How am I doing?

[Midwestpeds]

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.

We have been trying to track spending, and so far reverse budgeting is what seems to work for us. I.e. automatically save from paycheck and then spend the remaining. The biggest item in our spending is the house. Monthly we put in about 3800 (2500 for the mortgage + 1300 for escrow [Home insurance + prop tax]). We just got the house a year ago, so some spending in making it ours as well. On hindsight should have definitely settled for a much smaller house with lesser cost which automatically might have meant less possibility of spending in maintenance/upgrades. But hindsight is 20/20 and we really like the house/neighborhood now and don't want to move since it has become a big source of joy for our family.

Ultimately i have increased our monthly contribution to the brokerage account to 3000$ and will channel any increase in pay/bonus towards this in the future as well.

Thanks everyone in this group, i think it is good to get a frank opinion on where where one stands.

[GIMD]

You are saving 30% of your gross income currently which is excellent. You are heavily tilted towards equity. Is this part of your plan or just how it happens? You may want to consider buying bonds, the popular I-bonds that is paying >9% yield for the next 6 months, to diversify your investment. At this savings rate, you will do great. Welcome to the forum. I am the same age as you and 5 years out, 60% clinical.

[JBME]

you really didn't go wrong with the house. The rule with the house is to not get more than 2x income and you got less than 2x. I know you feel strongly about the 529 but I still would say take some of that and put it in the brokerage instead. You can after all use money from the brokerage to also pay for college when the time comes

[CordMcNally]

You’re in good shape. You’re not too far out of training and your numbers reflect that. Many people here have accounts that have been boosted by great recent long term returns. Just keep on keepin’ on.

[Midwestpeds]

you really didn't go wrong with the house. The rule with the house is to not get more than 2x income and you got less than 2x. I know you feel strongly about the 529 but I still would say take some of that and put it in the brokerage instead. You can after all use money from the brokerage to also pay for college when the time comes

Thanks. I am actually quite surprised by the number of comments on the 529. Do you all think these comments are due to my low accumulated savings ? or is the amount of 1500$/month for 2 kids less than 10 just too much ? This is obviously invested aggressively. But based on the current savings, and 1500$/month, and a 6% return rate i would probably get around 200,000 for each kid tax free for college and possibly post-grad. If they don't use it, it just goes to the grandkids. It also prevents me from tapping into it for other reasons. How is this not a better investment than a brokerage account ? I don't plan on FIRE (Rather possibly close to 58-60) and based on my savings rate, especially now with 3000/month into the brokerage i feel i should be comfortable.

In regards to GIMD's post, i am looking at tapping into the retirement accounts not for atleast 20-30 years. Would'nt an aggressive equity tilt produce the best return in that time frame, even on comparison with i-bonds ? I am also in a pretty stable job, and could potentially bailed out by my parents if for some reason i become bankrupt due to a huge litigation (agree doomsday scenario). Just to say that i might not be selling it in a low.

[JBME]

wrt the 529s, it's a bit of both. I have 3 kids and for now I put in only the amount that gets me the state tax deduction, which is nowhere near enough to pay for their college years, even in a public school. The cost of future college is also unknowable. Tuition cost increases have been quite large over the past 20-30 years. Many think that's unsustainable. Who knows if cost increases will come down in the next 5-10 years. Your plan B is that the money will go to grandkids. Reasonable idea.

There are 3 things I can think of that will help pay for college:
1) 529
2) Taxable brokerage
3) plan for mortgage payoff by the time kid goes to college so it's easier to cash flow.

529s are the most restrictive. So you have to pay some college costs out of your cash flow or brokerage account. You pay LT cap gains instead of ordinary income taxes but not tax free like a 529. But in exchange for paying LTCG you now have flexibility. You can use it for college. You can use it for early retirement (58-60 is still early retirement, if not for the people on this board, certainly for the average person). You can use it to pay off the house. You can use it for anything. This is why I think you should contribute for now to 529s up to whatever gets you your state income tax savings max. Then more to brokerage. Once you've got more in retirement savings then reassess and see if you want to put even more in 529s. The suggestions of today are not the suggestions that might be made 5 or 10 years from now

[Midwestpeds]

To again clarify explicitly that is 750$/kid/month

[CordMcNally]

People can always borrow for college but you can't borrow for your retirement. You probably wouldn't get many comments on it if you had more in retirement savings.

[Tim]

The difference between 529’s and taxable is purely tax.
529’s don’t impact the cost of college (other than the tax benefits). But the uses are bait restricted that you are in essence “gifting” now, not later.
Never to be repurposed for your or spouses benefit. That is based on tax advantages at the state level for you.

[Ghostface Killah]

Current savings plan
mine
- max 403b - 20500
- max 457 - 20500
- 10% of my income as employer contribution - 25000
- BD Roth max - 6000
Spouse
- max 401k - 20500
- 3% employer match - 3900
- BD Roth max - 6000
Others
- max hsa
- 1500$/month in a state 529 plan
- 1500$/month in a taxable brokerage

Those of you saying he’s not saving enough for retirement I’m not sure where you’re coming from. As far as I can tell he and his wife are saving over $100k a year (I added in amounts above) for retirement.

If he continues current contributions until age 60 he will have 5.7M assuming a return of 6%.

How much more is he expected to save?

[fatlittlepig]

i kind of look at it this way: the "maxing out" of the 401Ks, Roths are basically the bare minimum mandatory savings. so from my perspective he's saving 1500 a month. Just my point of view.

[JBME]

i kind of look at it this way: the "maxing out" of the 401Ks, Roths are basically the bare minimum mandatory savings. so from my perspective he's saving 1500 a month. Just my point of view.

obviously everyone is entitled to their point of view but this is crazy thinking in my view. So the $20,500+$6000+employer match isn't anything? It's bare minimum? What if they are doing the mega backdoor Roth? Does that count too, or not really because the person doesn't "see" the money until retirement? This is how people will save way more than they need to (i.e. worked way longer than they needed to)

The OP is saving enough for retirement now. I don't think many people are disputing that. It's clear the OP hasn't been saving enough until recently, which is totally fine. Had other financial priorities (maybe paying off student loan) that were reasonable priorities. From my view I was simply saying take some of the 529 money and put it into taxable instead....not save more in taxable and save the same in 529

[fatlittlepig]

You're not wrong but here's the way I see it: he's 38, household income of close to 400, has 250 in deferred and 50 in taxable, and he's saving 1500 a month. I would step up my game.

[Turf Doc]

You're not wrong but here's the way I see it: he's 38, household income of close to 400, has 250 in deferred and 50 in taxable, and he's saving 1500 a month. I would step up my game.

Or:

Only 3 years out of fellowship, no student loans, saving 30% and plans for a full career. Sounds good to me.

Being 38 with a high income and "only" having 280k is only a problem if theyve had that income for a while, which implies they were blowing it on stuff and not saving appropriately. That doesnt seem to be a problem.

[JBME]

You're not wrong but here's the way I see it: he's 38, household income of close to 400, has 250 in deferred and 50 in taxable, and he's saving 1500 a month. I would step up my game.

I'm not sure it's fair mathematically to say the HH income is close to 400 but he's saving 1500/mo. That's not true. He's saving way more than $1500/month on a HH income of 400. Just doing quick math without taking into account matches, they are maxing out 2 401ks and 2 Roth IRAs, so that's $4,417 per month before you even get to $1500/month in taxable. They don't even see $4417 each month because it's shoved into a retirement account, most of which is still theirs (minus taxes of course). Minimally to make it fairer, you'd need to say HH income isn't 400 but more like $347 and even that doesn't feel right