Maxing out My Nest Egg!

by Dual Income No Kids on February 3, 2007 · 0 comments

For me looking at those 401k numbers of the maximum amount for contribution always scared me a bit. I remember thinking, geez, I’ll never make it at $200 a month if there are people out there investing $15,500 a year. None the less, I figured little by little was better than nothing at all.

Now I’ve managed to save over $20k in my retirement. I still have a bit of work to catch up with my husband, who has around $80k.

I just recalculated my budget to see what I could manage to deduct. Now I’ll be contributing $1,266 monthly to max out at $15,500. I know it might be boring, but I’m pretty physched about this.

This means that next year I should be well on my way to making great strides in retirement savings. For those of you who might also think that this is boring, keep in mind these benefits:

  • Reduced taxable income. With an income at $60k and a retirement contribution of $15.5k, my taxable income base will be about a third less.
  • Reduced temptation. You can’t spend what you don’t have.
  • Creating good savings habits. Once I’m used to maxing out my retirement I’ll then be able to go on to save for other goals without noticing that the first amount is gone.
  • Setting retirement up for coasting. Some people think that when you are young it is less important to save for retirement. My take is that if James and I both have a nice chunk in retirement before we have kids, we will be better prepared for the financial drain that would result from those little guys.

Plus, my employer contributions to my retirement will go up this year as well. I’m currently getting 7.8% of my salary put into retirement with no strings attached (i.e. I don’t have to contribute anything to get this). This year it will go up another 1% on April fool’s because this is my three year anniversary. It will then go up again when I turn thirty in June, to a whooping 9.5% of my salary. Yes, I know I’m blessed by such contributions from a non-profit feel good job that allows me to travel the globe. :-)

Happy Retirement!

Miel

P.S. James dreamily talked about crusies to Alaska in retirement, but given global warming we are better off seeing the glaciers before they are gone!

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