I’m 36 years old. I have about $53,000 in a money-market savings account. I keep anywhere from $1,000 to $2,500 in a checking account. I have about $290,000 in my retirement. I have a wife who has had no job for four-plus years. We both agreed that she would raise our 4-year-old as a stay-at-home mom. I’m not complaining.
I only make about $62,000 a year, and took a pay cut for a better career. I used to make $79,000. I will eventually make more once raises come in. I own everything except our house, on which I still owe about $54,000. I have no debt, and I only purchase what we can afford with my paychecks. I use credit cards for everything, get 1.5x cash back, then pay it off in total every month.
“‘Should I put her money in a 529 college plan or keep it rolling over in a CD?’”
I put $100 from every paycheck into my daughter’s savings account, a CD with a decent interest rate. She has about $12,000 saved up already. My wife has a retirement account with about $45,000 to $50,000. I haven’t checked it lately. My credit score is 847; my wife’s is 799. I feel like I’m behind in the savings and retirement game.
I was putting the maximum IRS deferral limit into my 401(k) until we decided that my wife should quit, then I dropped it to 5%. I’m not saying I feel behind because my wife has no income. If we need money, I can work overtime or she can get a job. She will get a job once our daughter starts school. I plan on working until 67.
Am I doing it all right? Where can I improve? I want to live comfortably when we retire, but I also want my daughter to have the life I never had as a child. Should I put her money in a 529 college plan or keep it rolling over in a CD?
Father, Husband & Saver
Dear Saver,
You’re doing more than OK. You’re ahead of the game. You have already saved more than four times your annual salary, and you haven’t even hit 40 yet. Most people your age are playing catch-up, trying to make sure they can pay rent and make it to the end of the month without going into the red.
The average balance for a 401(k) in the U.S. is approximately $129,300, according to Fidelity Investments; for an IRA, it’s $134,900. And get this: Roughly one-quarter of Americans have NO retirement account, according to the Federal Reserve, …….