Smart Couples: Retirement Basket
As part of our reading of Smart Couples Finish Rich, my wife and I discussed our retirement savings strategy. Not rocket science, but I first gave my wife an overview of what we are doing today:
1) Max out my 401k contributions (currently $15,500 for 2008)
2) Regular contributions into each of our Roth IRAs ($500/mo in 2007, planning on upping to $800/mo in 2008)
3) Max out our Roth IRAs at some point before the April 15th deadline
4) Small SEP IRA contribution as much as allowed
My wife left her job earlier this year before we were married and had never contributed to a 401(k) or 403(b) (she was contributing to a state retirement plan). I brought this up as I believe it's critical now, before we start a family, to sock away as much for retirement. I feel that by putting away the money now, we will need to save less for core retirement once we have a family and will have more flexibility to save for a vacation home, early retirement, emergencies, etc in the future.
We discussed that when we get back to the US in mid 2008, my wife is planning on teaching again for ~1 year or so before we start a family. I brought up that this would be a great way for us to sock away significantly more for retirement as we could put as much of her 1 year salary away in a 401(k) as allowed by her employer - perhaps as much as the maximum for both 2007-2008. That would be at least an extra $30,000 we could possibly sock away. Could be tight, but managable.
My wife was receptive and agreed that she should start funding a 401(k), although her preference would be at a more moderate 10% at least initially. This is certainly something we will talk about in more detail once she starts working.
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