Should You Invest 15% For Retirement If You Already Have A Pension?

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Hi, I am a stay-at-home mom and my husband and I don't have any debt other than our mortgage and we live on a budget but it's pretty tight and I find every time I'm saving money I end up dipping into that. My question is my husband has a pension because he works for the city but we also give to a different investment account like for retirement just in case

The pension gets mismanaged and I'm just wondering if we're overdoing it. Well, tell us the numbers. What percentage goes, what percentage goes to his pension and what percentage are you guys putting aside in the additional investment accounts? So 12% goes to the pension. And I think it's almost, it's almost 15% goes to the 457.

Wow, okay, typically what we would say is treat the pension like half. So maybe in this case, you could treat it like 6% and then you do the other 9% to another investment account that you have more control over. So in that way, you could pull back and I think having that extra 6% would help things feel less tight. Yeah. Yes, for sure.

And then maybe help us say for kids call it a little bit easier. Let's talk about income. So it feels like you guys are pretty good at the budget. And it's just an income issue. Obviously, you're stay at home. And that's the season of life. And it's a great choice. What is he making? And what does he do for the city? He is a firefighter. And his income varies with overtime.

So it's about 5,000 a month, I think is our average. Yeah. So what other skills does he have, experience does he have that's transferable? Because one of the things about a fireman's schedule is he's got those three on, four off, or whatever it ends up being. And so he's got my point is, he's got a really unique situation.

where he's got some downtime or he could be making some money. And this is not necessarily something he has to do for the rest of his life, but certainly in this season where there's just one income, adding some more income right now, I think is a must for you guys. Number one, to have some margin. Because you guys are disciplined. So imagine how much more progress you guys could make financially given your discipline if you had more coming in. You tracking with me?

Yes, I think I feel like the time off gets sucked up with things like fixing cars and fixing the house. That's when he comes back and is part of the household. I get that and all I'm saying is I get that, but that's still a choice.

Yeah. You guys have got to make choices right now. You got little ones. You're trying to save for them and you're going to have to make a choice. What's most important? I can get, I can see one day a week. He messes around with an old car or something like that. That's a hobby. I'm all about hobbies. I got my hobbies and they are religious for me, okay? Because I'm fixing the cars. There's more that we drive old cars that need to fix all the time. But again, but again, more money means better cars.

More money means investing for the kids' colleges or their future education. How old are the kids? They range from 12 to 1. How many do you have? 4. Oh boy.

You know what? I'm not going to lie, Sarah, when I first started talking, I said, Sarah sounds stressed. Yeah. And you are stressed. I am. You're doing a great job, though, to Ken's point. You guys have got a handle on the budget. I love that. What I really love is that when I ask you direct questions about the numbers, you knew them, which lets me know you're on top of this. That's right.

You know, I think Ken is right if there's a way to bring in a little bit more money to to bring some some breathing room into the situation It would probably help you guys out over time I'm not sure what that is but I think that there's some margin to make that happen either way though I think dropping that Investing down by 6% and taking advantage of the pension that is there I think that's gonna give you guys the breathing room that you're looking for

All right. By the way, just a quick follow up on this for anybody that feels like they're in this situation. What I would do is reverse engineer this thing and go, how much more money, this is for people who know their budget, like she does. How much more money net to our household budget every month would take us beyond just some breathing room, but would be like, ooh, we got some momentum with this amount of money. Yeah. So if that number's 500 for some of you, get after, that's six grand a year. Yes. Gross. These are all gross numbers. So,

You know, I'd like to see in this situation a fireman like this, he's got some skill. I'd like to see him aim for 25 to 30 grand additional income a year. Once you pay taxes on that, that's gonna more than give them breathing room and actually allow them to make progress. That's right. This is the way I think you have to separate this out so it doesn't feel so overwhelming. Like, oh, I gotta get another job or go, well, listen.

for a season, yeah, you need to bring in an additional 25 grand, but we don't focus on the work, we focus on what the freedom, what are the options as a result of more money, more money, I'm gonna tell you something, I know a lot of rich people, and I can break it down to this, you know what rich people have? Tell me. Freedom. Options. All kinds of options. To do whatever the flip they want, whenever they want, and so we don't have to aim for that.

We're not keeping up with the Joneses. I'm simply saying that if you talk to wealthy people, what they love most about being wealthy is not the actual money. It's choices. And they've got some very clear things, choices. They wanna give their kids choices for education. So if that's the issue, I gotta bring in some more income in their situation because they're already tight and they're living discipline. So that's half the battle.

That is half the battle. That's good. That's good, Ken. I mean, luckily for them, they don't have any debt besides their mortgage, but even with that, to make the progress to pay this off quickly, it's gonna be. Yeah, so let's play your point out. So now let's take, let's say they get an extra money and it takes care of the kids' education and futures. But then you got this sweet couple that's worked really hard and they've been great parents, great Americans. Well, they want something left over too when they get to 65. That's right. So that additional 25,

Don't get me started with you and your investment calculator. You start plugging in those numbers for themselves and all of a sudden now they've got a really, really comfortable retirement options when you're old. Yeah, this is very true. And let's talk about this in a bigger picture because she, Sarah kind of hit on something that I think a lot of people feel. They're in baby step four. And there is kind of this feeling like once I hit baby step four, like there should be no

There should be no tight feeling anymore. I should be able to just go and sometimes people hit Baby Step 4 and they're not feeling that freedom, that options that you're talking about. And the truth is, some of it can be income like they're facing here. Some of it can be a season of life.

Because if you're, she's a stay-at-home mom, but if you've got two kids in daycare, if you've got kids in private school, Ken, there's different things that can put strain on your budget and baby step four. That is just for a season. And if you can decide, hey, we're going to side hustle for a little while, you will come to that point where there's a clearing in the woods. You know what I'm saying? And you'll be okay. That's a great way to say that.

That's really good. That's that emotionally describes that. You know, because everybody wants to get through and briars and little branches hitting the face and it's hard to walk. I love that. Then you eventually see that clearing. That's really good. And that's why the extra income. Yes. Yes, it's hard. Yes, it's inconvenient.

But look, that's the reality. I mean, over 40% of Americans have side hustles. There's a reason for it. And Detroit. Because it's expensive. It's my brother used to say. I know that's right. It's expensive. Things are expensive these days. You got four kids trying to go to college. You got a kid. All of that matters. If you're in a season of life where you're trying to get pregnant and you're paying for fertility treatment, all these things. And so basically what I'm trying to

doing this moment is kind of normalize the feeling that if you are in baby step four and it's a little bit tight, it doesn't mean that you're doing something wrong. It simply means that you have chosen a value for that time period and it's okay. And the solution to that is, hey, maybe we bring in a little bit more money for the short term or maybe we just accept it's a little tighter right now, but it's only going to be for the next three years. And then there's the clearing in the woods that we talked about.