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18% Gross To Retirement

June 30th, 2017 at 04:30 am

We save 18% of my husband's gross pay to retirement. I'm starting to wonder if it is too much. Only because I've been watching YouTube videos of people following Dave Ramsey and saving 15% gross on Baby Step 4.

Our plan is for my husband to retire from the Army with a full retirement pension. This is equal to 50% of his base income, which if calculated today would be about $3,840 per month. It will be higher as he will get promoted at least one more time before he retires. He might also be eligible for more than 50%, but not sure. If so that will make a huge difference in pay as he will have over 32 years of service.

Obviously, there is risk that something could happen that he won't get to full retirement. He is already eligible for a reserve retirement check that would pay out beginning at age 60, possibly sooner. That check would be far less.

I think part of me is wanting to adjust to 15% so I can use the other 3% (which is just under $300) towards the Big Goal. And I suppose I don't have to change anything, as more than half of our retirement is invested in our Roth IRAs. I can take those contributions out any time.

Just thoughts. How much of your gross income do you/did you save for retirement?

7 Responses to “18% Gross To Retirement”

  1. scottish girl Says:

    2%... I'm going to phone them and increase it. They sent a form to me online ages ago, but I couldn't figure it out.

  2. Carol Says:

    In a way, isn't the money toward the big goal also for retirement? Afterall, entering retirement with a paid off house, means you need less money to live on. It is handy to have money in taxable as well as tax deferred. So either way it's a win.
    15% is a number that I use, but I didn't keep good records in those years. We just saved as much as we could once the kids were through school.

  3. PatientSaver Says:

    When I was working f/t, I saved 29%, probably the most I've ever done. Now? Nothing.

    I think most people get started saving for retirement later than they should, so I would would stick with what you're doing if it's already relatively pain-free.

  4. FrugalTexan75 Says:

    At work I put 27% of my paycheck into retirement funding (9% paid by employer.) Starting this month we are also putting $1000/month into our ROTH's. That's about 23% of our combined take home. I'm not sure what that all works out to.

  5. creditcardfree Says:

    That is fantastic FT! If I didn't have college tuition, I think we could easily get to that point, too.

  6. MonkeyMama Says:

    I'd just work backwards from what you need. 15% by itself isn't really a useful measure. No context.

    I have seen some instances of "retirement poor." You can certainly over-do it. & as Carol says, saving up for a home is a retirement savings of sort. Maybe just not as tax efficient.

    We do save 15% right now for retirement, but it has nothing to do with any general rule of thumb. It just works out that maxing out our retirement vehicles puts us at 15%. I would be okay with 15% to retirement plus maxing out ROTHs (because ROTHs are easy to access). Anything much more than that, and we'd be too retirement heavy. Even if we didn't have kids/college to pay for, tying up all our money for age 60+ just doesn't make much sense. We'd need other savings sources for early retirement, so I wouldn't tie it all up in retirement funds. I could see backing off in your shoes (given pension and house goal). I personally wouldn't save so much for retirement if we were also saving for a house.

  7. creditcardfree Says:

    I appreciate everyone's advice. It's nice to see different thoughts on how you would approach it. We expect to lower our rent costs in one year. And in two years my husband will get a significant raise, nearly 18% of his current basic pay (of course, that is taxed,so we don't get all of that). The nice thing about the military retirement is that it will start coming in on the day he retires; he will be 54.

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