Beefing Up Retirement

A while back I posed a question about saving for retirement. When I first started managing my money, I decided not to contribute anything towards my 401(k) because my employer automatically contributes 3% regardless if I do or not. I decided it would be better to pay my interest-earning loans first.

However, since paying off those two loans, I only have interest-free debt to my parents left. I want to pay this off ASAP, but I also need to get in the practice of saving for retirement and the sooner I do this, the better. I crunched the numbers using this handy retirement calculator and just by starting this year as opposed to next, I will save myself over $200,000. Of course, there are so many factors that play into this (rate of return, types of investments, salary increase), but there’s no doubt that the earlier you invest, the better.

Here’s the new plan:
Contribute 5% of my income now (equals 8% with employer match), and when I finish paying off my debt (Summer 2010?) I will raise that goal to 15% or the max $5000 per year. I just contacted my HR rep to make this happen. It won’t be processed until June and will be approximately $115 of taxed dollars, so I will need to switch around my budget a bit. Assuming the market starts to turn upward (and I’m pretty hopeful), that should secure a comfortable and possibly early retirement.

How much do you save for retirement per year?

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  • I try to max a roth and save a minimum of 8% in 401k. Ultimately, I’d like to max both.

    But right now I quit contributing to my roth and am saving 8% in my 401k because I’m quite nervous about job security.

  • Right now I’m maxing out my Roth & trying to get as close as possible to maxing out my 401K. I might have a move coming up & will be supporting my fiance, though, so I’ll probably drop the 401K contributions and hold off putting anything else into the Roth until he finds a job…