Back in January 2015, I created some financial goals as a countdown to retirement. The goals were pretty aggressive; it’s time to see if I have lived up to my plan.
It is one thing to create a plan, and another to follow through with the plan. On January 1, I had 551 days until I leave my full time job. Today, it is closer to 380, with only 230 work days left, or 54 weeks. That is only 60% work days, as I have some vacation and holidays coming. And it doesn’t count sick days. But who is counting…?
As the days draw closer to the last day of full time work, and the last days of getting a steady paycheck, I check my retirement plans very often. Way more often than needed. Does a retirement plan need to be checked every hour? I sometimes think it needs to be checked even more often, especially when the market is soaring.
Here is how I have progressed.
My company also made the 2014 match in January, of 4% of my salary, so I got to see my 401K balance jump a bit in the first quarter. From here on out, it’s all investment performance to get the balance higher in the 401K for the rest of 2015.
With a 75% contribution rate until the 401K account was maxed out, it’s nice to see some bigger paychecks now. I have already set up my employer payroll tax deductions for single, 0 deductions, with an extra $1,250 per paycheck for taxes. I can avoid quarterly taxes if I do that. $1,250 in extra taxes every two weeks stings a bit but it saves making out separate tax payments. They also do not get ‘lost’ at the IRS.
For 2014, I was only able to do a non-deductible IRA, not a Roth. The same is true for 2015. Since I have some funds in my after tax account that I use to fund this savings, and the market should go up, down, or sideways throughout the year, money in earlier is 66.67% of the time better than money in later. My 2015 contribution was made in January. That is the $5,500, plus the extra $1,000 for being over 50. That is $6,500 saved in my non-deductible IRA. In 2016, I will revert back to a Roth IRA with my 2016 contributions.
My goal was to contribute the max to my H.S.A. On January 2, my company kicked in $400 for me, which means my maximum contribution, is only $3,950. Divided up among the 26 pay periods, that is $151.92 per pay check. So far, so good. I have made the contribution every pay check. While I could max out the account with an additional contribution on any given date, I am not entirely sure how it would be pre-tax. An H.S.A. is also pre-Medicare and FICA, so I will just let the deductions go forward as-is.
Next year, I will likely max out the account before I leave my job, with after tax money unless I can get the cash pre-tax.
If you are following along, that is about $32K saved in the first quarter in tax-deferred deductions.
After Tax Savings and Spending
My goal here was to spend less than $3,000 per month. This goal is so far, so good. My spending is probably closer to $1,000 a month so far. I do not have a house payment, so it is a bit easier. With the rental income, I can actually save more after tax than I do via payroll deductions.
As a side note, I did buy one frivolous purchase. A X5C-1 Quadcopter and extra batteries. Total cost was under $70. I still do not have it, as I had to cancel the order, get a refund and re-order it. A three month process!
Since I am getting close to retirement, I watch my spending and save as much as I can. I am over 60% of my savings goal, and we are only at the 6th month. But the last half of the year I wil save less. I have no more bonuses, no more 401K employer match, no more employer HSA match.
Now, if I can just get to my retirement date!
How have you progressed towards Financial Independence? Are you on track for 2015? Did you aggressively put money in early, to have your money in the market for as long as possible?