Time to share how I’m doing on the savings side of personal finance, specifically my retirement accounts. I last shared an update back in January based on the account balances that I had at the end of December. With my student loans finally being paid off, saving has now become my personal finance priority. Taking advantage of retirement accounts and the tax savings that they have to offer is an important part in meeting those savings goals. I’m hoping that by trying to max these accounts out it will bring me closer to my goal of financial independence. This snapshot should hopefully give a better picture of that!
Here is how the balances for my retirement accounts look after another 5-6 months of contributions and market ups and downs:
It’s been an interesting few months, with the market steeply declining during the first few months of 2016, but showing some recovery over the past few months. Essentially this has allowed me to break even with a slight gain in my investments. The rest of the changes have been increases in my contributions towards all of the accounts. You may have also noticed that I’ve cracked the $50,000 mark towards my retirement savings which feels good. I’m not sure if I’ve written about this or just had it as a mental goal, but I wanted to be able to hit $100,000 before the age of 30. At this point in time it looks I’ll be able to crush that goal!
The past two months I’ve been able to contribute $2400 towards my Roth IRA, and I’m hoping to max out my 2016 contributions by the end of July. You can see just from the change that only around $200 of that was due to the market/dividends with my contributions dominating there. I’ll continue to contribute towards the $5500 limit as the month goes on.
For my 401k I’ve been steadily contributing 8% of my salary towards that account with my employer contributing a 3% match (the maximum they will contribute). After paying off my student loans I increased my contribution amount to 10% of salary, but that has only allowed a single pay check to take advantage of that increase. I expect to see a bigger difference in my next update as that will consistently have the 10% contribution rate. I’ve actually considered raising that amount even more in the coming months, because once I max out my Roth IRA I will mostly be just banking money into my checking and savings accounts. It seems like a smarter decision to decrease my taxable income using my 401k as opposed to opening a taxable investment account at this point in time.
My pension continues to see good increases as well, with my employer contributing 3% of my salary to my pension. This is not a 3% withdrawal from my salary, but essentially a 3% raise that goes directly into the pension instead. I also earn a fixed interest rate that is based of the current LIBOR rates. So regardless of the market, my pension will continue to make pretty stable increases.
I think going forward I may be ‘retiring’ the retirement accounts post and just creating an overall net worth update once a month since the student loan posts will now become a thing of the past. This should hopefully allow me to keep a closer eye on my savings and then in turn share my progress with you every month. I’ll have to work on the spreadsheets to see how exactly to put everything together, but I don’t think it will be too difficult to do. It’ll also help in giving me a quick overall picture of all my accounts in a single place. Look out for those posts starting to be published in June!
Image Source: Anders Jilden @ Unsplash