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Retirement Planning

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Let’s be real, if it weren’t for the mandatory retirement required by my employer (we’re required to contribute 7%, which is matched dollar-for-dollar by my employer!), I’d probably be a ways off from any serious retirement discussion. I mean, we should all be doing it, but when you’re just trying to pay your monthly bills, you’re probably not super concerned about how you’ll be paying for your golden years.

But we should be! Especially with some hints of BIG changes on the horizon!

First, did you see the IRS’ announcement with 2018 pension plan and 401(k) contribution limits? If not, check it out here. For the time being, annual income limits are going UP for traditional IRAs, Roth IRAs, and Saver’s Credit! That’s good news to those in the stage of life to be maxing out retirement contributions!

The reason I use the verbiage here (“for the time being”) is that, right on the heels of the IRS’ announcement, talk from the Whitehouse is suggesting steep reductions in the annual limits allowed for tax-deferred retirement accounts. Check out this piece from the New York Times with more info. Some of these (rumored) reductions would be seriously dramatic.

Where are you in the retirement savings spectrum? Are you actively putting away money for retirement or still in full-on get-out-of-debt mode? I have mixed feelings about my work situation. I like that I’m being compelled to save 7% (+ the 7% employer match!), but I do wish I had the freedom to drop down my retirement contributions in an effort to get out of debt quicker!!!

I sure do hope that by the time I’m able to fully focus 100% on retirement that the investment vehicles to do so still exist! My Dad (before being diagnosed with FTD) was a financial advisor all his life. He has cautioned us for years that he felt Roth IRAs would eventually be taken away in their entirety (note – this is just his gut – no special “inside info” here). He’s urged us for years to get our financial houses in order and be in a position where we can max out our Roths since, in his view, they could end up disappearing soon!

 


9 Comments

  • Reply Angie |

    Except…. the Roth and traditional IRA contribution limits are not increasing for 2018. They remain the same at $5,500.

    • Reply debtor |

      Think the phrasing is confusing. The amount you can contribute is not increasing, but the income limitations that phase out those contributions is increasing (ie contribution limitations).

  • Reply Jax |

    When I got my taxes back in the spring and saw how much my income was, I was really surprised because it looked like a lot, but it feels like not so much. But then I did the calculations and I have been saving 20% of my income for retirement between my employer plan and my IRA. I felt better about that.

    I get a 2% COL raise every year (I’m support staff at a university) and I try to increase my contribution to my employer’s plan by that much as well. If I don’t see it then I don’t spend it. And since it gets taken out of my paycheck before taxes do, it saves me a few pennies at tax time.

    It’s hard to get into saving for retirement when there is so much else to spend money on (or to pay off debt or to save for bigger things) but I think future me will really appreciate it.

  • Reply cwaltz |

    My spouse is that rare unicorn that has a defined pension plan(railroad) as well as a stipend from the VA. We both qualify for health care at the VA too so we are not that worried about retiring.

  • Reply Brianne |

    We’ve been doing pretty well with a mix of 401K, Roth IRA, and rollover IRAs from my husband’s former employers. But now I’m thinking about cutting back on retirement because it’s getting tough to live one one salary while my husband looks for work. I cut the Roth contribution already and I’m seriously contemplating reducing my 401K contribution. I worry constantly about not having enough in retirement. I’m quickly approaching 40 and we’ve still got two college educations to worry about too. I’m not counting on social security being around in 25 years.

  • Reply Angie |

    We were full on debt mode for 8 years only contributing the minimum 6% to get a match in our 401k’s. Once we got all our debt above 5% paid off we starting maxing out retirement accounts. Theoretically this is the point where the market average will earn more than the debt will cost you. That plus the tax savings is the big driver to me. We were able to max both our HSA’s, IRA’s, and 401ks for two years before running into unemployment again (We are 4k short this year damn.). I was soooooo thankful for those two years. It definitely helped catchup our dismal retirement savings due to debt payoff.

    Retirement savings is more addicting than debt payoff. Once you get a bucket of money it starts making money faster than you can save it. It takes away some of the stress of watching every penny you spend. I know this year is a particularly good year for returns, but our retirement accounts have made over 70k and we have only contributed 40k! I’m happy to carry my low APR student loan for the full repayment period if it allows me to max out my retirement accounts and get the compounding returns in my 401k.

  • Reply Malady |

    My new employer takes 5% of my wage as a “non-compulsory” contribution towards retirement funds, but they put in 12% of my wage if I put in the 5%, resulting in a total of 17% hitting my fund each month.

    I was pretty annoyed about this arrangement at first – I had moved into this new job on the understanding that I’d be earning a particular amount, not that amount less 5%, but I’ve now reworked my budget and it is really nice to watch my retirement savings creeping upwards.

    I’m curious – if you don’t mind answering – how much do you have in retirement savings?

  • Reply Jen From Boston |

    About 8-10 years ago I took the plunge and maxed out my 401(k). It hurt initially, but it’s really paid off in terms of retirement nest egg! I’ve been contributing to a retirement account in some form or other since I began working after college. So I’m feeling fairly good about retirement, but I still worry about it – what will happen to healthcare costs? Will my home’s value hold? Will I be able to work until 67? Will I get laid off in my 50s? Fortunately, my husband and I are debt free except for the mortgage, which is at a very low rate.

So, what do you think ?