I am 34 and a full-time college student. My husband is 30 and active duty Army. How much should we be saving monthly for retirement? How much should we have in savings? What percentage of our income should go to savings/investing/retirement? We have 4 kids as well (8,6,4 and 1) what should we be saving for their college funds? I graduate next year and should start work next fall (teacher) so I want to get a handle on this so that when I start making money we spend it appropriately. Thanks! It's great that you have a mind for savings even when your money is stretched very far right now. Going to school while living on 1 income and have 4 kids is very impressive, congratulations on finishing up school soon!
Typically, you should always invest atleast 10% of your income towards retirement. Since you're in your 30s now, if you haven't started saving already you might consider even more than 10% if it's possible. More is always better, but doing what you can is certainly better than doing nothing at all. The 2 of you should consider each getting a ROTH IRA. A ROTH has no immediate tax benefit, but when you withdraw it in retirement it is 100% tax free. Vanguard is the best company to invest with (lowest fees, great track record):
https://personal.vanguard.com/us/account...
Vanguard or the the retirement plan at work are both good ways to go. If the TSP (with your husband's work) matches any funds he puts in, that is clearly the way to go until you maximize the matching, same thing with your own employer's retirement plan when you start working. If they don't match, the ROTH IRA at Vanguard is probably slightly better.
Make retirement savings your first priority. Behind it should be funding college for your kids. College is a lower priority for 2 reasons:
1) Your kids can get very good loans for school (low interest rate, tax deductible), but you cannot take loans to fund your retirement.
2) If your retirement is not well funded your kids will likely have to take care of you when you're old. If they had the choice of having college paid for or having parents who could support themselves in retirement, I'm fairly certain they would choose for their parents to be self-sufficient in their old age.
With that in mind, if you have money to invest beyond saving for retirement you should consider an educational savings account (ESA). This is what I'm using for the kids in my life. It is similar to a ROTH IRA in that it is fully tax free when you use the money as long as it is for education. One great thing about the ESA is that it is transferable between kids... If one kid doesn't go to college, you can move the money from that kid's account to another kid with no penalty as long as it's eventually used for education. Here is Vanguard's page on ESAs:
https://personal.vanguard.com/us/account...
And don't try to fully fund your kids' education, that is impossible in most situations (especially yours with 4 kids). Student loans are a great deal and you should not be afraid to utilize them. Also, look at value per dollar when helping your kids choose schools. Some schools are less expensive but still provide a top notch education.
In both the ROTH IRA and the ESA, for you I would suggest using the 'Target Retirement Funds'. These start out fairly risky (higher return with higher risk) and slowly become safer over time. So it will grow quicker in the early years but when you will need the money soon it will be very safe. Look for the funds called 'Target Retirement 2040' (or whatever year you'll need the money in).
I've found that the best way to save is to do it automatically. Take the money directly out of your paycheck if possible. This way you'll never see the money and won't ever have to consider spending it rather than saving it.
I hope this helps. I wish you the best in your investing future! All of those are GREAT questions....there is not however a simple answer. The general rule of thumb is to always be saving 10% of your current income. This would allow for you to have a safety net at all times for those unexpected expenses...car dies on the side of the road etc.
Now for the things that you mentioned: As to the kids for college, look into a 529 type plan (state sponsored college savings) each state has different requirements and tax treatment but now would be a good time to start funding one.
If you have access to a 401k or a 403b plan (company sponsored retirement plans) max it. even better if the employer will match (at the very least you should be contributing at least all that the company will match, its free money from your employer)
As to total amounts that is much harder to calculate for you specifically. I would suggest seeking advice from an advisor at a financial services firm. Most firms (Merrill Lynch...etc) have trainees who are registered and licensed but are still in a training program. These trainees will gladly sit down with you and your husband and work out a savings and investing plan. The best part is that you don't have to work with them (ie do any business) the trainees are gaining valuable practice and you can see models of what your savings can turn into! easy simple and the best part....FREE! As a rule of thumb that I use, save 10 percent of what you make. It adds up pretty quick if you can leave it alone. With 4 children and the cost of tennis shoes, I know leaving the money in saving is hard. Most employers have payroll deductions that can be set up to go into a savings account. That way you never see the money so you are never tempted to spend it. I know the military has an allotment system in place.
You forgot to include if any of the children are girls you have to pay for weddings along with college.
I would put what you can in savings now and when you finish school and find employment for a few months put in as much of your pay as you can then settle into the 10 percent.
Both teacher and military have pretty good retirement packages so I would save with the goal of helping the children. Another thought, good students get colleges to pay for their education. A good way to save on college funds it to make sure the children do well in school now.. well i will assume a few things if your husband is 30 and in army he is a lifer -- well he will have a good (not great) retirement and heath when he retires so you folks should be putting 5% away for your self and the at least 5% away for the kids educations!!! if you want any more details email me!!! You should be saving at least 10% of your income for retirement. If you can't then save as much as you can.
You should have 6 mos to a year's living expenses in cash accessability.
As to the kids and college, IMHO they should worry about that themselves as you and your husband have to take care of yourselves in retirement. You could always have everyone give the kids money for any holiday in lieu of gifts and put that into a 529 account or college savings plan. How much you save is really a matter of how much money you want for retirement or a rainy day.
I would consider 10% of your gross income to be living beyond your means. 10% of 50,000 would give you roughly $600,000 over 30 years (inflation adjusted) invested. This is not enough money to retire on.
I have always thought to save at least 20% of your gross income. With the scenario above, it would give you a retirement balance of $1.5 million (inflation adjusted). This amount is liveable off interest. You should be focusing on paying off your debts including mortgage BEFORE college for the kiddies.....
Save at least 15% of your income for retirement while paying down big ticket items....unless there is ugly credit card debt or old icky bllls.. | 