How Do You Think I Am Doing -- What Should I Do Differently?

[Anonymous]

I am 46.
HHI = 160K.
My retirement savings is 414K. My spouse has saved nothing.
Two kids, 7 & 5. College savings = 80K.
Home equity = 350.
Emergency fund = 45K, which is a touch more than 6 months expenses. I'd like to be done with it and push up the 401K (currently putting in only enough to get the match), but I have earmarked a huge chunk of it as a kind of divorce contingency fund. It may happen; it may not. It depends on what hour you ask me and I want to be prepared. I am scared. And yes, it came from separate property that has not been commingled. The problem is that I just don't know when to stop emergency funding? A year's expenses? Two?
No debt other than mortgage.
Thanks very much.

[Anonymous]

When considering an emergency fund, think about what types of emergencies would need to happen for you to use it. Then weigh your risks of those emergencies happening. For example, typical uses for an emergency fund are:

job loss
major illness
death of a breadwinner
natural disaster (think Katrina)
perhaps car accident
major home repair

Now what are the risks of these happening? Do you have a steady job in a good field? Have you been there a long time? If you lose your job, how marketable are you? Could you find one prety quickly?

Are you generally healthy? Do you have good health insurance coverage with low copays?

Do you and/or souse have life insurance?

Do you have good insurance on your home incase the unexpected happens like a tree falling on the roof? or Hurricane Sandy happens? Do you have family nearby where you could stay?

Are the major parts of your home up to date like the HVAC, the roof, etc or do they need replacing soon?

Is your car insurance good if you are in a major car accident and need to buy a new car?

Of course emergencies cannot be predicted or they wuldn't be emergencies, but you should have an idea of how well covered you are if something catostrophic should happen.

If you have good healt insurance, good property casualty insurance, are generally healthy, your car is newer, the major components of your house are newer then 6 months' is probably enough. If you have poor health, bad health insurance, a job that is going nowhere and no seniority and an older home that needs lots of replacements, then you should probably have a year or more.

[Anonymous]

Thank you. What about my retirement savings?

[Anonymous]

Hire a financial planner. You can afford it.

[Anonymous]

I did. He was terrible.

[Anonymous]

Hire a marriage counselor. Getting a divorce is often a terriable financial decision.

[Anonymous]

I KNOW.

But how do I budget for the possibility??

Am I doing OK retirement-wise?

I worry about money ALL THE TIME.

[Anonymous]

I think your retirement amount is good. But you need to be adding to it each year. You said you only contribute to your 401k to the match each year. But how much is it that you contribute? 3% of your salary or 10%? Overall, you should be contributing about 10-15% of your salary to retirement each year. So I would up it to that % if possible.

A good choice for you, if you are worried about having emergency savings is to contribute to your 401k up to the max and then put $5500 into a Roth IRA. Roth IRA contributions can be withdrawn at anytime for any reason. So while it should be thought of as a retirement fund, you can use it in an absolute emergency.

The amount you have in retirement now is good. It's similar to what we have and I think we are doing well. Our HHI is $140K. I have about $300K in retirement savings and DH has $400K. We max out our contributions, though, so I know the amount is good and we are on the right track.

How much of your HHI is yours versus your husband's?

[Anonymous]

9:47 here. To clairify what I said, if you contribute to your 401K up to the match, your next step should be the Roth IRA. (I said contribute to your 401k to the max, I meant match)

[Anonymous]

Anonymous wrote:I am 46.
HHI = 160K.
My retirement savings is 414K. My spouse has saved nothing.
Two kids, 7 & 5. College savings = 80K.
Home equity = 350.
Emergency fund = 45K, which is a touch more than 6 months expenses. I'd like to be done with it and push up the 401K (currently putting in only enough to get the match), but I have earmarked a huge chunk of it as a kind of divorce contingency fund. It may happen; it may not. It depends on what hour you ask me and I want to be prepared. I am scared. And yes, it came from separate property that has not been commingled. The problem is that I just don't know when to stop emergency funding? A year's expenses? Two?
No debt other than mortgage.
Thanks very much.

You are doing fine. When you get worried (as we did) remind yourself this: the kids can borrow for college. You do not owe them 100% paid for college. You can move somewhere that is less expensive if you need to. If you need to change, you can.

[Anonymous]

Anonymous wrote:I think your retirement amount is good. But you need to be adding to it each year. You said you only contribute to your 401k to the match each year. But how much is it that you contribute? 3% of your salary or 10%? Overall, you should be contributing about 10-15% of your salary to retirement each year. So I would up it to that % if possible.

A good choice for you, if you are worried about having emergency savings is to contribute to your 401k up to the max and then put $5500 into a Roth IRA. Roth IRA contributions can be withdrawn at anytime for any reason. So while it should be thought of as a retirement fund, you can use it in an absolute emergency.

The amount you have in retirement now is good. It's similar to what we have and I think we are doing well. Our HHI is $140K. I have about $300K in retirement savings and DH has $400K. We max out our contributions, though, so I know the amount is good and we are on the right track.

How much of your HHI is yours versus your husband's?

I put in 5% of my salary. There is a 5% match. I also max out IRA. With emergencies to save for as well, I just don't see a way to bump the 401K. But it is on my list.

Thank you very much for writing back to me.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I am 46.
HHI = 160K.
My retirement savings is 414K. My spouse has saved nothing.
Two kids, 7 & 5. College savings = 80K.
Home equity = 350.
Emergency fund = 45K, which is a touch more than 6 months expenses. I'd like to be done with it and push up the 401K (currently putting in only enough to get the match), but I have earmarked a huge chunk of it as a kind of divorce contingency fund. It may happen; it may not. It depends on what hour you ask me and I want to be prepared. I am scared. And yes, it came from separate property that has not been commingled. The problem is that I just don't know when to stop emergency funding? A year's expenses? Two?
No debt other than mortgage.
Thanks very much.

You are doing fine. When you get worried (as we did) remind yourself this: the kids can borrow for college. You do not owe them 100% paid for college. You can move somewhere that is less expensive if you need to. If you need to change, you can.

THANK YOU.

[Anonymous]

Get your husband to start saving for retirement.

[Anonymous]

how long have you been married and what state? Any prenup? Because odds are, you are going to lose some of that retirement. The e-fund might be safe if it was separate, but retirement and home equity is usually fair game.

[Anonymous]

Anonymous wrote:Get your husband to start saving for retirement.

+1

Why on earth is he not saving for retirement?

Anonymous wrote:how long have you been married and what state? Any prenup? Because odds are, you are going to lose some of that retirement. The e-fund might be safe if it was separate, but retirement and home equity is usually fair game.

+1