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35 and thinking about retiring

By Jennie L. Phipps ·
Sunday, May 5, 2013
Posted: 6 am ET

We had a family get-together last weekend, and over dinner, my oldest son asked me whether I thought he was saving enough for retirement if he put away exactly the amount that his employer matches.

My son and his wife are in their mid-30s. They don't have children. My daughter-in-law works part time at a job where there are no benefits. She recently became an American citizen, and we hope that will make what has been a long hunt for a full-time job more fruitful. Although my son makes a very good salary, he has piled up a huge student loan debt from graduate school. On top of that, the cost of housing in San Francisco where they live is brutal.

Under those circumstances, he asked, what sort of retirement planning should he be doing to make sure he'll be able to live comfortably?

The company for which my son works matches 100 percent of the first 6 percent of pay that he contributes to his 401(k) retirement savings. That's the most common type of match, with 27 percent of employers participating to that extent, according to the 401(k) Help Center. That means that if my son kicks in 6 percent and his employer kicks in 6 percent, he's actually saving 12 percent.

While 12 percent is a significant amount, it probably isn't enough to ensure a comfortable retirement. Fifteen -- even 20 percent would be better -- so I suggested that he kick it up a notch.'s story about retirement savings in your 30s points out that even a 1 percent increase can make a huge difference in the long run.

I also suggested he rethink his Roth strategy in favor of a conventional, tax-advantaged 401(k). Some people would disagree with me, but I know he already has some retirement savings from a prior job in a Roth and saving in a traditional 401(k) plan will help him find a few more dollars to put aside -- without feeling pinched.

I also urged my daughter-in-law to fund her own IRA. As a long-time wife myself, I think it is important to have money you can call your own. Plus, her savings will be available to add to the retirement pot when the time comes.

I look back on my 30s and remember only a blur of kids and work. Saving money for a faraway retirement didn't seem very important. I think my son is smarter than his mother.

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May 06, 2013 at 8:25 pm

Putting more money in 401K is not a good idea. Let's see when this housing price was collapsing, if you would have 50k for a down payment was a better choice. If the money are in an investment account you could take the plunge in real estate. if those money are in 401k or Roth you are stuck.If you are 35 yrs old until 65 there will be opportunity in real estate in the future. You should not keep all your money in 401k and Roth. I would keep some money in real estate that is for sure protected against inflation. I know it's more difficult to manage real-estate than stock investment, but maybe it's worth the extra work.

May 06, 2013 at 4:09 pm

Thanks for sharing. Congrats on raising a smart man. You've invested well in your thirties and your son's financial smarts are to be celebrated because of what he learned from you.

May 06, 2013 at 3:13 pm

Agree about 6% match.

some good ones will do 4% at 100% or 50 cents on the dollar till 6%.


May 06, 2013 at 1:16 pm

LOL! 401K

M Jack
May 06, 2013 at 12:40 pm

This is disappointing. I click on what I'm lead to believe is an article on retirement considerations and instead it's basically a way for to generate traffic. I expect better.

Paul McGhee
May 06, 2013 at 9:45 am

I think you gave him some bad advice.

Even if he has zero savings when he starts at age 35, here's how I calculate his outcome:

Saving 6% (matched dollar-for-dollar), all in equities, earning 7% real (inflation adjusted) return until he is age 65, currently making $70k, he will retire with about $853k in 2013 dollars.

That will enable him to buy an inflation-indexed annuity that pays 95% of his current salary when you include social security benefits, estimated at $2000/month.

Now, if he wants to retire early, or amp up his lifestyle in retirement that's a different story. But at the moment he is saving enough.

Why guess this stuff when you can calculate it?

May 06, 2013 at 9:33 am

I work with 401K's all the time and I can tell you it's almost unheard of to get a 100% match on the first 6% of contributions. There is no way 27% of employers are matching at this level so this article is way off the mark. Most are lucky to get a 100% match on the 4% of contributions.

Don Deming
May 06, 2013 at 9:28 am

I agree with Robert. I resent having wasted the time to even read this "article."

Robert Ryan
May 06, 2013 at 7:44 am

How is this an article. It doesn't provide any information or details. This is really just a random thought that was put on paper and CNBC provided a link to it with the word retirement in the title. I expect more from CNBC, the self-proclaimed worlds #1 source for financial news. If CNBC wants to provide good financial information links to random thoughts are not what should be provided.
CNBC...Please try to do some reporting and provide stories of value!