Just doing some quick analysis of our saving progress. In my handy dandy net worth spreadsheet, it shows we are saving 31% of our gross income in our 401k accounts and additional payments to our mortgage. We put an extra $200 towards our mortgage balance each year just to help speed up the payoff a bit. While many will argue we should be directing those funds towards our investment account, I can assure you we are also contributing a decent amount to the “after tax” investment account as well. The goal is diversification and moderation with all of our money.
Overall we have about $237K left on our mortgage with an estimated home value of $380K. That’s our only debt and has an interest rate of 3.75% so we aren’t too worried about it. When we decide to quit working, we’ll sell our primary home and move to our other house that is paid for. The good part of that plan is we’ll be able to invest the equity from the house sale and have zero tax liability on it. That combined with our other “after tax” accounts will help us manage our pretax withdrawals to maximize tax efficiency.
Another statistic that I keep an eye on, although it’s not nearly as important, is what I call our “net worth savings rate”. This includes all dollars that we put towards all of our accounts. That savings rate is 47% and includes things like my daughter’s 529 account, all the 401k contributions and additional mortgage payments and also includes what we are putting in our after tax accounts. I’d like to get this up to over 50% but we’re pretty happy with the current overall progress.
At this point, we are really on autopilot. If we were to stop contributing to all of our accounts today, we would just have to wait longer to retire comfortably. We are continuing to aggressively save because, a) we don’t need all the money we make to live day to day and b) we’d like to have the option to retire earlier than the traditional age.