Well 2006 is coming to a close and I figured I would check in on how I am progressing on my goal to have $100,000 in principal (solely my contributions) contributed to my various retirement plans. Here is my contribution table my initial planning post on reaching $100k by 30.
One of the great advantages, at least for me is that by contributing to my Roth IRA at work I know that some day when I leave the company I can roll it over to a Roth IRA which is a much friendlier vehicle for someone who may be thinking about retiring early. Well I have only been contributing to my Roth 401k for a year, but I am interviewing pretty hardcore lately and it’s likely that I’ll be leaving my current company in the next month or so.
How do you ever become content with with the amount you are saving for retirement?
Sorry if this is just a ramble and I know this isn’t the worst problem in the world to have, but I’ve found saving to be too damn addictive. To me it’s the same as salary, you’ll never be content. You always think to yourself, you know if I was making $10,000 more a year I’d be so content and wouldn’t ever need to make more money than that, I would have all I would ever need. Then all of a sudden you get that $10,000 boost in salary, your lifestyle/expectations adjust and all of a sudden you just need a little bit more to make you content.
I have been contributing to my Roth 401k for the last year and am now considering looking for a new job so that I can make even more money and contribute even more to my retirement. When I leave my current employer I plan on rolling over both my Traditional 401k balance to a Traditional IRA and my Roth 401k balance to a Roth IRA.
Well I just sent in the form to change my Roth 401k withholding percentage from 17.5% to 20%. This change is the direct result of me following my plans laid out in my $100,000 by Age 30 post. Seeing as how I just got a raise this won’t hit the pocketbook as hard as it originally would have and really at the same time because of my raise 18 or 19% probably would have sufficed, but I’d rather just stick with my original plan and worst case scenario I end up with too much money. If anything I’d rather overdo it now as my money this year is worth a lot more money that next years (see waiting just 1 more year).
In Part I of this series I talked about how important it is to come up with an accurate rate of return when doing financial planning.
In Part II I talked about my asset allocation being 100% stocks and some of my rational for that and briefly touched on some of expected rates of returns for stocks and some of the reasons why most individual investors can’t attain those rates.
In Part III of this series I am going to try to justify why I am not following the smart path of investing in index funds.
As I mentioned in Part I in the comments, I am invested 100% in stocks. My rational for this, which could be flawed, is that stocks have historically without a question been the best long term investment vehicle for your money. Yes there area a lot of up and downs, but over periods of 10-20 years this volitility is less of an issue, so in my mind the risk is mitigated. Like I said I’m young and don’t know everything, but until someone proves me wrong this is the strategy I’m sticking with. In my mind I would be throwing money away by investing in bonds, real estate, gold, etc.