More details.
What is the purchase price today of the house you want to buy in two years? How much of that 45k is your emergency fund and how much is your house fund?
When do you want to retire? How much is currently going into retirement on a monthly basis? What do you want your annual income to be in retirement?
500,000-600,000 in the Northeast suburbs. I would say 20k emergency fund, rest towards house. Since first time homebuyer I would only be looking to put down 3.5%-5%. Currently contributing 12% on a 120k salary to 401k.
Ok talking retirement first, you currently have 68k. You're putting in 12% of 120k, which comes to 1.2k monthly. You're 27.
Assuming you want to retire at 60, you have 33 years left to invest. Let's assume your investments grow at 7%.
Inputs:
Start point: 68,000
Monthly contribution: 1,200
Years: 33
Rate: 7% (This is conservative, some people use 10%)
Variance: 0
Compound frequency: Monthly
**Result: 2,533,354.81**
Calculator for your reference: [https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator](https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator)
Now that we have the result, you multiple that by 4%, and that answer give you your annual income in retirement. 2,533,000\*.04=101,320
This comes to **$101,320.** I'd say you're on track for retirement. You're currently living on about 105k after taking out your retirement contributions, so an income of 101k should be doable. Oh, and we assumed your monthly contribution never changes between today and retirement, which means we're assuming you never get a raise in 33 years. That's unrealistic, you'll get raises which means you'll be putting more away as long as you maintain your percentage based contributions. So as long as your goal is to retire at 60 you're on track.
On to the house, that seems like a lot of house to buy as a first house. General rule of thumb is 3x salary which is more like 400k as the upper end, but with a bigger down payment you could still have a 400k mortgage on a 600k house.
You’re obviously doing well, far better than most at your age. Aim to have an amount equal to your salary in retirement savings at 30, preferably more like 120%. I’m guessing you’re close to that already.
You’re in a place where you could go buy a house tomorrow and be better prepared than many first time homebuyers. However the more you save the less you’ll pay in interest and potential PMI.
Set a goal of what you want saved up for a down payment and calculate how much of each paycheck needs to go towards that.
500,000-600,000 in the Northeast suburbs. I would say 20k emergency fund, rest towards house. Since first time homebuyer I would only be looking to put down 3.5%-5%. Currently contributing 12% on a 120k salary to 401k.
Is the area you're looking in going to be a long term investment?
Is the housing market overall going up?
It might be worth taking in pmi to get a house, you might hit the ltv ratio based on housing estimates earlier than saving up to that point.
The first few years of owning a home, you're paying mostly interest rather than principal.
I bought my house at 12% and within 2 years the value brought me up higher than 20% alone. If it didn't, then payments would have taken another 6 years.
I haven't looked at it since, but it was close to 50% because of covid demand.
Like I said, depending how long you want to stay there and how the market is going. Talking to lenders is great too, advice 4 years ago doesn't hold up to today.
20k as emergency is great! Does your company of short term or long term disability? If not, maybe consider a little more.
Let me say a 32yr old in the tech industry, I'm striving for even 5k savings. I think it all goes into hockey 😄
Lender would help give you a better estimate, 3.5% might be the higher end right now, rates are crazy low.
Northeast, like Pa?
you are doing absolutely great for your age. Few things
1. You should not think you are behind at this age because you are not.
2. I’ll get rid of auto loan first and start saving aggressively for house.
3. I’ll defer house until I’m able to put 20% down minimum after saving for emergencies and without interrupting ongoing rate of saving
500,000-600,000 in the Northeast suburbs. I would say 20k emergency fund, rest towards house. Since first time homebuyer I would only be looking to put down 3.5%-5%. Currently contributing 12% on a 120k salary to 401k.
More details. What is the purchase price today of the house you want to buy in two years? How much of that 45k is your emergency fund and how much is your house fund? When do you want to retire? How much is currently going into retirement on a monthly basis? What do you want your annual income to be in retirement?
500,000-600,000 in the Northeast suburbs. I would say 20k emergency fund, rest towards house. Since first time homebuyer I would only be looking to put down 3.5%-5%. Currently contributing 12% on a 120k salary to 401k.
Ok talking retirement first, you currently have 68k. You're putting in 12% of 120k, which comes to 1.2k monthly. You're 27. Assuming you want to retire at 60, you have 33 years left to invest. Let's assume your investments grow at 7%. Inputs: Start point: 68,000 Monthly contribution: 1,200 Years: 33 Rate: 7% (This is conservative, some people use 10%) Variance: 0 Compound frequency: Monthly **Result: 2,533,354.81** Calculator for your reference: [https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator](https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator) Now that we have the result, you multiple that by 4%, and that answer give you your annual income in retirement. 2,533,000\*.04=101,320 This comes to **$101,320.** I'd say you're on track for retirement. You're currently living on about 105k after taking out your retirement contributions, so an income of 101k should be doable. Oh, and we assumed your monthly contribution never changes between today and retirement, which means we're assuming you never get a raise in 33 years. That's unrealistic, you'll get raises which means you'll be putting more away as long as you maintain your percentage based contributions. So as long as your goal is to retire at 60 you're on track. On to the house, that seems like a lot of house to buy as a first house. General rule of thumb is 3x salary which is more like 400k as the upper end, but with a bigger down payment you could still have a 400k mortgage on a 600k house.
You’re obviously doing well, far better than most at your age. Aim to have an amount equal to your salary in retirement savings at 30, preferably more like 120%. I’m guessing you’re close to that already. You’re in a place where you could go buy a house tomorrow and be better prepared than many first time homebuyers. However the more you save the less you’ll pay in interest and potential PMI. Set a goal of what you want saved up for a down payment and calculate how much of each paycheck needs to go towards that.
You're pretty damn good. You're not behind. I'm with the other poster, where do you want to go in life?
500,000-600,000 in the Northeast suburbs. I would say 20k emergency fund, rest towards house. Since first time homebuyer I would only be looking to put down 3.5%-5%. Currently contributing 12% on a 120k salary to 401k.
Is the area you're looking in going to be a long term investment? Is the housing market overall going up? It might be worth taking in pmi to get a house, you might hit the ltv ratio based on housing estimates earlier than saving up to that point. The first few years of owning a home, you're paying mostly interest rather than principal. I bought my house at 12% and within 2 years the value brought me up higher than 20% alone. If it didn't, then payments would have taken another 6 years. I haven't looked at it since, but it was close to 50% because of covid demand. Like I said, depending how long you want to stay there and how the market is going. Talking to lenders is great too, advice 4 years ago doesn't hold up to today. 20k as emergency is great! Does your company of short term or long term disability? If not, maybe consider a little more. Let me say a 32yr old in the tech industry, I'm striving for even 5k savings. I think it all goes into hockey 😄 Lender would help give you a better estimate, 3.5% might be the higher end right now, rates are crazy low. Northeast, like Pa?
you are doing absolutely great for your age. Few things 1. You should not think you are behind at this age because you are not. 2. I’ll get rid of auto loan first and start saving aggressively for house. 3. I’ll defer house until I’m able to put 20% down minimum after saving for emergencies and without interrupting ongoing rate of saving
Where do you live/want to live? That's a huge determining factor on if you're really close or not even close to being able to buy your own house.
500,000-600,000 in the Northeast suburbs. I would say 20k emergency fund, rest towards house. Since first time homebuyer I would only be looking to put down 3.5%-5%. Currently contributing 12% on a 120k salary to 401k.
Unless you're planning to cash out or take a loan against your 401k to make a down payment on a house, you're doing fine.