My husband and I have been saving in our respective 401(k)s for
the last seven years. We were invested when the stock market faltered
and are still recovering. We have $60,000 in retirement savings,
$30,000 cash, $450,000 in home equity and no debt other than our
mortgage. I quit working three years ago. My husband's annual salary
is $58,000. We are 37 years old. Are we on track for a comfortable
retirement or do we need to worry about increasing our retirement
-- Dawn Dilemma
Well, with a net worth of over half a million dollars, you're the
envy of most people your age, but it's a little hard for me to say
you're on track for a comfortable retirement. You're certainly not
at a point where your husband can stop contributing to his 401(k).
Although you provided me with a lot
of information about your current financial situation, there's still a lot to
figure out. With no debt, other than your mortgage, it seems pretty clear that
you're able to live on your husband's annual salary. After all you've been doing
it for the last three years. But how much of that annual salary is being invested
in his 401(k) plan every year? Does his employer match all or part of his contributions?
If so, he should at least contribute up to the limit of the matching program.
One concern I have is that your home equity is 83 percent of your
net worth. You didn't say what your house is worth, or the size
of your mortgage, but counting on continued appreciation in housing
prices to fund your retirement can be problematic. On the other
hand, paying off your existing mortgage and then using the financial
slack from not having a mortgage payment to fund retirement investing
may be a viable strategy.
Other considerations include: How are you invested in the retirement
accounts? What are your financial goals besides retirement? When
do you plan to retire? What standard of living do you hope to have
in retirement? All these factors play into what the goal should
be for your retirement portfolio and net worth at retirement.
Try using Bankrate's interactive
retirement worksheets, "How much will I need to retire"
and "How do I reach my retirement goal" as a way to measure
your progress and what still remains to be done.