been maxing out since we graduated college and got our first jobs at 22.

2015 most funds were flat. How did you earn such high returns on a 401k? Are you active trading/market timing in your 401k? All the funds offered by my 401k were flat-- all of them b/c they are broad index. What is your secret?

I agree. My returns for 2015 was almost flat.

[Anonymous]

Anonymous wrote:OK so it's clear most people think I should be putting my whole raise into my 401k. It still won't be maxing it out but if we did that we would have hardly any money left for anything else. We still want to take vacations, have our kids take lessons, etc. I know many of you think savings should be come before that stuff, but that's not our feeling, esp. given the money we have in lucrative DC real estate.

I definitely agree that 401k is more important than college savings, but I wasn't sure how far behind we were with retirement. Apparently further than I thought. The years of two daycares hurt us there.

I'll keep college savings at the level I am currently at until I can max out the retirement contributions. The windfall will go to college savings.

Whenever I get a raise, I bank it in either retirement, savings or some kind of investment as if I'd never gotten any extra money. To spend it just increases my wants , not needs, and it offers diminishing returns on my happiness. Sounds like you already want for nothing, so why increase your lifestyle expenses?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:These people telling you your $650,000 in 401k is too low are fucking insane, OP. Ignore them. Especially the ones who are 10 years younger and already have twice that -- who the hell locks up that sort of money in illiquid accounts?

I'm 10yrs younger than the OP and have just under 1M in retirement already. It hardly is locking up a ton of money at 18k/yr per earner. My company matches 100% of my contributions and DH'S matches 6%. It is absolutely foolish not to take advantage of those tremendous benefits, especially since I'm seeing double digit gains for the last few years. To put it in perspective in 2015, we contributed 36k, employers contributed 30k and we saw an overall return of 112k. So this year, at age 37, we saw a total increase of 179k on an out of pocket expense of 36k...absolute no brainer.

We've both been maxing out since we graduated college and got our first jobs at 22.

2015 most funds were flat. How did you earn such high returns on a 401k? Are you active trading/market timing in your 401k? All the funds offered by my 401k were flat-- all of them b/c they are broad index. What is your secret?

Sorry 2014
2015 I got 4%.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OK so it's clear most people think I should be putting my whole raise into my 401k. It still won't be maxing it out but if we did that we would have hardly any money left for anything else. We still want to take vacations, have our kids take lessons, etc. I know many of you think savings should be come before that stuff, but that's not our feeling, esp. given the money we have in lucrative DC real estate.

I definitely agree that 401k is more important than college savings, but I wasn't sure how far behind we were with retirement. Apparently further than I thought. The years of two daycares hurt us there.

I'll keep college savings at the level I am currently at until I can max out the retirement contributions. The windfall will go to college savings.

Whenever I get a raise, I bank it in either retirement, savings or some kind of investment as if I'd never gotten any extra money. To spend it just increases my wants , not needs, and it offers diminishing returns on my happiness. Sounds like you already want for nothing, so why increase your lifestyle expenses?

I'm not increasing my lifestyle expenses, those stay the same. But I previously had higher non-lifestyle expenses like daycare, house down payment, etc. that I had to pay for, so I couldn't max out retirement. And I haven't gotten a raise in two years, so this is the first time in a while that I've had extra money to plan for. This is why I'm determining how to spend my raise. None of my options are to spend more money on lifestyle. I am trying to determine if it should all go to 401k, college savings, home improvements, etc. And I'm not talking about lavish vacations. We budget $5k/year and this includes a modest vacation plus annual trips to visit our familes. Airfare for 4 takes up most of that.