Monday, November 7, 2016

2016 2nd Half Savings Update

October is done and we added $2,600 to the savings target which stands at $6,300. Hey, only $12,200 from the $16,500 goal she says with a mix of sigh and laughter. We should easily reach $10,000, so considering July started us in negative digits, I shouldn't despair too much. We've decided we need to keep fully feeding the Roth as opposed to college fund. There's a probability she'll go to a state college and as long as we have a years worth in cash, we should be able to cash flow the costs. Last resort would be student loans. There may or may not be any education credits by then so not counting on the tax refunds we got with other two, but we both do a hefty tax deferred savings which will greatly lower taxes now that we both can put $24,000 aside. I'll do a final update in January to this challenge with new targets, maybe in a different format. 

I've been thinking a lot about net worth. Not counting the house, the retirement calculators say we should be more than fine in ten years assuming we keep at our current actions of maxing Roth and 401K. We need more liquid savings though and that will be part of the 2017 goal setting, aiming for a three year cash savings to bridge between DH' s retirement year target and age 67. I want to draw done as little as possible to keep the tax burden low. The Roth won't be taxed as it was funded with after tax money but the 401K's, my pension, and my work sponsored health savings plan will be. My brain gets fuddled thinking all this, but it's necessary. 

Any feedback on my savings goals? Would anyone do things differently in my shoes? What's your biggest financial worry and how are you trying to handle it?

16 comments:

  1. Anything you do to lower your tax burden now, put tax-free $ away from retirement and save, save, save is a good thing.

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    1. That is what we figured-less taxes now, through the tax deferment, and then try and save where we can to grow the cash savings. If we are able to pull off cash flowing college completely while maxing all the retirement accounts, we should still have a few years with no college before we plan to retire and can grow the liquid savings rate.

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  2. I haven't started looking that closely into college yet (we are saving, but nowhere near, age wise for the kids) the time. But, given you think you can cash flow everything, I would prioritize retirement accounts as well.

    In the same boat with the retirement funding. I need to start paying more attention to draw down rates, and percentage of funds coming from specific accounts, but I haven't yet. You seem way more on top of it than me. :-)

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    1. Hard to believe but we are just three short years form that and will start the searching and tours next year already, applications the following. I can believe I have two done with post grad already-it seems like we were just doing this for them no that long ago. As we are probably a decade closer to retirement age, I think I've forced myself to learn more and try and stay on top of things, but I don't think I'm there yet.

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  3. You know those kids who dance to a different drum? From the day he was hatched Son 3 did, so we decided not to invest in the state college plan. Now all these years later we are thrilled beyond belief we didn't. Since he did not go to a state school we would have lost every penny of it. Instead we invested that money figuring if he decided to go in state we would have at least kept up with rising tuition by the interest and reinvestment money. Best Move Ever

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    1. It is hard to know when they are born where a kid may end up. We have some i a 529, not nearly enough, and some in a generic education fund, but the rest will be just cold hard cash savings, and what we can float by probably not putting much in savings the four years she is at school. She an use all of these sources at any accredited post secondary, so nothing lost, even if there is nothing much there.

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  4. Sounds to me like you have your head on straight. I no longer worry about finances now that we have the house paid off for a few years. That was a huge relief and now knowing that we can cut back on everything else if required we can always live within our means. I guess the only thing I occasionally worry about is our company and whether or not it can pay our salaries. Right now though we are in fantastic shape that way with 6 months worth of contracts signed into the new year so no worries! I actually think we over saved for kids education since it appears only 2 of the 4 kids are likely to actually go to college (one is done, other is taking upgrading to go next year)

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    1. I hope things continue going well. Not quite the same, but with DH 100% commission, I have similar worries about sustaining. I mean we saw what a major dive can do between spring and fall when things weren't strong. This is why I never understood people that insist their lifestyle needs to increase with every raise. None of us know really what is on the other side of a calendar, and it is a lot easier to cut back when you don't have 50% of more of your salary locked into debt, even if the debt is a house for the most part. inflexible bills.

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  5. My finances are the simplest they've ever been. No debts, mortgage paid,bills reduced and we save for travel out of money coming in from our pensions which is less than half what we had when we were working. Neither of us will draw state pension for a number of years but as we have both paid in for max number of years we will get maximum allowed.Your system leaves me very confused lol.

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    1. It leaves my head spinning!We have so many buckets and I'm not counting social security because I don't trust it will be there or will be pushed back later.

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  6. Is your social security like our state pension? Do you pay into it from your salary? Ours was taken directly from source PAYE so pay as you earn. They are constantly messing about with state pension and have just pushed up the age from 60 to 65 and 66 in my case. It will be nice if it's still there when we reach that age but not banking on it lol

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    1. I think so, but then some employers, usually public or union, or very large companies, might offer a pension. It is all so confusing, and some people that do not pay in receive SS.

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  7. Good job!!! Is it bad that massive debt doesn't scare me?... We'll get to start help the college kid make payments on her loans come this next summer and a wedding just before that. That should be enough to scare the pants off anyone...

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    1. Throw weddings into the mix, and we are truly cash poor. This is why my austerity measures in my home will stay with me forever, I feel. It's all good though, right?

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  8. As a Canadian I don't have a lot of understanding of your taxes/savings etc. I think your 401k is similar to my defined benefits work pension. I never had a choice though in how much to put into it. It was a mandatory amount and came right off our paycheque. It was up to around 13% of my salary by the time I retired which seemed like so much at the time but I am now very grateful for.

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    1. Work sponsored pensions are rare-public workers and a few big companies. I have one for the first time now in my 30+ years in the work force. 401 K's are also a work sponsored of sorts, but the bulk is the employee and the employer may or may not put anything into it.These are tax deferred,but taxable once you draw out. You can if offered do an after tax Roth version. $18,000 is max under 50, but if over 50 years old, max is $24,000 so huge tax releif. A straight Roth is after tax, and $5,500 max for under 50, $6500 after, but this is not taxed when you withdraw. Then there is social security, which we and employer pays into, but they keep changing the age you can receive the benefit, now at 67 for my age.So confusing, and why my head explodes.

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