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Reader’s Question – Is Greg Saving Enough?


Is Greg saving enough?Hey Everyone,

Today we have a question from Greg. His household income increased greatly over the last two years and he has some questions. I’ll try my best, but I don’t have any experience with this level of income. My advice might not be on target so I’d love some help from everyone.

Greg’s Questions

My wife is a physician who finished residency a year and a half ago.  Her salary has increased 700%.  I have also doubled my salary in the last 4 years.  Our total income now stands at about $450k – $500k annually (depending on bonuses). We have paid off all student debt and only have a car loan because interest rates are so low.

Here are my questions:

We bought a house 3 months ago to make sure that we got locked in before interest rates increase.  House cost $670k and we locked in 15 year loan @ 2.5% (we were able to put 20% down).  Based on our income, did we overspend?

(Joe) The rule of thumb is to spend less than 30% of your monthly income on housing. It looks like you’re way below that. The price of the home seems very reasonable for your income as well. I don’t think you overspend. 

Retirement – I have maxed my 401k ($18k + 8% match = $27k) and my wife is able to contribute $50k in her account totaling $77k a year in retirement.  Too much or too little saved?  Other retirement avenues?  We make too much for Roth IRA.

(Joe) That is a really good start, but I think you should save more. Saving more will help keep your lifestyle in check and it will make a big difference in the long run due to compound interest

One way to save a little more for retirement is to use the “back door” Roth IRA. Basically, you contribute to a traditional IRA and then convert it to Roth IRA. The limit is only $5,500 per year so it is not much extra saving.

Another option is to open a taxable brokerage account and invest there separately. You can earmark that account for retirement. 

Have you checked with your employer to see if you can contribute after-tax dollars to your 401k? That would be a great option if it’s available in your 401k.

529 for our son – we contribute $6k to account annually (can only write off $4k in state taxes).  If amount doesn’t cover total college, will pay the rest in after-tax accounts.  Too much, too little?

(Joe) You might want to consider front-loading this account. The 529 plan’s distribution (withdrawal) will be tax-free if you use it for qualified expenses. If you save a larger amount up front, you’ll benefit more from the compounding effect.

We contributed extra to RB40Jr’s 529 for the first few years. Our kid will be 5 in 2016 and his account is worth around $45,000 currently. I’m trying to reach $50,000 and then ratchet back to around $4,000 per year.

After tax investments – we put all of our extra money in the last 18 months towards my wife’s med school debt ($200k) and a down payment for a house to lock in an interest rate before they potentially go up ($150k), so we are pretty much starting from scratch (worked out, however, since the school loan was 6% and I am not aware of many investments that did better than that from late 2014 – 2015).  Right now I have budgeted about 20% of take home pay to after tax investments.  This will yield $50k in contributions annually.  Too much, too little?  Investment allocation strategies?

(Joe) Congratulations on paying off your debt in such a short time. That’s a fantastic accomplishment! Great job locking in a nice rate, too.

$50,000 is great, but you were able to pay off $200,000 in 18 months. Can’t you just switch from paying debt to investing? It seems like your saving rate is going to be reduced quite a bit. I guess you have more expenses now due to the house and kid. I would try to save a bit more than 20%. Is it possible to save 30%?

Asset allocation can be a bit tricky. You never know how much risk tolerance you have until you go through a few stomach churning bear markets. You can check out my asset allocation post. I listed some sites that can help you figure out your asset allocation. You should also consider hiring a good fee-only financial advisor. They should be able to help you come up with a personalized investment strategy.

The most important thing to remember is to keep investing. Don’t panic sell when the market drops.

Emergency fund – how much?  In what type of account (do you consider invested money emergency fund)?

(Joe) If your jobs are very stable, then 3 months of expenses probably would be plenty. I’d keep that in a regular saving account. You need to be able to access your emergency fund easily.

In my opinion, we have done well in fighting off lifestyle inflation (paying off all debts & no other large purchases other than home) and want to continue down that path without hoarding money just for the sake of hoarding money.  After all of the above has been setup, we are still about $7k in the black each month.

Thanks in advance for any insight.

(Joe) Great job on holding off lifestyle inflation. That’s probably the most difficult challenge you will face over the next few years. People tend to ramp up their lifestyle too quickly when they start making better income. Your household income is fantastic so you need to be extra vigilant.

I would invest as much as you can right now to take advantage of compound interest. The earlier you invest, the better off you’ll be in the future. I know it’s been a long road for you to get to this point, but consider investing more while you’re still relatively young. You didn’t mention your age, but I assume you’re in your early/mid 30s. 

Also, you didn’t indicate your net worth, but I assume it’s probably not that high because you mentioned starting from scratch earlier. At this point, you’re way ahead of your age group in income, but probably behind on net worth. I’d focus on building up your net worth for a few years and then ease up on the saving rate. Good luck!

What’s your advice to Greg? Do you think he should save more or am I being too hard on him?

A little more info from Greg

Age – early 30s.

Long term goals – Greg prefer to retire in his mid 40s, maybe in about 15 years. His wife probably will continue to work in some capacity. They plan to have 2 kids.

Current net worth – About $350,000. That’s pretty good for their age. Their net worth should increase tremendously over the next 15 years.

Image credit: by Håkan Dahlström

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Joe started Retire by 40 in 2010 to figure out how to retire early. He spent 16 years working in computer design and enjoyed the technical work immensely. However, he hated the corporate BS. He left his engineering career behind to become a stay-at-home dad/blogger at 38. At Retire by 40, Joe focuses on financial independence, early retirement, investing, saving, and passive income.

For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.

Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.
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{ 38 comments… add one }
  • JC January 15, 2016, 1:55 am

    What a great situation to be in! In regards to your question at the end it’s never a bad thing to save more.

    One other factor that needs to go into the equation is what their long term financial plan is. If they want to be financially independent at a ridiculously young age then that completely alters the required savings and plan going forward than if they both plan to work until 50 or 60 or 70. Although if their current lifestyle is relatively cheap and they can continue to avoid lifestyle inflation then they would probably hit those levels earlier than most anyways.

    Debt free except the house, an excellent income, and avoidance of lifestyle inflation is going to really allow you all to do some great things both financially and otherwise. Congrats!

  • Hubbard January 15, 2016, 4:11 am

    There really isn’t enough information to answer the question. Two things would help.

    First, how much does Greg want to retire on? That number is key.

    Second, how much longer do the two of them want to work? Their saving rate is probably inadequate if they want to stop in five years, but it may well be fine if they’re in their twenties and would like to retire in their forties or early fifties.

    • Greg January 15, 2016, 7:33 am

      Hi Hubbard,

      I would like to retire right around when our mortgage would be paid off – mid forties. Once that expense is gone, I estimate we would live on about $10k a month. Given that information, I would welcome further input.

      • Hubbard January 15, 2016, 11:09 am


        Thanks for the data. If we’re going conservative–by that, I mean a 4% withdrawal rate from your nest egg—then to get $10,000/month, you’ll need $3,000,000 saved up. When you hit that number, you can retire. You might want to play around with an investing calculator, like this one, and see how much you’ll need to save to get to $3,000,000.

        • retirebyforty January 15, 2016, 12:33 pm

          I think $ 3 million is achievable in 15 years if they continue to save and invest a good portion of their income. If his wife plans to work in some capacity, they can also factor that in.
          Here is another good calculator that can take part time income into account.

        • Tyler January 18, 2016, 3:08 pm

          I would recommend you adjust the math to make sure the $10k is free and clear of taxes.

          Also – you’ll need to make some assumption about healthcare costs, if you’re no longer covered by an employer plan to truly ‘retire’.

          So, $3m may not be enough at that point. Just some considerations.

  • connie munoz January 15, 2016, 4:30 am

    how old is this couple, their child, are they going to have anymore children? and when do they want to retire?

    • Greg January 15, 2016, 7:35 am

      I am 33, wife is 31. Likely 1 more child and I would like to retire in my mid forties. My wife will likely continue to work part time.

      Give these answers, I welcome any additional feedback. Thanks.

  • SeaR January 15, 2016, 5:41 am

    Why have a car loan at all? Even if the interest is low, there is still interest and you probably have enough cash to pay it off. Just do it.

    • Greg January 15, 2016, 7:51 am

      For reference car loan is 1.5%. Just curious if you still think worth paying off vs. investing the money that is freed up from it?

      • ravi January 17, 2016, 1:43 pm

        Technically, it’s advantageous to keep the debt, but the net benefit it so small it’s just more convenient to pay it off and be done.

        Assuming a 35k loan, your benefit is the spread between long term investment return (maybe 7%?) and the loan amount. Again, undoubtedly beneficial, but not really meaningful. If you simply pay it off in a few months, and then start investing all that cash flow, you end up in almost an identical place.

        … In 15 years when your net worth is (hopefully) $3m+, you won’t even notice the benefit from keeping some low rate debt.

        If you don’t mind keeping track, then yes, it is beneficial to keep the loan on the car and probably even the mortgage at 2.5%.

  • Money Beagle January 15, 2016, 6:13 am

    I don’t know, I think that buying a $670k house is probably a bit of lifestyle inflation, don’t you think?

    • Conrad January 15, 2016, 7:45 am

      depends where they live. in my area, 670k would buy a 1000 square foot house that needs a complete remodel.

      • Greg January 15, 2016, 7:54 am

        I must admit, the house is pretty big – much bigger than 1000 sqft. However, speaking in terms of % of income, the house we moved from was a greater % of our income at the time of purchase as compared to this house.

  • SavvyFinancialLatina January 15, 2016, 6:49 am

    Astounding saving and salary rate! Congrats! I agree with Joe, front load your savings now, don’t fall into lifestyle inflation.

  • Greg January 15, 2016, 7:30 am

    Hi Joe,

    Thanks for answering my questions. I appreciate the challenges to save further that you propose. To answer some of the questions that I had not given answers to:

    Age: 33
    Current Net Worth: about $350,000 – would be interested to know where that falls for age group.

    Looking to retire in mid to late 40’s, but my wife will likely continue in some capacity well after that.

    • Stockbeard January 15, 2016, 10:43 am

      Hey Greg, your net worth is above average (I think the US Median for households your age is less than $10’000?), but given your level of income that’s not really surprising.

      You say you want to spend $10k a month once you retire, when your mortgage is paid off. That $120’000 a year, meaning you’ll need to have a wealth of approximately 3 millions dollars by then. (That’s assuming both you and your wife stop working at that point).

      You currently have $350’000 and want to reach 3 million in about 10 years. You can achieve that by saving about 170’000 a year in your many savings vectors (401K, brokerage account, etc…). I think you’re completely on course for that. With your level of revenue and your expected expenses you should be able to save 250K a year without even trying.

      • retirebyforty January 15, 2016, 12:39 pm

        I’m not sure if they can save $250k per year without trying. Their tax rate must be pretty high.
        Here is where they are at.
        Retirement: $77k per year
        529: $6k per year
        Money left after expenses: $7k in the black each month = $84k per year.
        That’s around $167k per year they can channel toward investment.

  • Vawt January 15, 2016, 7:50 am

    I think Greg sounds like he is off to a good start. Asking someone to review your plan is much better than asking them to create a plan for you.

    Yes, they could increase the savings rate, but after what they have accomplished budgeting some money for a future vacation would not be a bad idea! You should celebrate your financial victories. I would also say to budget an entertainment fund and use that to prevent large impulse purchases.

    I think they will have a net worth over $1 million in less than 5 years. Assuming they were starting at about $200k with the down payment, etc.

  • Marco January 15, 2016, 7:56 am

    Yea, I’m surprised that after paying off those huge loans and now starting with a net worth of around zero, you went and bought a $670k house with the usual 20% down. The way you describe your finances worries me a bit too. I sense some robotic programming and you need to be more creative than this if you’re going to make it in the long run. For example, perhaps you considered enjoying the moment a bit, renting for a couple years, seeing what happens with your jobs, the economy, real-estate prices and then perhaps buying a house a bit later? Seems you’re moving very fast and maybe that’s your personality. Try slowing down a bit and enjoying the ride. Also, beware of the big salary syndrome, which makes you feel rich when it actually means nothing if you’re spending more than you make. Rock on!

  • Financial Samurai January 15, 2016, 7:59 am

    It’s hard to know as we don’t know their full net worth picture.

    I wrote a post about how many couples are just scraping by on $500,000 a year which got a lot of fanfare he may want to check out.

    At $500,000 a year at what I presume is early 30s (?), Greg should be worth around $1 – $1.5 Million. What is his net worth?


    • retirebyforty January 15, 2016, 12:20 pm

      Their net worth is around $350,000. That’s pretty good, but it could be better. I’m sure they will increase their net worth tremendously over the next few years.

      • Sam @ Financial Samurai January 16, 2016, 4:13 pm

        Honestly, a $350,000 net worth with $450,000 in annual income is pretty terrible. The good thing is that they have many decades to work to get to financial freedom with their occupation.

        • Smart Money MD January 16, 2016, 4:54 pm

          It’s only terrible because Greg’s wife made essentially no money up until recently. I didn’t earn a six figure salary until my thirties. What’s actually impressive is that even though his wife is only 1.5 years into working a real job, they have a combined income of $500,000 and a net worth of $350,000.

          I agree that they actually did have a bit of lifestyle inflation compared to how they probably were living. He is doing fine, although they can likely do a little more to convert the earning potential into net worth.

  • Mike H. January 15, 2016, 8:18 am

    Hi. First of all, good job: you are definitely set up for success. We don’t have specifics about your life or number of children, etc., but I can make some generalizations and you can tell me if they don’t fit your specific plans/needs. For people who have your level of income, debt-free is not necessarily the best way to go; the key is how much your investments are expected to yield in any given timeframe. Paying off debt over the last 18 months was genius, and may continue to be for 2016. That won’t always be the case.

    House: You did not overspend on your house. In fact, depending on where you live, I suspect that a $670k house might be admirable restraint on your part. A 15-year mortgage is aggressive – don’t be afraid to refinance if you can get a lower interest rate at some point.

    Retirement: I’d say too little. Remember that you’re trying to replace 75%-85% of your pre-retirement income with retirement savings. I’m assuming you’re not in your early 20s, that you plan to have more than 1 child, that your lifestyle WILL grow, and that you want to retire early. Also, that you will live a long time and want to enjoy the finer things in life when you’re older. Joe hit the nail on the head: traditional IRA and convert to Roth, after-tax 401(k), and brokerage accounts.

    529: Again, I’d recommend a bit more. Joe’s strategy works pretty well, but I’m assuming your son will be going to a good undergrad school and a good grad school (education level of children are highly correlated with the education level of their mothers), so you’ll want as much tax-free growth in this account as possible. Also, keeping this up over your son’s pre-college life will enhance your tax savings.

    After-tax investment: If by “take-home pay” you mean money that is AFTER 401(k), 529, and IRA deferrals, 20% is a great starting point. But the math here isn’t adding up: if you were able to pay off $200k in debt and $150k in down payment over the last year and a half, you should have considerably more than $50k/year to invest. What did I miss? Also, you say you’re starting from scratch (again, I’m assuming that you’re not in your early 20s), so now’s a great time to pump as much money into the market as possible. Asset allocation is such a personal thing that I won’t make specific recommendations, but for that amount of money make sure you carefully look at investments fees – for you, it will make a significant difference, especially in the first few years.

    Emergency fund: Your wife is a physician, and I know a little bit about all of the insurances you must be carrying, so don’t forget that if she loses her job for any of a variety of reasons you may be receiving an insurance payout. Joe again hit the nail on the head: this depends on how stable your jobs are: 3-6 months should be fine for you. One thing I’d highly recommend is if you’re going to keep your emergency fund in cash, make sure it’s an interest-bearing savings/money market account (you can find 1%+ accounts out there).

    Lifestyle inflation: If you set up the savings rates that you need, you’ll automatically be hedging against lifestyle inflation, so don’t worry if it turns out you have a little extra cash. It’s easy to fall into the trap of constantly upgrading or buying nicer things, without even noticing, so my recommendation is to try to think about what you buy (my weakness is guitars, so I’m still fighting this myself…). Also, in regards to your kid(s), I don’t think there are many people whose childhood regret is that they didn’t have nicer toys. Using your money to create more family adventures will be well-remembered.

    Sorry this got so long. Great job and keep up the good work. If you are still uncertain about your plans or options, don’t be afraid to see a financial adviser. Just make sure that his/her fees are flat-rate or hourly, not based a percentage of assets. Also, have you considered creating a trust for your kid(s)?

    • Stockbeard January 15, 2016, 10:50 am

      “Remember that you’re trying to replace 75%-85% of your pre-retirement income with retirement savings.”
      Mike, that’s a misconception, and blogs like retireby40 as well as other financial blogs try to fight hard against that misconception.
      You don’t have to replace 75%-85% of your pre-retirement income with retirement saving, you have to cover 100% of your post-retirement *expenses*. This is vastly different, because 1) you don’t have to spend 85% of what you make (hopefully for them a household making 450K a year does not spend 390K a year!), 2)People tend to spend less in retirement due to many “work related” expenses dropping down and 3) to counterbalance that, once in retirement there are some expenses you have to include that were not counted before such as health care.

      As a result, the “85% of income” rule has been debunked many times as a random rule of thumb with no link to reality, that only benefits financial advisors.

      In my case, my “pre-retirement income”, post tax, is more than double what I plan to use in retirement. ergo I’ll only need 50% of pre-retirement income. I want to believe that the number would be even lower for a household making 500K a year. (they are basically in the top 1% of income in the US)

      • Mike H. January 15, 2016, 11:16 am

        Stockbeard, I understand what you’re saying and I think that you’ve hit upon a good way to think about it, but I respectfully disagree. First, I never meant that Greg should be planning on $390k/year expenses in retirement (likely higher due to salary inflation). I also disagree that people spend significantly less in retirement: once everything balances out in terms of health care – which you correctly identified as a large added expense – and more importantly the often-overlooked aspect of price inflation, I’d anticipate that most people should plan for a high replacement ratio (my background started in the pension world, so those are the term I think in). Whether people actually do fit themselves into a smaller budget for whatever reason is another story. Finally, I’d strongly disagree with the statement, “the “85% of income” rule has been debunked many times as a random rule of thumb with no link to reality, that only benefits financial advisors.” On an individual level, sure, people an adjust their lifestyles to fit a lower budget, but I’ve seen, managed, and even commissioned/written surveys which almost uniformly indicated that – over a population level – people who plan to significantly reduce their expenses post-retirement run into financial troubles. I’m sure you’re not recommending under-saving…

        If you’ve identified your “number,” then that’s good. I am a little concerned with your backlash against financial advisers (although, reading your blog, I completely get where you’re coming from). Your strategy of keeping to index funds to stay away from the broker/salesman world is admirable.

        Love your blog!

  • Dave in Sunny FL January 15, 2016, 10:37 am

    It could take longer to find a replacement job to match that salary, if you lose the current one for some reason. Be prepared for a stretch without income. Also, trying to replace a specific percentage of your income in retirement will mean that you cannot depend on Social Security to the same degree as the rest of us “mortals.” Congratulations and good luck!

  • Pennypincher January 15, 2016, 1:16 pm

    Joe, you’re right on the money w/advice. What if something happens to one or both of the spouses and income was cut? What if one or both wakes up one day and says to themselves, …What the heck am I doing? I want to do something else. Like open a bakery, or travel long term.
    You’ll have plenty of cash to help pay for tuition when the time comes, besides the kid should be contributing as well, builds sense of self, self reliance, etc. No debt though, unless it’s med school! Many parents say-for grad school, you’re on your own, kid! Oh, and never, ever let your kid know your financial situation/net work/etc. Kids will suck the life and money out of you-and I love kids!
    Remember, more house, more expense to keep it up, taxes, etc. I would not go any bigger. The best you can do is stay there, improve on it if you must, let the value of it grow over many years. A house isn’t the best place to park money. Better invested elsewhere for return on investment. Have a few good plans down for your money- your tax accountant can help. Be careful w/financial advisors, use a fee only one. Check out Vanguard! Get rid of the car loan, pay cash for cars, they devalue as soon as they leave the car lot. Forget the material goods, they take up too much time and effort to maintain, insure, worry about- instead, take great trips w/your family. The family that plays together, stays together. Friends and family are all you really have in the end. Enjoy!

  • AJ January 15, 2016, 5:33 pm

    Greg – great job so far. Lots of good advice here but there is one thing many people are missing. If you do intend on retiring in your mid-40s you will not be able to use money that’s been invested in 401k or IRA (from your statement that your wife can put away 50k per year in retirement I assume that’s a SEP-IRA) accounts until you are 59.5 years old. (there are ways to access that money earlier but the complexity and taxes associated are often not worth it). The reality is that from retirement until 59.5 you will only be living off taxable investments (remember only gains are taxed). That’s not a bad thing but something to keep in mind.

  • Kate January 16, 2016, 4:44 pm

    All I can say is wow-that’s a huge income to be responsible for. I’m just looking into this early retirement theory. I’m hoping to get motivated and start saving more. I’m just starting out and rent is so high in California. But I can’t imagine living anyplace else.

    • AJ January 17, 2016, 4:58 am

      Kate – I totally get your desire to stay in CA. I love it so much I have a second home there (mostly rented out) and plan on retiring in CA. Saving more is a great goal but maybe approach it as not spending as much. Track everything you do spend and ask yourself if you really need what you’re spending on. Best of luck!

  • Jesse Cone January 16, 2016, 7:25 pm

    I’m a 39 year old physician with 3 kids (one with special needs) with a similar take home pay. This is largely my plan (in reference to your questions):

    House: Doesn’t matter for you anymore so forget about it. Done is done. If buy again, however, the more you spend on buying a house, the more you spend on upkeep. (appx. 4% per year from what I have read and experienced- I am on my 4th house thus far). I try to keep mortgage/rent less than 33% of take home pay.

    Retirement: Like comment above mine, if you want to retire before 59.5, you will need to maximize your after tax account. My investing plan is modeled after the “Intelligent Investor” by Benjamin Graham. I buy dividend paying stocks that average a 3% yield. Once the dividend is comparable to my costs, I can work part time (I think it is emotionally it is hard to be a physician and retire). By the way, as a rule of thumb, if you save 50% of your take home pay, you can usually retire after 15 years with similar lifestyle. If a high earner with frugal tastes, even less.

    529 plans: I have two boys who should go to college. I have told them already that they have a “Defined Contribution Plan”. I am not guaranteeing to pay for the their tuition/room + board. I am saving money in their 529 accounts. Whatever is there, they can have. Right now, it should pay for them to go to a public school for 4 years as well as room and board. If they want to go to a private school, they will likely need loans to supplement. If they don’t want to go to college, they can have it in cash (after taxes). Goal is $120K for each by their 21st birthday (junior year of college).

    Emergency Fund: Physician jobs are in demand but there is no such thing as job stability. I am on my second job and working on my third in 6 years. I keep three months in cash and another 3 months in short term Vanguard muni-bond funds that I can liquidate, if needed.

    Good luck.

    • AJ January 17, 2016, 5:03 am

      Jesse – your plan sounds a lot like the book Your Money or Your Life by Joe Dominguez and Vicki Robin. I highly recommend it. One thing to be careful about in your plan is where your dividend paying stocks are held. Held in a tax defered account you don’t pay current taxes on the dividends but held in a taxable account those dividends increase your income. I hold the higher dividend paying mutual funds in my 401k and tax efficient funds in my taxable account. Just something to think about. Best of luck!

  • freebird January 17, 2016, 9:26 am

    I’d say the higher savings rate they can pull off now, the sooner they can stop working if they want to. The ratio to keep in mind is net worth divided by annual expenses, and a higher savings rate will both increase the numerator and decrease the denominator.

    If they save 133k/yr plus their 7k/mon headroom, and pay 140k/yr income taxes (rough guesstimate), then their annual spend can be less than 100k so their net worth target would be 33x of that or 3M in today’s dollars, which they can probably reach in a decade. But if they spend all of their headroom their networth target doubles, and savings rate is cut in half, together this stretches the finish line out to three decades.

    So don’t think of saving to the max as ‘hoarding money’ which seems senseless when it’s coming in so fast. Instead think of this as ‘hoarding time’.

  • Stefanie January 20, 2016, 8:55 am

    For the numbers
    1) 10K a month with a paid for house and college for the kids already funded. Then with taxes and health insurance taken out (25% taxes and 1.5K for health insurance) would leave you with 6K a month. This means you would need 3M saved.
    2) 10K a month (take home) with a paid for house and college for the kids already funded. If you pay 25% taxes on that amount and 1.5/month in health care you would actually need 14K/month which is 3.5M saved.
    Then calculate how much a month you need to save to retire in 10 and 15 years. I would assume a 7% return in the market (which might be high for the next few years).

    But another way to look at it is, not looking at the details, how much do you want to spend each year. We all have our own gut number of what is to much to spend each year. A number that if we go over is wasteful, or can create an entitled heart in ourselves or our kids, or at some point is morally uncomfortable/wrong. I would ask yourself what that number is for your family. Then regardless of what you need to save to reach your goal of retirement in 15 years keep your spending below that.

    Personally I would max out my pretax accounts like you suggested. Take the extra 7k each month and put 3K extra towards the house, 3k in a post tax vanguard account (or similar), and 1 k for long term fun (extra toys, travel, etc.). And pay off your car.

  • susan January 20, 2016, 6:09 pm

    Greg is getting great advice hear at Retire by 40 but may also want to check out White Coat Investor for additional specific ideas geared toward physicians.

  • Chris January 25, 2016, 9:15 am

    Is there any way we could start a similar discussion with someone having a lower income? I would love to give my current financials and see what improvements and opportunities people can give information on. Also, this is my first actual post here. Love the site, have just never posted or commented before. Thanks!

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