With a lot of planning, this may be us in two decades! Via Shutterstock
My husband and I have been thinking a lot about our net worth and I’m tempted to share the figure with you. Should I?
We’re both big savers – mostly out of insecurity that we won’t have enough money someday – but I’ve never shared how much our savings add up to. With anybody.
Part of the issue is privacy, and part of it is the fact that we don’t have a comprehensive retirement plan. This is where you come in. I feel like if I shared our net worth I’d get a lot of feedback on how to go about fashioning a comprehensive retirement and savings plan. Which is part of our insecurity.
How much do we need to save? How should we be investing it?
Last time I checked, we are saving 26% of our income.
That’s a lot, right?! Like I said, we’re both driven to save from deep insecurities that we will run out of money. (Feel free to provide your own pop psycho analysis of that!) And we both try to spurn commercialism as much as possible. (One exception being that we love to eat out.)
So how are we saving?
We max out our ROTH IRAs, which is $5,000 a year. Hardly enough to retire on. We both contribute a few thousand dollars a year to our 401k plans (mine’s actually a 429 plan because I’m self employed). We own our home, so we are building equity in our home each month. And we set up 529 college savings plans for our children – which won’t contribute a dime toward our own retirements, so I’m not sure if we should include this in our net worth calculation. We have a few other small investments.
How much do we need to save for retirement?
My husband says $2 million. I say $1 million. That’s a big discrepancy. I’m in favor of the smaller number because it means we can retire earlier, even though we’d have to live on less. He’s adamant that we need to save $2 million for retirement because if our portfolio performs poorly, we’ll be screwed with anything less.
How much will you spend in retirement?
The answer lies in how much you project your retirement expenses to be and how lavishly you want to live in retirement. Are you willing to put in a few more years of work in order to live more comfortably later on?
I’ve heard you can base your monthly retirement expenses on how much you currently spend, minus some if you will have paid off your mortgage and be living rent free. Or you can go the harder but more thorough route and estimate your monthly expenses in retirement. If you do the latter, the big question is how much heath care will cost. Will you purchase a long term care policy? Will you get it free through your former employer? Will you rely on Medicare?
Getting back to revealing our net worth…
When I think about my net worth, it brings up a lot of difficult questions. Which is why I shy away from thinking about it. Revealing my net worth to you will force me to face – and answer – a lot of these questions. Right now it feels safer to not have answers. Because there are no real answers, just estimates of how much we need to save, how our portfolio will perform, and how much we’ll actually spend in retirement.
Welcome to Bargain Babe! I’m Mara, and I’m so glad you’re here. I am an obsessive bargain hunter and penny pincher, and I am determined to live a full life without EVER paying full price.
Without doing any calculations, I think hubby is closer. Two major reasons come to mind, including inflation and the likely length of retirement these days, even if you do remain in good health. I have money insecurity (for the future) also and have a good chunk saved, and my husband (who has a more “money is for enjoying life” attitude that has been good for me) has the maximum 401k contribution taken out of his paychecks before he is tempted to spend any of it. However, I’d still like to meet with a financial advisor to make sure we’re maximizing the best of both our inclinations 🙂
@Julie Hills If you think hubby’s retirement goal of $2 million is closer to what we’ll need than my estimate of $1 mil, that means a lot. You are one of the most frugal people I know! And an excellent saver. Sigh, that means we have a LOT more saving to do. Our goal is to retire in our late 50s (I know 55 is out of question). But the downside to retiring early is that your savings have to last that many more years. Hmmm…maybe I’ll plan on going part-time in my 50s, then full retire in my 60s.
Oh, also, I don’t think you need to reveal the number to have these conversations here and have to ask yourself hard questions. The people who comment will all have different priorities and lifestyles and even though well-intentioned, their advice based on seeing a number may not fit your situation, so I think it’s fine to keep it between yourself and your financial advisor, who is taking all that other stuff into account with your goals.
@Julie Hills I agree. I can pose questions and challenges here while not revealing my net worth, but talking more generally about our savings and our goals. My financial advisor is pretty hands off (he makes recommendations but doesn’t have a total overview of all our accounts) while my husband’s advisor is pretty involved.
What are your ages? That would be more important than the amount at this time.
@John Good point. We’re both in our mid-30s.
I don’t think you need to reveal your net worth…just telling us that it’s either $1 million or $2 million is enough info for people to give their opinions. I think $2 million would be a safer bet, or as close to $2 million as you can come. $1 million used to be alot of money, but these days……..it can go very fast!!
@Michelle Ventresca That is certainly true. $2 million just seems like so much money! I think that I’d have a lot more free time in retirement, so I would be able to do more things myself, like repairs, making decorations, making meals and food staples, etc. THough with all that free time, it would also be tempting to shop a lot!