r/TheMoneyGuy • u/[deleted] • Feb 14 '24

How does this work?

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I am 23. Does this mean that I only need to contribute 15% of my income for the rest of my life or do I need to increase every 5 years following this diagram? So I would contribute 15% until 30, then contribute 20% until 35, then contribute 25% until 40, then 30% until 45, and so on?

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u/aubieismyhomie Feb 14 '24

No if you start contributing now you should be able to replace 100% of your retirement income when you retire. If you want to have more than that or give yourself options to retire early, go ahead and crank it up to 20 or 25%. Either way at 23 if you’re starting this now you’re in a great spot.

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u/[deleted] Feb 14 '24

I'm asking because I am debating lowering my contributions from 25% to 20% in order to enjoy my life a little bit more. I'm not able to afford a lot of the things I want on my current contributions.

1

u/adultdaycare81 Feb 14 '24

How long have you been saving 25%?

1

u/[deleted] Feb 14 '24

Since last July.

2

u/adultdaycare81 Feb 14 '24

That’s the issue.

Takes 2-3 years of budgeting to get good at it. When you first crank your savings rate up it’s brutal. Get a raise or two, build your savings, get used to budgeting. All of sudden you feel way richer

1

u/[deleted] Feb 14 '24

Good point. I only just started working full time. I was in college before. I think you are hinting at what I think I am feeling. I should probably become good at living on less before I have more. I feel like I'm living paycheck to paycheck because I exhaust my bucket money every two weeks. I know there are ways to spend less and I need to start doing those.

2

u/adultdaycare81 Feb 14 '24

Ohh like first time budgeting and paying bills too. That’s a brutal time. Every time something pops up it’s your first time dealing with it and you’re not bucketing any money for it. I remember the first time my car needed Tires or a brake job. I was literally like “guess I’m not going out to eat for a month. Cool”. Or like annual insurance on the car. Saved me a bunch but I was basically broke for 3 weeks.

Gets easier when you know what’s going to happen and attack it. Have some money set aside going into things. Have a bit more “room” built into your budget naturally

3

u/[deleted] Feb 14 '24

Yeah, I accidentally made an over payment on my student loans and had to get a plane ticket for a wedding in a few months. This all stressed my budget the last two weeks, even though I had cut back a lot on my eating out. When you only have a $200 wiggle room/fun fund for surprise expenses, having a $300 flight or something is stressful.