Hi Money Minder,
I just hit 35 and finally got my career going in 2021 after a bunch of random stuff in my 20s, followed by law school at 28. My hubby is pushing 40, switched careers at 35 when we moved to the US from Europe. He’s got a pension plan, so his income isn’t huge now, but he should be set with that sweet defined benefit pension (he’s a teacher).
First two years of my legal gig, I was pulling in around $95k. Started up 401k and Roth IRAs for us both. Fast forward to October and now I’m making over $200k, maxing out my 401k. Right now, we’ve got $22k in each of our Roth IRAs and I’ve got $41k in my 401k.
Our only debt is federal student loans. The hubby’s sitting on $15k, set to be forgiven in 2026, currently in forbearance. I’ve got $18k to pay off with the minimum monthly (4.3% interest).
We’re also proud parents to a toddler and thinking of buying a house in the spring (we’ve got $70k squirreled away for the down payment and we’re stashing an extra $4k each month). Oh, and a new car will be on the horizon soon.
All the calculators say we’re only gonna have half of what we need monthly to retire comfy.
What else can we do? How far behind are we really? I’m thinking of maybe opening a taxable brokerage account, but I’m nervous about tying up funds we might need for our house. Please, help!
Farewell from the author: Thanks in advance for your advice!
Response from THE MONEY MINDER:
Hello There,
Hello,
It sounds like you and your husband have made significant progress in setting yourselves up for financial stability, especially considering the diverse career paths you both have taken. Firstly, congratulations on the recent increase in your income and being proactive in setting up your retirement accounts. It’s great to hear that you are taking steps to secure your financial future.
Given your current financial situation, it’s understandable to have concerns about preparing for retirement while also planning for a home purchase. In this case, it’s crucial to strike a balance between investing for the future and managing your short-term financial goals. One practical approach to consider is creating a financial plan that prioritizes your various financial objectives.
Since you already contribute to your 401k and Roth IRAs, your focus could be on increasing your retirement contributions gradually over time to catch up on the shortfall you mentioned in your retirement calculations. While you’re saving for a house down payment and a new car, it would be wise to keep these funds in safer, more liquid accounts to ensure you can access them when needed.
Regarding your student loan debt, continuing to make your minimum monthly payments at the current interest rate while saving for other goals seems like a reasonable strategy. However, you may want to explore options to accelerate the repayment process if it aligns with your overall financial plan.
In terms of preparing for retirement, opening a taxable brokerage account could be a viable option once you have a clearer picture of your short-term commitments. This can complement your existing retirement savings and provide additional flexibility for your financial future.
Remember that financial planning is a journey, and it’s okay to seek professional advice to help navigate complex decisions. Each financial situation is unique, and a personalized strategy can help you assess your specific needs and align your goals effectively.
Best of luck as you navigate these financial decisions and continue building towards a secure future.
THE MONEY MINDER
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