- December 7, 2023
- Posted by: legaleseblogger
- Category: Related News
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**Financial Situation of a 28-Year-Old Living in Rhode Island**
A 28-year-old individual residing in Rhode Island is currently earning an annual income of $85,000 with the potential for future salary increases. At present, they are contributing an amount ranging from $350 to $400 per week into their 401k retirement fund. According to their retirement account, they are projected to retire with a monthly income of $11,000, a figure that significantly exceeds their current monthly expenses of less than $2500. Furthermore, this individual is a homeowner with a mortgage-free property valued at approximately $400,000, acquired through inheritance.
**Considerations for Adjusting Retirement Funding**
Given the surplus in projected retirement income compared to their current living expenses, the individual is contemplating the possibility of reducing their contributions to the retirement fund. This decision is motivated by a desire to allocate more funds toward home improvements and the purchase of a new vehicle, both of which are anticipated expenses.
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The AI Legalese Decoder can play a crucial role in providing financial guidance in this situation. By utilizing advanced algorithms and data analysis, the AI Legalese Decoder can provide personalized insights into the financial implications of adjusting retirement contributions. This includes evaluating the potential impact on long-term retirement savings, as well as offering recommendations for maintaining a balanced financial strategy.
Additionally, the AI Legalese Decoder can assist in clarifying any legal or procedural aspects associated with modifying retirement contributions, ensuring that the individual fully comprehends the consequences of such a decision. Overall, by leveraging the capabilities of the AI Legalese Decoder, the individual can make well-informed financial choices while also addressing their immediate financial goals.
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Your retirement account says you will retire with 11k a month IF you keep contributing at your current rate for the next 35 or so years. An adjustment of $100 a week will reduce just the base contributions by 182,000 without any accrual of compounding interest or growth.
Right now is the best time to save, as you get the longest amount of compounding growth.
Where are your expenses going? You say you want to cut back, but you don’t really have anything to spend money on. You have a mortgage free house? So you probably pull in 5000 a month. You invest about 1400-1600 a month. That means you have 3400 of free spending cash a month. I might look at spending your money more wisely, rather than reducing the amount of money you save!
We just met with our FA at 53 and plan to retire at 60. You are so young your spending at 28 will be way different than your spending at 48. Things increase over time. You donÔÇÖt mention a family, spouse, kids etc. But all that could change. As someone who wishes they would have invested more when they were young I would say keep going.
You are saving about 21% of your gross income. With no housing costs, that is a good amount and you should have plenty left over to spend elsewhere. Don’t forget that the $11k will feel like less due to inflation.
If you really want more funds now, you could drop to $250 a week (15% of gross), but I wouldn’t do less than that.
Keep saving for retirement. ThereÔÇÖs tax benefits to saving more in your 401k.
Also, 11k is just a projection. Could be less, could be more, and who knows. By the time you retire, the apocalypse could be here and the value of the dollar is shit, so a loaf of bread costs $1500 ƒñú
Assuming a 28% combined tax rate (fed/state/FICA), your net income is $5100/month. If your expenses are $2500, and you’re contributing $1600 to your 401k, where is the other $1000/month going?
So many things could affect your decision. Are you married? Do you have kids? Are either of those answers going to change? Are you going to change jobs? When do you want to retire?
The younger you are the more money is enjoyable. You’re much better off having a lower burn rate when your over 70 than when you’re under 50.
Most people’s income goes up as they get older. Saving when your in your 20s for most people means losing out on their 20s. You can always make more money but you can’t ever get back missing out on being 20-something.
You can’t be completely irresponsible but you also can’t ignore that bad shit happens. I’ve lost so many friends under 50 that I take this very seriously.
If you go any lower you should plan to increase it with each raise you get to make up the difference eventually.
A lot depends on what you want from your personal financial goals. When do you want to retire, how much do you want to retire with etc.? ItÔÇÖs good to have some general targets in mind, but at the end of the day some people feel comfortable with more and others are fine with less. Do you have an idea/estimate of how much you want to cut back?
>My retirement account says IÔÇÖll retire with $11,000/month.
Unless you have an atypical current balance for your age, that projection is likely assuming you continue saving at your current rate.
>That is honestly way more than I need.
Inflation; 35 years of it. $11k today was ~$4250 35 years ago.
What can you not enjoy with $1,300 of free cash flow after all expenses, taxes, and retirement savings??
After taxes and retirement savings, you should have $3,800 a month. Less the $2,500 you list as expenses leaves $1,300 a month to do whatever you want with.
Buy a new, reasonably priced vehicle. $400 a month car payment would still leave you with $900 free cash flow after all expenses, taxes, and retirement savings. That’s plenty for a great vacation or two a year.
Do you have 6 months of emergency savings built up outside of retirement? If not, get that socked away.
I don’t recommend cutting the retirement savings in your situation. If anything, I would save a little more while you’re young because the compounding is so huge in 35 years.
Ask yourself, where is that $1,300 going every month that you feel like you have to cut retirement savings to enjoy life?
You’ll always need more money later. That said you’re putting a lot away. I wouldn’t change a thing until I was 35.
I wouldnÔÇÖt even think about lowering retirement contributions at this point, you arenÔÇÖt maxing out any tax advantaged accounts yet
You are way ahead of the power curve. You could cut back some and still be in great shape. ItÔÇÖs great to have a big retirement nest egg nut honestly no one knows what the future holds. Everyone assumes they are going to have a long heathy retirement.
I would compromise. Plan for a comfortable retirement but enjoy life while youÔÇÖre young and healthy. Travel and work on your bucket list. You canÔÇÖt go back in time and you sure canÔÇÖt take the money with you.
You could be dead from cancer in 3 months. You have no idea what life has in store for you. You are in a great, comfortable position, from which it would be very difficult to ruin things. Definitely allow yourself to enjoy life a bit more.
Most financial advisors recommend saving 10%-15% for retirement. I think you’re probably saving closer to 23%.
ItÔÇÖs 1979 your projected retirement income is $1950 a month. You think youÔÇÖll be set. FFW to 2023
Wow /r/personalfinance is very risk-averse.
I would look at /r/coastFIRE, seems like that could be a good fit.
It’s of course up to you, and it depends on how risk-averse you are, but I would reduce it slightly. You need money earlier in life too. It’s good you already have a house though, that really frees you up to focus on retirement saving.
Don’t sacrifice your youth for a luxurious retirement. However, don’t sabotage your retirement to live a luxurious youth either. If you’re comfortable contributing +20% of your gross income, keep going. If you’re eating Ramen Noodles everyday to make +20% possible, ease up a bit. You can always make more money as you progress in your career, but the one thing money can’t buy in this world is time. Enjoy your youth.
You should be able to double your retirement savings and still have enough for enjoyment with a paid house and that salary. I guess it depends just how much you want to “enjoy yourself” with an expensive car and home project.
What on earth are you spending $2500 a month on currently?
You have a paid for home and only saving 21% of your net salary on retirement and you want permission to save even less?
Where is everything going?
Calculate your coastfi number at your desired retirement age, and if youÔÇÖre there then scale back and see if your happiness improves significantly.
Build a FIRE plan and play with the numbers. It is all about tradeoff. Some people likes to “Be FREE” ASAP at all cost. Some people likes a more balanced way. Once the numbers is in front of you, it is much easier to get answers for yourself. ( BTW, this answer could change as well. )
No you continue doing what you are doing. In future you may not be able to contribute this much (family, kids, etc) so this is the time to sow the seeds.
Do you want to work your whole life? Keep saving and retire early.
If your goals align with saving a lesser amount, low it as you’d like. You can always increase it later if desired. Most people are the opposite and try to save more for retirement.
DonÔÇÖt forget about inflation. If you are retiring in 25 years that $11k will buy about what $5k-$5,500 buys today. So not as good as it sounds.
No!
Keep it up.
In 40 years, you’ll need to be a multi millionaire to retire comfortably.
$11k a month in 40 years won’t be that much.
But life is about experiences not saving money for when you can’t have experiences.
Live, damn you! LIVE!
Saving long term with compounding is great, but don’t forget to enjoy life while you do it. You always read people talk about travel and such, but that’s not for everybody, so you do you. I will say that Roth IRA should be in your investments/savings plan. Having all of your retirement in a taxable 401K will have tax implications that will affect your take-home money. Investing in a Roth account while you’re young and have the extra cash will be much better in the long run.
There is no future. The USD is worthless. Do with that what you will.
YouÔÇÖre better off, cutting your expenses drastically, contributing an insanely high amount for a few years, then stop.
I would not cut back. The more you save earlier the less you can contribute later. Make hay while the sun shines and time is on your side. If anything, I would get aggressive and look to contribute as much to the max as possible. This, however, is dependent upon you not having any high cost consumer debt (Cards, Car loans, etc.)
You didnt share budget details (If you dont budget, start), budget can include setting aside sinking funds monthly for home improvements, future car purchases, etc. Best of luck,
Nope. Pump them numbers while youÔÇÖre comfortable to do it. Life changes everyday and even if you get to retire with that amount itÔÇÖs always better to have to much than not enough, especially with fixed income money.
That $11k/month contains a lot of assumptions. It might not be enough 35 years from now. Life happens. Inflation happens, too.
A lot of these calculators assume you increase your contributions annually (not stop them).
I strongly recommend to keep investing as much as you can afford now until your mid 40s, then reevaluate once you have a solid base. Your invested dollar goes much further now when you are young.
Speak to a professional before stopping contributions either way to understand options and scenarios. Perhaps at 55 you decide to retire early and travel. You canÔÇÖt do that if you stop contributing.
You should know and lay out your current and retirement goals as that will help your decisions.
Do you get a match through your job? Maxing out a 401k is probably the best thing you can be doing when young, especially if you have no other debt.
I personally wouldn’t reduce your saving. In fact, I’d try to increase it in your situation. You have free housing, so I think you could probably increase your saving and buy a car. This all depends on how much the car and other things you want but it seems quite doable. Most of my income every month gets drained for housing.
What have you saved for future home repairs? IMO, save now while you can. What are you spending $2500/month on if you have no housing expenses? Can you save less? Sure but nobody knows what the future will look like for your income, the growth of your savings, the property tax increases, etc.
We would need more numbers of current balances and allocations. Please also take into account you don’t really know what your expenses are going to be in 30+ years. You are contributing a ton of money right now though.
You donÔÇÖt need the money. DonÔÇÖt cut back. Better to cut back later if you want. Time in market is so critical. Pile savings in early and let off the gas later.
Dollars you put in now are worth way more than those in those 40s and 50s. Keep pushing hard until around 35 and then re-evaluate. If things go well you might be able to drop down to 10% or so and have more of a transition to retirement rather than a step-change.
What is the current balance? Is the 401k your only investment account?
Figuring out if you can coast is more about how much you have now rather than how much youÔÇÖre putting away.
What I do at times is play with my 401k percent to find a good compromise. For example if you are getting 12% taken out per paycheck, reduce it to 6 to see what your take home will be with that. If take home isnÔÇÖt much different due to taxes, increase backup because taxes would eat it all. If the take home is great, make sure you at least leave a percent that hits your employers match. You can always increase it when you are 30.