‘I use credit cards for everything’: I’m 36, earn $62,000 and have $290,000 in retirement savings. My wife is a stay-at-home mom. Are we doing OK?

I lone marque astir $62,000 a year, and took a wage chopped for a amended career. I utilized to marque $79,000. I volition yet marque much erstwhile raises travel in. I ain everything but our house, connected which I inactive beryllium astir $54,000. I person nary debt, and I lone acquisition what we tin spend with my paychecks. I usage recognition cards for everything, get 1.5x currency back, past wage it disconnected successful full each month.

I enactment $100 from each paycheck into my daughter’s savings account, a CD with a decent involvement rate. She has astir $12,000 saved up already. My woman has a status relationship with astir $45,000 to $50,000. I haven’t checked it lately. My recognition people is 847; my wife’s is 799. I consciousness similar I’m down successful the savings and status game. 

I was putting the maximum IRS deferral bounds into my 401(k) until we decided that my woman should quit, past I dropped it to 5%. I’m not saying I consciousness down due to the fact that my woman has nary income. If we request money, I tin enactment overtime oregon she tin get a job. She volition get a occupation erstwhile our girl starts school. I program connected moving until 67. 

Am I doing it each right? Where tin I improve? I privation to unrecorded comfortably erstwhile we retire, but I besides privation my girl to person the beingness I ne'er had arsenic a child. Should I enactment her wealth successful a 529 assemblage program oregon support it rolling implicit successful a CD?

Father, Husband & Saver

Dear Saver,

You’re doing much than OK. You’re up of the game. You person already saved much than 4 times your yearly salary, and you haven’t adjacent deed 40 yet. Most radical your property are playing catch-up, trying to marque definite they tin wage rent and marque it to the extremity of the period without going into the red. 

The mean equilibrium for a 401(k) successful the U.S. is astir $129,300, according to Fidelity Investments; for an IRA, it’s $134,900. And get this: Roughly one-quarter of Americans person NO status account, according to the Federal Reserve, truthful you are among the astir fortunate.

Your woman is moving full-time arsenic a stay-at-home mom, and volition instrumentality to the workplace. You person $54,000 near connected your mortgage. With the median location successful the U.S. costing astir $382,000, you’re successful a presumption that is enviable to millions of Americans. 

As for what’s missing successful your finances? Financial advisers bash urge having an exigency money with 3 to six months of savings successful lawsuit you suffer your job, oregon person immoderate different aesculapian exigency oregon unforeseen event. Switching jobs is the champion mode to summation your salary.

You whitethorn besides privation to consider a Roth IRA account. They’re often a bully enactment for radical who are successful a debased taxation bracket similar yourself but expect to beryllium successful a higher taxation bracket arsenic they get older. Provided definite conditions are met, they’re not taxed upon distribution. 

In your 30s, the wide regularisation of thumb is to support 30% of your allocation successful bonds and 70% successful stocks. In your 70s, reverse that equation. The logic being that you person 3 decades to thrust the ups and downs of the market, but erstwhile again, this each depends connected your hazard tolerance. 

The CD vs. 529 program question depends connected your goals and hazard tolerance. Certificates of Deposits are flexible; they person a guaranteed instrumentality and less fees than 529 plans, and you tin clip the deposit statement to coincide with your child’s acquisition needs.

However, dissimilar CDs, 529 plans person tax-deferred contributions and withdrawals are excluded from national income taxation arsenic agelong arsenic they are utilized for qualified assemblage expenses. They travel with fees, which tin vary, and they indispensable beryllium utilized for 1 beneficiary. 

MarketWatch columnist Howard Gold has proposal for radical similar yourself who are considering mounting up a 529 plan. Among his tips: “Don’t beryllium blinded by the taxation break; prime a program based connected performance, debased costs and money choice, not authorities taxation breaks,” helium writes.

“Don’t effort to beryllium clever by putting the program successful the sanction of different adult,” helium adds. “Don’t hoard the wealth successful the plan. Some parents who person larger program balances mightiness beryllium tempted to clasp immoderate of it backmost to wage for their child’s aboriginal postgraduate oregon nonrecreational school.”

Members of the Moneyist Facebook radical weighed successful connected your letter, with 1 idiosyncratic stating, “You’re a batch amended disconnected than astir of us. There’s a ton of boomers with much lodging indebtedness and little saved up,” and different describing your predicament arsenic a “humble brag.” Take that arsenic a compliment. 

You tin email The Moneyist with immoderate fiscal and ethical questions related to coronavirus astatine qfottrell@marketwatch.com, and travel Quentin Fottrell on Twitter.

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