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I’m a 31-year-old woman who just completed a career shift out of corporate America and into academia. I worked for a large corporation for about four years and saved for retirement during that time, but I put my savings on hold while I was in grad school. Luckily, I accumulated no debt, but I took a very reduced salary.
Now, I’ve been lucky to land my dream academic job making $120,000 a year and I have tons of opportunities for retirement savings but am not sure where to turn. From my corporate days, I have about $150,000 saved in a 401(k) , which I can no longer contribute to. I’ve also made sporadic contributions to a Roth IRA, totaling almost $30,000. Both of these accounts are invested in mutual funds targeting a retirement date in my 60s.
My current job doesn’t pay into Social Security but there are several other ways to save for retirement. I’ve signed up to contribute 8% of my salary (the maximum allowed) to a retirement savings account and also contribute $1,000 a month to a 403(b).
I recently learned that there is yet another option: a deferred compensation plan. I haven’t opted in to that, but I’m wondering if I should. And/or should I keep maxing out my Roth IRA?
My husband and I try to be smart with money. We have about a six-month emergency fund, and we have no debt other than our mortgage.
However, we did just buy our dream home and have a small child, so our mortgage and childcare costs are a bit of a stretch at the moment. We aren’t saving much, nor are we doing things we hope to do in the future (family vacations, nice meals out, etc.).
If I were to continue to pay my 8% retirement savings, $1,000 to my 403(b), and $500 a month to my Roth IRA to max that out, I’d be contributing about $2,300 per month to retirement. We can do it , but it’d be awfully nice to have some of that money to spend now instead. I don’t plan to retire early (see above: dream job!!).
Do I really need to do that much? Do I need to do…
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