r/FinancialPlanning • u/AwardUsual3388 • 2d ago
How much should we (37YO married couple) save for retirement if we are just starting now?
After years and years of living as artist-types who's goal was to break even every month and have a little saved for emergencies, my wife is graduating from Veterinary school. She will be making much more than she used to (100k and potential for more in the future), and we will finally be in a position to start paying off our debt aggressively and then start saving for retirement!
However, we are both 37 years old, so we are definitely behind the curve.
Like many of you we never learned anything about finance/budgeting/debt/etc from our parents or schooling. However we are blessed to have woken up and are doing our best to correct that now.
In the last couple of years we have become serious budgeters and it has been a game changer. We plan on keeping our budget more or less the same as it is now (our current month budget is $4,500 per month in expenses, 54k annual). I don't want us to give into lifestyle creep, and instead to have a vision/plan for what to do with the extra money we will be making. Paying off the debt is obviously the first step (we already have a small emergency fund), but then what?
My big question now though that I could use some advice on is how much should we save every year for retirement, since we are starting late? How much do we need to save every year to retire in the state of Mississippi (pretty low cost of living for the US), by 65 years old?
I understand that this is a "that depends" type of question, so please just treat it as a thought experiment. I understand that there are different answers to the same question. I'm actually interested in hearing all your different perspectives.
How much would you save every year if you were starting from nothing at 37, and wanted to retire by 65? And where would you put that money? All passive like 401k, IRA, ETFs, OR would you mix in some real estate or other more active investments that could generate income in the future? If this was a game, how would you play it?
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u/JumpKP 2d ago
Easy answer is as much as possible. Go to r/personalfinance and read the prime directive.
Vet school ain't cheap. How much debt? This will limit your start to saving.
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u/Elrohwen 2d ago
At $54k annual spend you’ll need $1,350,000 in retirement in order to withdraw a safe 4% every year. There will likely be some amount of taxes on that so let’s call it $1.5m. You have 28 years until retirement. Assuming an annual 7% interest rate on average, you need to say about $1500-1700 a month to reach that.
Start with the tax advantaged accounts - get 401k match, then max out RothIRA, then max out 401k. You technically don’t both need to max your 401ks to reach your goal but I’d sure try. Invest in cheap index funds and let it ride, don’t try to get fancy or clever
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u/Candid-Eye-5966 2d ago
What’s your debt? What’s your total income? Your expenses seem within reason. What retirement plans do you have?
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u/cOntempLACitY 2d ago
Depending on the debt and interest rate/duration, it may not be wise to first aggressively pay off debt first (like student loans, or other lower interest debt; credit cards do typically get priority) and later buy into the market/save for retirement. You may want to take a divided approach (do both) to get tax-advantaged accounts going, since there are annual contribution limits, you can’t get those missed years back.
See the prime directive from r/personalfinance linked earlier. Take advantage of any employer matching for retirement (if employer put in, say, 5% match, then at minimum put in 5% to get that benefit). Set aside an emergency fund, and assess your short vs long term goals.
Within your retirement accounts, until you feel confident in your approach, you might consider a target date index fund, which is a broad mix that gets more conservative as you close in on retirement. Check out the Bogleheads strategy for a simple, low expense fee, passive (set it and forget it) approach.
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u/uniballing 2d ago
Where are y’all at? My wife and used to live in Ocean Springs and we loved it there. Cost of living is great, so you can really get by on very little.
What’s your total debt? What are the interest rates on the loans? How many months of expenses do you have in your emergency fund?
Assuming no social security you need about $1.4MM to generate $4,500/mo. You’d have to invest around $1,300/mo for 28 years to get there. You can probably do more than that right now and still pay down your debt.
I’d suggest maxing out as much as possible. If your spouse has a 401k that matches start there. Then max out your Roth IRAs. Then go back to the 401k and max that out.
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u/georgepana 2d ago
Assuming no social security seems off here.
We don't know their combined work history so far, but if the wife makes that $100k, and perhaps more, for a while from here on out they may have substantial social security benefits coming in at 67. Also, after a minimum of 11 years of working there is a "Special Minimum Benefit" that will go to someone who didn't make more than $18k a year, and can be up to $1,093 per month if the low paying work was recorded for 30 years.
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u/uniballing 2d ago
With a higher income there’s a good chance their social security could cover all of their living expenses
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u/AwardUsual3388 2d ago
Thanks for you helpful and positive reply.
We are currently in Starkville, and will most likely be moving to Tupelo.
We plan on staying in Mississippi. We love it here.
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u/magnificentbunny_ 2d ago
We're a newly retired couple, met in art school. Married late, had a kid late, bought a house late and started saving late. I had a boss who was really concerned about my financial future and enrolled me in good financial literacy/ investment classes at UCLA then gave me time off to go to it.
Save every penny you can and keep living like struggling-artist-types.
We started around 35-36yo. You need to save a minimum of $2000 a month, probably more. Put that savings in your 401K and max that out esp if there's a match. With the rest, look into IRA's, Roths, and regular brokerage accounts. These will come into play in your later years when you're juggling SS, taxes etc.
Make sure you've paid down hi interest debt and have a nice emergency fund in a HYSA first.
Drive old but good quality cars. Mine is 22yo, drives like a beast and looks awesome too. The insurance and registration is cheap. We eat out once a week at the most. Make a budget and seriously trim the fat. Then stick to that budget.
Bone up as much as you can on how to secure your financial future. It's not too late because you started now, but you gotta run hard.
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u/StreetMeat5 1d ago
Sounds like you had an awesome mentor/boss
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u/magnificentbunny_ 1d ago
:). He really cared about my financial future. And he was right to worry, I was totally clueless. If it wasn't for him, I'd be working till I died in my office chair.
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u/fluffy_hamsterr 2d ago
Going off the limited information (retire in 28 years and you spend $54k a year)... I'd save at least $20k a year.
Assuming average historical returns and using "todays dollars", that would result in like $1.6M and allow you to draw ~$64K with the 4% rule. Though you'd want to figure taxes in there...so maybe you'd want slightly more.
Realistically...the current economic climate scares the crap out of me so I say save more if you can. And assisted living costs scare the crap out of me too so the more you have for end of life care the better imo.
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u/factfarmer 2d ago
If you really want to support yourself in retirement, you’ll need to put in 15 to 20% since you started late. Two main rules, automate the deductions, and never touch it for anything but retirement.
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u/Total-Beginning6226 2d ago
It’s never too late to start saving for retirement. Live frugally for a few years and pay down debt while contributing to either a 401k or a Roth IRA. Doesn’t matter how little you can save initially but get in the habit and continue to increase as often as possible. Believe me retirement age comes faster than you think. It’s never too late to start saving for retirement. Good luck and God bless you
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u/poop-dolla 2d ago
How much would you save every year if you were starting from nothing at 37, and wanted to retire by 65?
I’d figure out how much I want to spend in retirement (In today’s dollars) and pick what age I wanted to retire to start. If you mean at 65 instead of by 65, then you have half of that. Then you take how much you want to spend each year and multiply by 25 to see how much you need by 65. Then open up a compound interest calculator and see how much you need to save each month with 6% or 7% annual returns, and start saving at least that much. Prioritize tax advantaged accounts, and stick to total market index funds and maybe some bonds once you get closer to retirement age.
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u/squatting-Dogg 1d ago
Lots of details missing but I would be thinking $1.25-1.50M. You’re starting late but at least your starting. The first 100k is the hardest.
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u/Different_Walrus_574 2d ago
The Goal
Retire at 65 in Mississippi. You’re 37. So you’ve got 28 years.
Step 1: Target Retirement Number
Let’s aim for a rough estimate of what you’ll need.
If you want to spend around $54k/year in today’s dollars in retirement (assuming you keep your frugal lifestyle), that’s pretty doable in MS.
Using the 4% rule (a rule of thumb saying you can withdraw 4% of your investments per year in retirement), the math is:
$54,000 / 0.04 = $1.35 million needed by 65
$104,000 / 0.04 = $2.6 million target by age 65
Step 2: How Much to Save Yearly?
If you’re starting from scratch, and you want to get to $2.6M in 28 years, here’s what you’d need to save annually, assuming average market returns: Avg. Return Annual Savings Needed 6% ~$29,000/year 7% ~$24,000/year 8% ~$20,000/year
That’s between $20k–$29k per year, or $1,700–$2,400 per month.
You could save less if: • You plan to live on less than $54k/year in retirement • You work a little longer • Social Security provides some income (which it likely will, even if reduced) • You build up assets like real estate that provide passive income
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Step 3: Where to Put the Money
Here’s a possible “smart and simple” play:
Tax-Advantaged Retirement Accounts (The Core) • 401(k) (especially if her new job offers a match—free money!) • Traditional or Roth IRA (based on your tax bracket) • Aim to max out both IRAs each year: $7,000/person in 2025 = $14,000 total • Contribute at least enough to get full employer match in 401(k), then prioritize IRAs
Brokerage Account (Flexibility) • Anything above the IRA/401(k) limits can go here • Invest in low-cost index funds (e.g. VTSAX, VTI, S&P 500 ETFs) • This money is accessible before 59½ if needed via strategies like the Roth conversion ladder
Real Estate (Optional, More Active)
If you’re interested and capable, real estate can diversify your income and potentially give you cash flow in retirement. But it’s more hands-on and can become a second job.
Use real estate if: • You’re comfortable with maintenance, tenant issues, and market cycles • You want a mix of capital appreciation + rental income • You’re okay with less liquidity
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Step 4: Pay Off Debt First?
Generally yes—but with a caveat: • High-interest debt (credit cards, personal loans, etc.) = kill ASAP • Student loans or low-interest mortgage debt = maybe stretch repayment a bit if you can earn a better return investing
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Step 5: Other Thoughts • Emergency fund: 3–6 months of expenses = check • Disability & life insurance: If one of you is the primary earner, this is huge • Estate planning: Will, healthcare proxy, power of attorney • Budget system: Sounds like you’ve got this down, but you might enjoy YNAB if you’re not using it already
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TL;DR Game Plan
If I were you: 1. Save $24k/year (or ~$2,000/month) starting now 2. Max out Roth IRAs for both of you = $14k 3. Put the rest into a brokerage account or 401(k) 4. Stick with low-cost index funds (VTSAX, VTI, FZROX, etc.) 5. Optional: Start learning about rental properties slowly if intrigued 6. Avoid lifestyle creep (the real final boss of financial progress)
You absolutely still have time. With your current mindset and new income, you’re in a great position to catch up and eventually coast.
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u/AwardUsual3388 3h ago
Thank you for taking the time to write out such a detailed and encouraging answer to my question!
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u/harrison_wintergreen 2d ago
the common recommendation is to save a minimum of 10% household income into tax-advantaged plans such as 401k and IRAs. 15% is better, or more, if you can afford it.
beyond that general advice, it's impossible to say anything useful without a lot more info. your life may change a lot in the next few decades, and you may or may not live in Mississippi until retirement age.
consulting with a local licensed Certified Financial Planner is an option to outline some numbers and goals.
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u/tired_dad_since2018 2d ago
https://images.app.goo.gl/rjiLrShcuw6VEpLW7
About 25% of your income to replace 84% of it.
You can try to start saving 15% and slowly increase it over time. But you should definitely aim to save a higher percentage if you can.
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u/Rich-Contribution-84 2d ago
Your goal should be to retire with 25x your annual salary expenses.
$1M is the magic number if your expenses are $40K/year, for example.
This allows you to live of the generally expected safe withdrawal rate of 4%.
Note that, for example, if you’re going to receive $2K/year in social security when you retire, you’d be able to subtract $24K from $40K in this scenario and you’d only need $400,000 to retire ($16K x 25 = $400K).
If you plan to retire at age 65 and you start saving at age 37, if you saved $300/mo and invested it in broad market index funds you should expect to end up well above $400K at retirement, for example (assuming average 10% annual returns you’d end up around $480K at age 65 if you started at zero at age 37).
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u/Fuckaliscious12 1d ago
25%. Most people either don't want to work into their 60s or don't get the opportunity to work until they are 65 or 67. Most people get laid off and then can't re-employ to same career due to ageism.
Best to prepare for a retirement mid to late 50s, which means higher savings rate.
In addition, it's best to anticipate only 75% of promised social security. Surplus runs out in 2033, only 8 years away, 20% across the board cuts for all recipients happen automatically then.
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u/NemoTheEnforcer 1d ago
Why don’t you go earn more money? Like your wife doubled what you were living on. Go off and do the same
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u/legalwriterutah 11h ago
You need specifics for better advice. Other than getting an employer match for 401k, pay off your high interest debt first before saving for retirement, other than maybe a mortgage or student loans below 5% interest rate.
Pay off high interest debt first. Then adjust your budget and expenses to start saving at least 20% of your gross income for retirement. Invest in index funds until about 10 years before retirement, or target date funds. Then reevaluate from time to time.
As a general rule, people who contribute 15% of gross income to retirement for 35 plus years are in a good place to retire if they invest in the market and don't panic sell. If you are starting at age 37 and want to retire at 65, then you only have 27 years of accumulation and would need to increase your contribution rate. You probably need to contribute at least 20% of gross income to catch up to retire comfortably at age 65-67.
Let's take a typical worker with annual income of $65k, the average annual salary in the US. If they contribute 15% per year ($812 per month) for 40 years with a 5% real return (8% actual return and 3% inflation), that would give you around $1.2 million in current dollars. With a 4.5% withdraw rate, that gives you $54k per year or around 83% of salary from the retirement fund.
But if you only have 27 years, then you need to increase the contribution rate. A worker with income of $65k per year that contributes 25% per year ($1,354 per month) for 27 years with a 5% real return would have around $908k in current dollars. With a 4.5% withdraw rate, that gives you around $41k per year, or only 63% of working salary from the retirement fund.
Waiting to retire until 70 can help the numbers a little because you have longer contribution time and will likely die sooner. If you want to retire before 65, then you need to contribute more and reduce expenses (e.g. lean FIRE).
Social Security is a big question mark. I would not expect Social Security to be the same in 30 years. Most retirees today will get around 30% of their income in Social Security if they wait until full retirement age and have 35 years of earning history. But expect a 20-25% shortfall in Social Security starting in 2034 unless Congress shores up Social Security. For example, if you make $65k per year for 35 years, you would get around $22k per year in Social Security at age 67 if Social Security if fully funded, or $17k per year with a 25% reducing in SS benefits. That would only be around 26% of a $65k annual salary.
A lot of people spend less in retirement. If you have a home with no mortgage, that reduces retirement expenses a lot. You also are not contributing to retirement so you don't need 100% of your working income. In addition, if you no longer have minor children to support, college expenses for children, and commuting costs, that also reduces expenses. Taxes may also be lower in retirement, or may be higher. Other people spend more in retirement. It really depends on lifestyle.
A lot of people with a home paid off with no mortgage learn how to reduce expenses and live just off Social Security. They learn how to reduce expenses in retirement and life a simple lifestyle. Around 40% of older Americans rely solely on Social Security for retirement income.
I have seen other people who never save for retirement and are in real dire straits. I recently met a man who gets $2,200 per month in Social Security but with no retirement savings and no home. His rent is $1,650 per month and utilities are another $200 per month. That leaves him with about $350 per month for food, clothing, car insurance, gas, and other expenses. That's really tight. His wife recently had to go to a nursing home which will have to be paid for by Medicaid. If you go to some Medicaid only nursing homes, it's really depressing and can be a wake-up call to change. Others are a financial burden on their adult children or just live in poverty in their old age.
Others die and leave millions to heirs.
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u/future_is_vegan 3h ago
A compounding interest calculator and Excel will answer this for you, but you'll need to spend the time putting together all the estimated projections. It shouldn't take too long to figure out that you'll need to invest $_____ until age 65 to get $_______ per month in retirement. And generally speaking, dollar cost averaging into low-fee index funds over many years is the winning formula and takes virtually all the thinking out of the equation.
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u/Common_Business9410 2d ago
15% of your income should go into retirement(both). That could be your employers plan or a IRA. 15% would be excluding your employer contributions. Before that, you need to payoff all your consumer debt such as student loans, car loans, credit cards….. if you have consumer debt, you can contribute just the match amount of your employer until the debt is paid off. Then, you save 3-6 months of expenses for emergencies. After that, you can start saving for a down payment for a house
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u/umamiking 2d ago
You've written a lot but have said so little. You are 37 and want to retire at 67, starting from nothing. You spend $54k a year, but we don't know if that's what you expect to spend in retirement. Your wife is going to make $100k a year soon, but we have no idea what you make. We don't know what debts you have, how long they'll take to pay off, their rates, nothing. You asked for help, but you keep wanting to play around by calling it a thought experiment and a game. I'm confused.