My retirement nestegg report for this month. Slowly but surely approaching a six figure retirement nestegg account.
Traditional Rollover IRA – $10,694.27 (+3.89%)
My Roth IRA – $30,126.74 (+4.66%)
Wife Roth IRA – $16,065.05 (+4.41%)
Current Traditional 401k – $39,132.26 (+9.73%)
Roth/Traditional % = 48.10 % (tax free)
Total Retirement Nest Egg $96,018.29 (+6.53%)
Well it seems like just yesterday I was in high school math class learning about exponentiation when a light bulb went off on my head about the power of saving money with compound interest on your side and now I’m 30 – holy crap time flies.
Since this is a pretty historic milestone in my personal finance journey as well as my life in general I thought it would be a good time to sit back and look at the good and bad from the last decade. Some of the items I list may or may not be entirely financial at first glance, but I’m certain they have all affected where I stand financially today.
Things I accomplished financially in my 20s
Overall from the positives I really was lucky enough to “get it” financially at a young age and then be lucky enough to get married to a person who thinks and acts the exact same way as me. Now don’t get me wrong we aren’t a pair of tightwads who don’t know how to have fun or enjoy life – its just that we both know whats truly important in life and what will truly make us happy. We don’t need to drop $30,000 on a new car to realize after the fact that owning something new and shiny is not going to make us truly happy.
For us the peace of mind of knowing that by forgoing so called pleasures now will give us the security and freedom to do what we want with our lives and not be worried about trying to pay down debt or being stressed out wondering where the money will come to pay the bills. Money doesn’t control our lives in fact I think its just the opposite – we control our money and are able to live our lives the way we want it – instead of so many people who have it backwards and don’t bother to learn how to manage their money because they don’t care or don’t want to deal with money when deciding what to do or what to purchase and then it ends up running them the rest of their lives.
Overall though I’d say from the list other than marrying an awesome wife – would be my degrees as they are the drivers of my income – amazing how a little work to get a few degrees early on in your life can change the trajectory of your income for the rest of your life. Quite possibly the best investment you can make. Obviously staying clear of bad debt and managing our money is good too, but I’d probably have to put starting this blog very high up on the list. This blog has been invaluable to me to get me thinking about my finances, setting goals for myself and writing them down (amazing how powerful this is), and then being able to constantly be able to come back to my thoughts and plans on this blog really has been a tremendous benefit. I’m sure everyone at some point in time starts planning out their lives or what they want to accomplish, but so many people don’t write it down somewhere and then after a few months/years those plans/thoughts are completely lost. The added benefit of doing it in a blog format is you can get incredibly insightful feedback from people who are kind enough to provide comments or emails on your content (this being a prime example).
Overall I am very happy where we stand today, but as you can see from the list below it wasn’t all easy and mistake free and I wasn’t exactly a model example in my 20s.
Financial Mistakes I have made or areas where I’ve fallen short
Certainly the two stock related items on the list I probably knew better before hand, but can chalk it up to experience. When I first started out I had no clue what I was doing and like 99% of people should have invested in low cost index funds from vanguard and left it at that. I invested all the money at once in 4 individual stocks that I knew nothing about and looking back now lost a fair amount of money – in fact one of those stocks is now bankrupt. Before I bought those stocks I actually got talked into buying a whole life insurance policy and a rather large one at that. I understood compounding and didn’t understand the stock market at all so this was an easy way for me to get started “investing”. The more I read up and learned the more I realized what a horrible “investment” whole life insurance was and eventually cashed out for a term life insurance policy that I purchased over the internet and invested the rest.
Another area where I feel I have fallen short of so far is Philanthropy. My wife and I give to our churches, we pitch in on special items such as donations to Heifer International, family members running marathons for LLS, I volunteer at church and am a member of a Lions Club, but I feel that we could do a lot more with the amount of money that we give to charity and the regularity that we give to charity. We get better each year, but in the end I’d like to see us get at least to 10% of our income in cash donations. I have no idea where we stand on this right now, but I know its probably less than 5%.
A will – I have brought this up a couple times on this blog, have a family member who works for a law firm and can get us a family discount, have over $1M in life insurance, 3 kids, and still have no will. No excuse and this is something we need to do this year.
Things I have not accomplished but should in the next decade
I have an entire other post that I am working up with goals for myself before I reach age 40, but in general I see the next decade as my major earning years and at the end of the next decade I really hope to be in good shape. About the only stupid thing I plan on doing in the next decade is to build a house. Other than that I hope to continue my retirement savings and build up a nice nestegg heading into my 40s.
I have not calculated out my nestegg values going forward in quite a while but I know a few years back when I did I expected to hit $1 million dollars in retirement accounts by about age 42. This was very dependent upon getting good returns in the stock market, but in general I think by the time I hit 40 things should really be in cruise control. I hope to have most of my house paid off and a very nice cushion in my retirement accounts. When I hit 40 my oldest kid will be 14 years old and I hope that at this point in time since money will be less of a concern that I can become a free lance consultant, become a teacher, or do something that will afford me considerable free time where I can enjoy summers off and vacations with my family. Again look for a post on my XX by Age 40 goals.
In conclusion I feel like I made a number of positive steps in my 30s, I made mistakes that I can learn from, and hopefully in 10 years when I am writing up my “Holy crap I’m 40 – my 30s financial review” I will feel as good about the next 10 years as I did the last 10.
My retirement nestegg report for this month.
Traditional Rollover IRA – $10,294.48 (+2.81%)
My Roth IRA – $28,785.64 (+1.79%)
Wife Roth IRA – $15,386.78 (-2.53%)
Current Traditional 401k – $35,662.31 (+2.65%)
Roth/Traditional % = 49.01% (tax free)
Total Retirement Nest Egg $90,129.21 (+1.47%)
Well it’s been a really long time since I’ve participated in a carnival of any sort. Partly because I felt I hadn’t written anything of good enough quality in a long time. On a whim I decided to submit my $100,000 in principal by Age 30 – Final Recap to the carnival of personal finance just because well it was actually an article and it well the post was sort of nostalgic for me back to a time where I wrote a lot more and was a lot more active in pf community. Anyway as luck would have it the article was actually chosen as an Editors Choice for the carnival. Head over to Budgets are Sexy to see my article and as usually many more high quality articles in the Carnival of Personal Finance #218 – Chuck Norris Edition – thanks again to Budgets Are Sexy for hosting as it really is a lot of work to host.
Well 3.5 years ago I wrote this original post where I set a goal for myself to have saved $100,000 in principal by the time I reached age 30. By principal it meant money that was contributed to my retirement accounts only and not the current value of the accounts. This allowed me to have complete control over whether or not I reached my goal as I would not have to worry about market fluctuations (like those ever happen anyway 🙂 ). It seemed like such a steep goal because at the time I barely had $30k put away for retirement at the time.
The whole purpose of the goal was to put me on a solid track for saving for retirement. I understood the power of compound interest at an early age and knew the cost of waiting to save for retirement. $100,000 is really not an important number and there is no science behind it, I just knew that if I had roughly $100k put away by the time I reached age 30 I would be on a very good track where if I were to sluff off on retirement savings to do other things (build dream house, pay for kids college, etc) that it would not hurt my retirement as bad because I had done the grunt work up front and had 30+ years and the power of compound interest on my side.
Over-simplifying things, but if I had $100k in my accounts at age 30 and never saved another penny and it earned 10% annually in the stock market for the next 35 years I would have over $2.8 million in my retirement account at age 65. Again over simplifying things, but that is the general concept. Save as much as you can as early as you can and get time on your side and saving for retirement will seem easy, especially compared to those that wait till they are 40 or older to start saving.
Below are the final results of my goal. I’ll provide more detail after you review the results.
| Year | Age | Roth IRAs | Traditional 401k | Roth 401k | Total Contributions |
| 2004 | 24.5 | $6,000 | $1,146 | $0 | $7146 |
| 2005 | 25.5 | $8,000 | $8,268 | $0 | $16,268 |
| 2006 | 26.5 | $8,000 | $0 | $9,380 | $17,380 |
| 2007 | 27.5 | $8,000 | $0 | $11,424 | $19,424 |
| 2008 | 28.5 | $10,000 | $0 | $9,710 | $19,710 |
| 2009 | 29.5 | $10,000 | $0 | $10,281 | $20,281 |
| Totals | 30 | $50,000 | $9,432 | $40,795 | $100,027 |
| Year | Age | Roth IRAs | Traditional 401k | Roth 401k | Fully Vested Matching Funds | Total Contributions |
| 2004 | 24.5 | $6,000 | $1,146 | $0 | $0 | $7,146 |
| 2005 | 25.5 | $8,000 | $8,268 | $0 | $0 | $16,268 |
| 2006 | 26.5 | $8,000 | $0 | $10,592 | $0 |
$18,592 +$1,212 |
| 2007 | 27.5 | $4,750 | $13,852 | $2050 | $3,134 |
$23,786 +$4,346 |
| 2008 | 28.5 | $8,700 | $14,505 | $0 | $3,386 |
$26,591 +$6,881 |
| 2009 | 29.5 | $0 | $3,867 | $0 | $2,548 | $6,415 |
| Totals | 30 | $35,450 | $41,638 | $12,648 | $9,068 |
$98,804 -$1,196 |
As you can see the first thing you probably noticed is that I fell short of my goal. I will address that in a little bit. The other thing you might have noticed is that there is an additional column where I decided to count all of the matching money that my employer has contributed that is 100% vested. Originally I said I was not going to count on this money, which is good when setting a goal, never count your eggs before they are hatched, but in the end this money was contributed to my retirement accounts and it is 100% mine so its really no different than if I had contributed it myself. I made a conscious decision for taking this job over others and the retirement package was one of the reasons and I think I should be able to count those contributions.
Now to address me falling short. This certainly was not because I couldn’t reach my goal, its sort of that I decided reaching the goal wasn’t as important as saving for our dream house. As much as I like to go on and on about saving for retirement and how buying houses may not be the best financially for some people (wow had some foresight there) as was pointed out to me so eloquently by Doug in this post – you have to balance long-term savings vs spending some money now and enjoying life today. While this may sound goofy as I’m forgoing one savings to save for something else, I sort of view saving for a house as a short-term lets waste money on something and enjoy life now thing versus anything that would be smart financially. We already have a house it suits us fine and there is no reason we could not live here the rest of our lives. We just want something bigger and better and one of us has some crazy ideas on ways to waste money 🙂
So while I fell woefully short of my intended savings for this year – in the last 2 years I’ve been able to save $35,000 for our new house. In fact an automatic deposit today went to our house fund for $1,175 which ironically would have put me right at $100,000 if I had directed it to our retirement savings instead. So all in all while I feel some disappointment for falling just short of my goal – I do feel very good about where we sit financially right now and think our retirement savings is very much on track. The last two caveats I will throw in here are that originally the goal stated Dec 31 of the year in which I turn 30 which I will easily get (I changed the goal about a year ago when I thought the goal was getting too easy) and I also have $8,382 of contributions that I am not counting because they are not 100% vested until Jan of 2010. So I guess depending upon how you look at it I may have actually met my goal. Like I said this wasn’t rocket science I just wanted to make sure I was headed in the right direction and I feel very much so that I am.
My retirement nestegg report for this month – funny how people say the economy is horrible and you’d be an idiot to put/keep money in the stock market today and yet I’m very close to nearing an all-time high for my retirement nestegg. Had I listened to the naysayers and took my money out when things were ugly I’d be sitting on $55,000 in the bank earning next to no interest. Instead just 6 months later I’m sitting at nearly $89k 🙂 The stock market is for the long-term and you should never react to short-term fluctuations (talking years here) in the market. If you can accept the good returns when the market is humming then you have to also be able to accept the poor returns when the market is not. They key is to always stay in the market if you want to create any kind of long-term wealth accumulation in the market.
Traditional Rollover IRA – $10,013.28 (+12.32%)
My Roth IRA – $28,279.91 (+6.56%)
Wife Roth IRA – $15,786.60 (+10.71%)
Current Traditional 401k – $34,740.08 (+13.77%)
Roth/Traditional % = 49.61% (tax free)
Total Retirement Nest Egg $88,819.87 (+10.68%)
My retirement nestegg report for this month –
Traditional Rollover IRA – $8,914.80 (-7.67)
My Roth IRA – $26,538.91 (+1.36%)
Wife Roth IRA – $14,259.01 (+0.50%)
Current Traditional 401k – $30,536.53 (+1.71%)
Roth/Traditional % = 50.84% (tax free)
Total Retirement Nest Egg $80,249.25 (+0.25%)