Retirement Accounts Update – Mid 2015

It’s the time of the year where I provide you with an update on how my retirement accounts are doing. So far I’ve just kept this post to twice a year updates, but I think I’ll eventually convert it to a monthly net worth progress once my student loans have been paid off. The last update I did leave you off with was at the end of 2014 which had me around $31,000 stashed away in my retirement accounts. The market looked like it might have been peaking recently, but it seems that was only a momentary pause for now. The S&P 500 has remained relatively flat the past few months, only dipping up and down. Overall in 2015 we’ve seen gains and I think my portfolio reflects that. For the time being, most market fluctuations will be outweighed by my contributions though.

So about 6 months ago when i gave you this update, I was at $31,000 total between my accounts. In those 6 months the progress has been positive in all three accounts and here is where I stand now:

I’ve hit $40,400 saved up and increased my savings by almost $9000 in just 6 months! I know that these huge gains can be temporarily erased if the market does start to change, but it’s still cool to hit another little milestone. The other good news is that I’m now fully vested in both my company’s 401k and pension, so all that money is available to me no matter what now. My plan all along had been to reach full vesting, but it brings peace of mind to know that it’s actually occurred now.

For my 2015 contributions to my Roth IRA, I’ve made $2,200 so far so the rest of the change in that account is strictly gains from the market. I plan on contributing the remaining $3,300 over the course of the year to hit the $5,500 max that is allowed. With the recent set back from my car accident this may prove to be a little more complicated than I originally thought but it’s a priority for me.

You can only contribute $5,500 each year, and if you miss it – you can’t really go back and recover. I hope that my progress shows you just how helpful it is if you start saving in your 20s. The IRS does allow catch up contributions at a later age but you also miss out on years in the market. Even though returns are not guaranteed in the market, I think that through compound interest I will come out ahead. The money I will make in the stock market will eventually trump the guaranteed return of 5.49% I get from paying off my student loans. At least that’s the bet I’m taking right now!

Both my Roth IRA and 401k are still fully invested in low-cost index funds. Right now they are in “target retirement funds” which essentially does the balancing for me. Both of them are around 90% in stocks and 10% in bonds which I feel comfortable with at this age. My 401k does not have any low-cost options for me to create my own portfolio, so this is the best option. For my Roth IRA account to take advantage of the lower expense ratios, I would really need more money in the account. For now this is a simple and painless way to manage my money, and I know I’m not getting taken advantage of with outrageous fees.

So overall I’m thrilled with being able to save $40,000 in just 3 years since I’ve started working. When I entered the workforce I barely had any knowledge of retirement accounts or how to go about saving money other than just watching it pile up in my savings account and earn 0.5% interest rate! If the market cooperates and I’m able to contribute that $3,300 in the next few months I think I might be able to close out 2015 close to $50,000.

Image Source: Siyan Ren

4 comments

  1. I think it’s great how much you’ve been able to pay down your debt and build up your retirement accounts in the last 2 years. Based on what you’ve blogged you give your parents $100/month for rent. They can’t possibly feed you for that much, it probably costs $200 to $300 a month for your food depending on how frugal they shop. If you add that up for 2 years that’s $4800 to $6000 they could have used to pay down their debts or build up their retirement plans. I don’t mean to be mean about it, just wondered if you had thought about that. I do enjoy your blog.

    1. Thanks for reading and I appreciate the comment, and you do make a good point. At this point I’m probably just subsidizing the actual cost to live here when it comes to food, water, electricity, etc. because I do pay them $100 a month for “rent”

      I’ve tried to help out in other areas by helping them reduce their phone bill, and recently the cable bill as well (nobody actually watched those extra channels and we got the promo price for the basic package for a year now too). Both the showers in the house now use 1.25 GPM showerheads, we’ve slowing been converting to LED light bulbs. We also added an insulating blanket to the hot water tank since it’s pretty old and wrapped the exposed hot water pipes in the basement as well. My parents said the bills this year were lower even with the record cold we had up here. So hopefully they do appreciate the savings just as much as any increase in income!

      I think I will discuss increasing the amount I give each month for rent though as a small increase won’t hurt much and should help them a lot. They’re already helping me a ton by giving me a huge discount based on the price of rents in the area!

    1. Yeah I do help with the chores around the house too: raking leaves, shoveling snow, cutting the grass, laundry, etc.

      The next thing I’m trying to get them to do is take a defensive driving course to save money on car insurance now. But I still think I will increase the rent payment, it feels nice to help them out after all the years they helped me out.

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