How am I doing?

[Midwestpeds]

Hi,

long time reader of WCI first time poster. Was inspired to write this after hearing an older wci podcast episode with an academic neonatologist.

I am a 38 y/o pediatric sub specialist working in an academic setting with 80%clinical and 20% research. I am about 3 years out of fellowship and make 250 k and my spouse in a non-medical position makes 130k. We have 2 kids who are less than 10.

Current savings plan
mine
- max 403b
- max 457
- 10% of my income as employer contribution to 403 b
- BD Roth max
Spouse
- max 401k
- 3% employer match
- BD Roth max
Others
- max hsa
- 1500$/month in a state 529 plan
- 1500$/month in a taxable brokerage

insurance
Mine
- term life for both (mine - 3m, spouse -1m)
- disability (employer + guardian)

loans
- home - 600k out of a 680k home at 3% fixed rate which is now worth 770k.
- no other loans

current savings
- tax deferred - 250k
- taxable - 50k

current spending
- we seem to spend everything other than what we save per the plan above.

Asset allocation
90% stock
index low cost mix of entire market and international with a little bit of reit.

let me know if there are scope for improvement or any other suggestions

Thanks

[JBME]

this all seems pretty reasonable to me. House is reasonable, not other debt. Maxing retirement plans. Are you saving at least 20% to retirement? How long have you been doing this? 3 years? What was your savings like before that? Your current savings of $300k seems pretty low to me considering your age....that's the thing to critique but that's more a factor of past behavior rather than current and future. Were you paying off student loans? I have to assume so. Keep contributing at least 20% to retirement (maybe dial back putting so much in the 529s and put it towards brokerage instead) and you'll get those balances up to a nice number within 10 years or so

[Tim]

“Your current savings of $300k seems pretty low to me considering your age....that's the thing to critique but that's more a factor of past behavior rather than current and future. Were you paying off student loans? I have to assume so. Keep contributing at least 20% to retirement”
(Employee + employer contributions)/ (gross comp+ employer contributions) = contribution rate. This should be 20% or greater for retirement at 65. (Excludes 529’s).

You and the spouse can look at it this way:
Gross-taxes-retirement = spending
If you want to “catchup” or retire earlier, the only solution is to up your retirement savings rate from less spending. 20%-30% are reasonable retirement savings rates.
I cannot tell nor should you be concerned with the market returns (balances). You can only control the savings rate.

[fatlittlepig]

Can u live off your salary and save/invest hers.

[Nysoz]

I think you're doing pretty well. $380k salary, save 20% = $76k a year saved x 3 years post fellowship = $228k.

It would seem that spouse salary through training has been used for paying off other debt and spending.

Overall, you seem like you got a later start in life with your career. So to make up for it, you should try to save more than the usual recommended 20% if you can.

[JBME]

now that I'm more awake I've done the math. It seems like you're saving 21%, without including the HSA and the employer match. So it might be a bit higher like 23%. I know college is probably closer than retirement but I don't consider 529 savings as part of retirement and neither should you. I'd maybe put $500 in those 529s each month and $3500 in taxable each month, unless that'll lead you to pay much more in state taxes, which I'm guessing won't make a huge difference

[nephron]

Everything looks pretty good to me. You are saving a lot in your 529 plan, it maybe reasonable to redirect some of that towards paying off your mortgage. If you do not have a mortgage payment, you can probably cash flow more of what you will need for college and you will be more financially secure should anything happen to your income (if you both have a drop in income for whatever reason, you will probably qualify for some amount of financial aid).

[fatlittlepig]

U are late to the game and have skimpy savings. Ramp up the savings.

[jbmitt]

DW and I are similar ages to the OP with similar combined incomes and family units. She didn't do a fellowship, so we've had the benefit of a few more years of attending income to get loans aggressively paid down and increase our savings. I think that you're set-up well, and just need to follow your plan. As you you reach your goals, earn bonuses, etc, I'd encourage you to try and up your savings rates. I periodically review our autopay subscriptions/memberships/recurring bills to make sure that we're getting the value that we're paying. We're not cheap, but make sure our spending reflects our goals.

As a comparison, we've crossed (and barely remain) across the two comma club.

[Midwestpeds]

Hi all,

Thanks for the advice. We definitely got a late start career wise, and both our salary was actually lower the past 3 years. The 529 contribution, based on VG college savings calculator would pay for full tuition for both kids in in-state college, and maybe 1/2 of private school. We plan on not changing the 529 contribution. However i would like to contribute more on top of it to our savings rate (retirement) and maybe cut back on spending. Would it be more prudent to say pay 1500$ towards the mortgage in addition to the above or 1500$ more towards the brokerage (total of 3000$).

[Tim]

Two metrics :
•Retirement savings rate
•Wealth Accumulation Rate
https://thephysicianphilosopher.com/...ecree-30-rule/
The first is purely how you allocate income, behavioral.
The second measures the results, including market results and other priorities like paying off student loans.

[wideopenspaces]

Hi all,

Thanks for the advice. We definitely got a late start career wise, and both our salary was actually lower the past 3 years. The 529 contribution, based on VG college savings calculator would pay for full tuition for both kids in in-state college, and maybe 1/2 of private school. We plan on not changing the 529 contribution. However i would like to contribute more on top of it to our savings rate (retirement) and maybe cut back on spending. Would it be more prudent to say pay 1500$ towards the mortgage in addition to the above or 1500$ more towards the brokerage (total of 3000$).

Given your age and current retirement balances I'd definitely focus extra money to the brokerage account. The home interest rate is so low I'd be in no rush to pay that off early.

[Nysoz]

Yeah, paying off a 3% loan doesn't make any sense in this current environment. Heck, buy ibonds and pocket the 6.62% difference.

Contribute more towards retirement in the taxable account.

[DoctorT]

You’re crushing. Keep it up.

[Anne]

Hi all,

Thanks for the advice. We definitely got a late start career wise, and both our salary was actually lower the past 3 years. The 529 contribution, based on VG college savings calculator would pay for full tuition for both kids in in-state college, and maybe 1/2 of private school. We plan on not changing the 529 contribution. However i would like to contribute more on top of it to our savings rate (retirement) and maybe cut back on spending. Would it be more prudent to say pay 1500$ towards the mortgage in addition to the above or 1500$ more towards the brokerage (total of 3000$).

Do you know what you spend on—I.e. do you budget or track your spending. It’s a lot easier to spend less once you have a solid idea of what you are spending your money on. Then you can decide which spending brings value to your life and which can be dialed back.