Hi PF,
First off, posting from mobile, apologies for any errors.
I just took a new job after my wife and I had our first child and have been reexamining our budget and savings goals. It seems like all the advice I see is constantly telling me to max retirement savings before moving on to other goals. It's almost like all other spending goals are afterthoughts to retirement.
While I understand the importance of saving for retirement, it seems to me that saving 12% of my pre tax income will generate more than enough savings for our retirement goals (currently making 80k, 6% estimated return, current age 25, retirement age 65, 900 a month contributed before 4% employer match giving me a nest egg of over 2.5 million, which would allow for a 3% safe withdrawal rate of 75k annually, which is more than double our current annual spending). This comes out to an annual contribution of $10,800 and seems to more than cover me. I hope my rough math there will be forgiven, but please let me know if I'm neglecting some considerations.
It just feels like overkill to me to prioritize funding retirement in the midst of other savings goals like paying off house early, starting college savings, saving for new cars, or saving for major home repairs. I can't imagine the benefit of maxing out my retirement accounts to the full 401k and IRA maximums. Sure, it nets me the absolute highest return objectively, but what will I actually do with that money once I'm there? Is it not to the detriment of life in the meantime?
Please help me to understand why maxing retirement accounts is the right move in the midst of more immediate savings goals, or help me understand how to invest wisely for these short (less than 3 year) and medium (less than 15) year goals. Thanks!
Submitted August 09, 2017 at 11:15AM by VintageBurtMacklin http://ift.tt/2uGKQ6a
