Anonymous wrote:
NP here. The poster above sounds very on-the-ball. But here's one question -- why do you settle for a job that pays $52,000 at age 29? It seems like you're quite capable, and I suspect you could apply for and get a job with a higher salary to allow you the occasional comfort.

Anonymous wrote:

i would like to hear more info about how you max out and what funds you use/roth or traditional, etc?

also- it is a lot easier to live extremely frugally and simply when solo. much harder to negotiate space constraints etc when married

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:how do people afford to contribute 18k when at a fed gs12 or 13 salary?

Just do it. There are many ways to do - adjust your other money going out.

Correct...just do it.

I'm 29 and make $52k as a federal benefits & retirement counselor. I max out my TSP contribution yearly (last year $17.5k, now $18k), as well as a traditional IRA with $5,500. I also have a side-gig (~$10k/year) and contribute the maximum deductible amount from my 1099 earnings into an SEP-IRA ($2,400 last year). My effective federal income tax rate for 2014 was 7.3%...not too shabby. Both the traditional IRA and SEP-IRA contributions get transferred into TSP (can't beat the cost anywhere else, including Vanguard). I've done this yearly since 2010 and already have early retirement (45?) on my mind. And since I'm already maxing everything, every raise I get in the future is all mine (instead of bumping up my contribution % trying to play catch up). You have to make saving a goal, then a priority, and then just do it.

To put my expenses in perspective, I rent a shoebox-sized basement apartment in Arlington for $800/mo, have eaten enough oatmeal and rice in my 20s for five lifetimes, and still have my first car from high school that I drive practically everywhere in. I rarely drink (gigantic waste, especially at the bars), but have plenty of fun every weekend. And I still manage to sock away $1,000/mo into a Vanguard taxable account. Having zero debt makes it all possible. I also don't have a bunch of kids, cars, houses, boats, timeshares, etc., etc. that I can't afford.

CONTRIBUTE THE MAX. It hurts, I know personally, but it puts you on an actual track to retirement, not just hopes and dreams. If you're not maxing out your tax-advantaged retirement account space, you're only cheating yourself. Time is your greatest investing friend and compound interest is simply magic. Contributing the max gets you the up-front tax savings now, helps you accumulate a huge nest egg, and then gives you the choice of deciding exactly what your tax bracket and income will be in retirement. The fact that Uncle Sam has put a limit on what you can contribute, is a sure sign that it's a good deal. You can borrow for college, cars, and houses all throughout your lifetime, but you absolutely cannot borrow for your retirement.

At my agency, I get ecstatic when 20 & 30-somethings come into my office to talk about retirement planning and TSP. I have the chance to hopefully steer them onto the right path to earning a very comfortable retirement. With dedication and perseverance, you really do EARN it. When folks 55+ come in, a lot of times it's too late for me to be much help. When I see their $100k (or less!?!) TSP balances I wonder which type of dog food they'll enjoy the most in retirement. On the contrary, when the quiet GS-9 admin assistant in her 40s comes in for retirement planning and shares that she already has $500k+ in TSP, I can only tell her keep up the good work and don't stop whatever she's doing.

If I can make it happen on my pittance of a salary, you can too.

"The best time to plant a tree was 20 years ago. The second best time is today."

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Quick survey!

I've seen a few posts lately by OP's claiming they are "maxing out" their contribution in order to get the employer match, or "maxing out" even with a HHI of 90k and family of 4.

It kinda makes me wonder what y'all think it actually means. I have recently worked in the field of retirement plans, so I already know

I am particularly interested in how the 90k poster makes that work.

Maxing out 18k pretax on a 90k income is easy.

When you have 2 kids? A mortgage? Transportation costs?

Anonymous wrote:Agree with PP. Raising happy, healthy children can be just as rewarding as saving gobs of money. I'd argue that keeping up with toddlers in your 50s could be tougher for some than catching up on retirement later in life. If you can't max a 401k, contribute as much as you can and don't sweat it. But having the available space in your budget to fund a 401k, but still not doing it is silly.

There's way too much 401k misinformation out there unfortunately. I was told on my first day of my current job "This is your 401k, put money into it" and that was it. It took finding bogleheads forums to finally help put all the pieces together for me that made actual sense. To hear my co-workers brag about their continuously revolving 401k loans as "free money" now makes me cringe a little.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:how do people afford to contribute 18k when at a fed gs12 or 13 salary?

Just do it. There are many ways to do - adjust your other money going out.

Correct...just do it.

I'm 29 and make $52k as a federal benefits & retirement counselor. I max out my TSP contribution yearly (last year $17.5k, now $18k), as well as a traditional IRA with $5,500. I also have a side-gig (~$10k/year) and contribute the maximum deductible amount from my 1099 earnings into an SEP-IRA ($2,400 last year). My effective federal income tax rate for 2014 was 7.3%...not too shabby. Both the traditional IRA and SEP-IRA contributions get transferred into TSP (can't beat the cost anywhere else, including Vanguard). I've done this yearly since 2010 and already have early retirement (45?) on my mind. And since I'm already maxing everything, every raise I get in the future is all mine (instead of bumping up my contribution % trying to play catch up). You have to make saving a goal, then a priority, and then just do it.

To put my expenses in perspective, I rent a shoebox-sized basement apartment in Arlington for $800/mo, have eaten enough oatmeal and rice in my 20s for five lifetimes, and still have my first car from high school that I drive practically everywhere in. I rarely drink (gigantic waste, especially at the bars), but have plenty of fun every weekend. And I still manage to sock away $1,000/mo into a Vanguard taxable account. Having zero debt makes it all possible. I also don't have a bunch of kids, cars, houses, boats, timeshares, etc., etc. that I can't afford.

CONTRIBUTE THE MAX. It hurts, I know personally, but it puts you on an actual track to retirement, not just hopes and dreams. If you're not maxing out your tax-advantaged retirement account space, you're only cheating yourself. Time is your greatest investing friend and compound interest is simply magic. Contributing the max gets you the up-front tax savings now, helps you accumulate a huge nest egg, and then gives you the choice of deciding exactly what your tax bracket and income will be in retirement. The fact that Uncle Sam has put a limit on what you can contribute, is a sure sign that it's a good deal. You can borrow for college, cars, and houses all throughout your lifetime, but you absolutely cannot borrow for your retirement.

At my agency, I get ecstatic when 20 & 30-somethings come into my office to talk about retirement planning and TSP. I have the chance to hopefully steer them onto the right path to earning a very comfortable retirement. With dedication and perseverance, you really do EARN it. When folks 55+ come in, a lot of times it's too late for me to be much help. When I see their $100k (or less!?!) TSP balances I wonder which type of dog food they'll enjoy the most in retirement. On the contrary, when the quiet GS-9 admin assistant in her 40s comes in for retirement planning and shares that she already has $500k+ in TSP, I can only tell her keep up the good work and don't stop whatever she's doing.

If I can make it happen on my pittance of a salary, you can too.

"The best time to plant a tree was 20 years ago. The second best time is today."

Anonymous wrote:The dog food comment was a joke. The low balance TSP folks are either CSRS who couldn't care less about TSP or FERS who will still have a great basic benefit pension and SS to get them by just fine. They had a golden opportunity handed to them with the TSP and just didn't take advantage of it.

But the rest, I stand by. Adequate living space is just that...adequate. I really don't need more than a dry place to lay my head, an outlet to charge a phone, and a hot shower with the capital of the free world out beyond the doorstep. And I'd much rather toss away $800/mo on rent, rather than $2k. DC has real keeping up with the Joneses problem, which is evident all over DCUM or just a walk around town. If people really want to work until they're 80, they can go right ahead and do it. When folks get the idea that even maxing out a yearly 401k contribution is impossible, working 'til 80 becomes the back-up plan. I'm not eschewing kids either, but I'd rather have my ducks-in-a-row years ahead of time, instead of cobbling together a financial plan that includes them after they've arrived.

Ever been to a retirement luncheon for someone who's under 55? The beaming smile on their face lights up the room and they instantly look twenty years younger knowing that they've "won the game" after saving, investing and living below their means for so long...while still having a home, kids, and everything else a person would ever need. The best part is all the folks in the room who are staring daggers wondering "how'd they do it?" It's no secret.

Great job, PP! Agree with everything you said!! You're ahead of the game and more people need to learn these basic principles!!

Most common regret from those with underfunded 401ks?: "I wish I had saved more."
Most common regret from those with already huge 401k balances?: "I wish I had started earlier."

And I'll say it again, you can borrow for absolutely anything in this world, except retirement. Max out you 401k contribution now and your future self will thank you.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:how do people afford to contribute 18k when at a fed gs12 or 13 salary?

Just do it. There are many ways to do - adjust your other money going out.

Correct...just do it.

I'm 29 and make $52k as a federal benefits & retirement counselor. I max out my TSP contribution yearly (last year $17.5k, now $18k), as well as a traditional IRA with $5,500. I also have a side-gig (~$10k/year) and contribute the maximum deductible amount from my 1099 earnings into an SEP-IRA ($2,400 last year). My effective federal income tax rate for 2014 was 7.3%...not too shabby. Both the traditional IRA and SEP-IRA contributions get transferred into TSP (can't beat the cost anywhere else, including Vanguard). I've done this yearly since 2010 and already have early retirement (45?) on my mind. And since I'm already maxing everything, every raise I get in the future is all mine (instead of bumping up my contribution % trying to play catch up). You have to make saving a goal, then a priority, and then just do it.

To put my expenses in perspective, I rent a shoebox-sized basement apartment in Arlington for $800/mo, have eaten enough oatmeal and rice in my 20s for five lifetimes, and still have my first car from high school that I drive practically everywhere in. I rarely drink (gigantic waste, especially at the bars), but have plenty of fun every weekend. And I still manage to sock away $1,000/mo into a Vanguard taxable account. Having zero debt makes it all possible. I also don't have a bunch of kids, cars, houses, boats, timeshares, etc., etc. that I can't afford.

CONTRIBUTE THE MAX. It hurts, I know personally, but it puts you on an actual track to retirement, not just hopes and dreams. If you're not maxing out your tax-advantaged retirement account space, you're only cheating yourself. Time is your greatest investing friend and compound interest is simply magic. Contributing the max gets you the up-front tax savings now, helps you accumulate a huge nest egg, and then gives you the choice of deciding exactly what your tax bracket and income will be in retirement. The fact that Uncle Sam has put a limit on what you can contribute, is a sure sign that it's a good deal. You can borrow for college, cars, and houses all throughout your lifetime, but you absolutely cannot borrow for your retirement.

At my agency, I get ecstatic when 20 & 30-somethings come into my office to talk about retirement planning and TSP. I have the chance to hopefully steer them onto the right path to earning a very comfortable retirement. With dedication and perseverance, you really do EARN it. When folks 55+ come in, a lot of times it's too late for me to be much help. When I see their $100k (or less!?!) TSP balances I wonder which type of dog food they'll enjoy the most in retirement. On the contrary, when the quiet GS-9 admin assistant in her 40s comes in for retirement planning and shares that she already has $500k+ in TSP, I can only tell her keep up the good work and don't stop whatever she's doing.

If I can make it happen on my pittance of a salary, you can too.

"The best time to plant a tree was 20 years ago. The second best time is today."

Anonymous wrote:

Anonymous wrote:how do people afford to contribute 18k when at a fed gs12 or 13 salary?

Just do it. There are many ways to do - adjust your other money going out.

Anonymous wrote:What I meant was I contributed the most my employer let me which was 10%.

I know I could have by federal law contributed more but I would still say I maxed out at work.

It wasn't until I was in my mid-30's that I actually hit the federal max. I now call that extra money my Christmas bonus, because I hit the max in November and my paycheck goes up.