According to an article published on The New York Times website, people between the ages of 30 and 34 should have a retirement savings equal to half their yearly salary. That means people making $50,000 a year should have saved as much as $25,000 for retirement by the time they reach 34 years old.
At the present time, my husband and I are falling short of our retirement savings goal, but we are changing things up to solve that problem. In an effort to find a way to save for our retirement and emergencies, my husband and I decided to ditch our 401(k) and put our money into liquid savings. Here are the changes we've made, and how we are saving now.
Putting 401(k) on hold
My husband began contributing to a 401(k) fund not long after starting his current job. Over the years he tweaked the percentage of his salary that was allotted to his 401(k) until he ended it a little over a year ago. At the time he ended his 401(k) he was contributing 10% of his bi-weekly salary, which was around $200.
What we are doing to save now
After sitting down and looking at our monthly expenses, we determined we needed to have at least $10,000 in a liquid savings account just in case an illness, job loss, or some other emergency that landed us in a financial bind. That $10,000 would cover all our expenses for six months while we recovered. Some of the things it would cover are;
- Mortgage: $500
Auto: $310
Electricity: $200
Water: $50
Food: $250
Gasoline: $200
Credit card: $60
Wireless phone: $70
Cable and Internet: $80
We are currently saving around $100 a month toward this emergency fund, and it's money we do not touch.
We are also saving money in an interest account for the future. We are contributing a minimum of $100 a month to this account; however, that isn't the only money going into that account. As a frugal shopper I look for ways to save money on everything we buy, and I recently started putting 50% of that money into our retirement savings.
Admittedly, my husband and I should have done better with saving money in our 20s because now in our very early 30s we have saved far less than we should have. We currently have around 25% of what we should have in our retirement savings, but we are confident we will reach our goal if we are diligent with our saving efforts.
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