Layout:
Home > Dreaming of a Retriement (Savings) Plan

Dreaming of a Retriement (Savings) Plan

July 29th, 2013 at 05:31 am

I have been dreaming of maxing out retirement benefits at my full time job for about 6 months now.

For me that means $3174.60 a month or $38,215.20 a year toward retirement.

How you ask?

Well my union/state contract mandates 11% away each month toward retirement: $678.33 a month.

I can max out my 401K fund for $1458 a month, $17,500 a year.

The state has a second retirement savings vehicle state employees can use, the 457, that I can put away up to $1458 a month. For me the 457 would be $1100 a month to ensure that I had enough monthly to live on or $13,200 a year.

My take home would be $2260.81 a month broken down into the following sending categories:

Rent (estimate depends lease at that time) 790.00
Water/sewer/garbage estimate 65.00
Spending money: 200.00
Electric: 40
Gas for house: 30
Cell bill (2): 160
IRA: 10
Groceries: 290
Household: 10
Gas for car (Prius): 125
Car payment (0%): 326
Internet: 85 (estimate. Getting rid of cable means I’d like to watch a few favorite shows each week so need high speed/lots of download size. Must use current company because I use a microcell tower in my apartment to get cell phone coverage as I do not have a land line. The tower only works on AT&T internet. The use of the cell tower boosts the cell coverage to 5 bars and costs nothing extra to run.)
Netflix: 15
Audible.com: 15
Student Loan: 270. (Interest rate locked in at 1.25%. I am not in any hurry to pay this off because 5 more years of limited payments and the balance is forgiven through the federal loan forgiveness program)
Mom (assistance): 150
Emergency savings: 50

I would need to save a few things ahead of time to prepare for the year of living like this:
Car insurance for a year: 1400
Renters Insurance for a year: 350
Contact/Glasses: 720
Clothing: 1000 (estimate)
Personal HSA Savings: 200
Gym yearly membership: 100
All that totals $3770.00

Plus, I have my emergency fund.

And I earn between $150-700 dollars a month in the house and pet sitting business. Usually I have that money accrue in a savings account for the entire year but if I could use that during any month I needed after I save the business expenses I need for the following year, about $800.

I wonder if I have the strength to live this close to the bone for 12 months.

I know I could adjust my retirement savings at any time to get more money if I needed it.

What do you guys think?

12 Responses to “Dreaming of a Retriement (Savings) Plan”

  1. snafu Says:
    1375075250

    Did you take your road trip? Was it enjoyable? I'm a bit confused about your proposed retirement savings. Have you established and been contributing to a 401K for the past 6 months along with your State pension deduction? What are you holding in your 401K? What are the fees and MER?

  2. Kiki Says:
    1375077682

    I have been working for the state for more than 10 years, so yes i have already been contributing to both the 401k and 457 and of course the union contract mandated amounts as well.

    I am playing some personal catch up because we have had furloughs for four years and i haven't been as aggressive in savings as i wish i could have been. Well, furloughs and helping out a family member meant it was much less than i was contributing.

    Our fees for both the 401k and 457 are set by the state programs. Monthly admin fees of $1.50 for each 401k and 457. So i pay $36 a year.

    They also have the option of paying a little more each month and the Professional Management at aon hewitt who run our program will have an Investment Advisor create and maintain a personalized retirement strategy for your 401k/457 accounts. I am not sure what the extra fees are because i have never looked into them.

    I met with my personal investment guy for my Roth and he looked at what i was invested in and we made a couple of changes. That was in May. Right now i am doing the asset allocations aggressive (30%) and moderately aggressive (70%) because i don't have the time to actively manage my accounts. The MER on these two asset allocations are .13% and .18%.

    The largest MERs come in the small cap funds and those were .75%. As i am currently staying in the asset allocation area i am paying .13% and .18%.

    As of Friday my rate of return for the accounts from jan-july 26 was 10.9%.

    Calpers does not tell us the MER for our defined benefit contribution plans. Based on studies the estimate MER is 1.7%. I can't do anything about that for my mandated retirement.

  3. PatientSaver Says:
    1375100379

    It looks a little tight, but nothing really great is achieved easily. I say go for it by all means; as you said, you can always cut back a bit if it seems too much. Don't let hesitation keep you from pursuing your goals.

  4. creditcardfree Says:
    1375101106

    I agree with Patient Saver, go for it! You have a good reason to catch up, you can cut back if it gets too tight.

  5. MonkeyMama Says:
    1375106000

    Absolutely I would do so.

    I do wonder if your take-home would be much bigger due to all of the tax breaks, or did you already factor all that? This would be more reason to do so - to lower your taxes, which are probably quite high as a single renter.

    The only thing I would do differently is lowering the 457 plan or the 401k contributions, in exchange for funding a regular IRA or a ROTH IRA. Just because you can invest anywhere and limit fees. Employer plans will always have more hidden fees and restrictions, is why I suggest that.

  6. snafu Says:
    1375108664

    Kiki, off topic but would appreciate your sharing knowledge/expertise of emergency planning for families. Too many of us are woefully unprepared for out-of-the-blue emergency evacuation

  7. Kiki Says:
    1375111809

    Snafu i will definately do a series of blog posts about emergency preparedness. So far topics i have in the list are: financial grab and go kit, grab and go evac bag, how do i prepare when it so expensive (complete with purchasing calendar schedule), how to store preparedness items, how much do i really need? What are the hazards in my area? How about my kids at school or at college/university (preparing in dorm space), evacuation route planning, emergency contacts and how do i rotate/consider my kids needs?

    MonkeyMama i used the state controllers office state employee paycheck calculator to figure out the paycheck amounts. And all the fees i coild find on he atate program werw $1.50 per month per account and the MER of .13% and .18%. I don't think there are any others.

  8. IndianGal Says:
    1375112951

    This sounds like a great plan. The more you can save towards retirement, the better. This would mean really sticking to a strict budget, but I am sure you can do it. Good luck!

  9. baselle Says:
    1375118076

    I'd go for it. I did something similar when I inherited some money - maxed out my retirement saving. (I didn't have as many places as you! Smile)
    Only one thing to note: if you need to adjust, when are the windows? Can you do so monthly or is it quarterly? If I know when my exit points are it gives me a plan.

  10. Kiki Says:
    1375118445

    I can adjust the amounts withheld into the 401K or 457 monthly if I needed to.

    And I max out my Roth through the housesitting company income although I am working on marketing to be able to increase the income generated through house sitting and dog walking.

  11. FrugalTexan75 Says:
    1375135133

    I stream a lot of YouTube, Netflix, Hulu, etc. and am on the lowest Internet speed plan. Once in awhile it is a bit annoying, but 99% of the time it works just fine. It may be different if you're doing a lot of gaming or something like that. Anyway, I'd suggest going with the lower speed and see if it works for your needs first. That'd save you money in that area.

  12. Jolly Says:
    1375171714

    It is a very good plan

Leave a Reply

(Note: If you were logged in, we could automatically fill in these fields for you.)
*
Will not be published.
   

* Please spell out the number 4.  [ Why? ]

vB Code: You can use these tags: [b] [i] [u] [url] [email]