August’s issue of Money Magazine asks: Are You Doing The Right Things (For Retirement)? Although a bit mundane, it’s offers a quick gut check. Here are the questions and my answers:
1) Are you maxing out your 401(k)?
I think I put in $10,000 last year, which wasn’t the max. This year I haven’t been on pace for the $15,500 maximum either, but I do plan on reaching it by year’s end. I’ll need to run the numbers to see how much I’ll need to increase my contributions in order to catch up in time.
Maxing out a 401(k) does seem like a tall order for the average U.S. household though, considering the median income is about $46,000 a year.
2) Are you keeping tabs on your progress?
Yup, every month. Next update is coming up soon.
3) Are you grabbing every tax break you can?
This is mostly directed at IRAs. I’m probably not going to be eligible for a Roth IRA this year due to the income restrictions. However, I will likely fund a non-tax-deductible IRA, which has the potential to be converted to a Roth in 2010. Otherwise, I’ll settle for the watered-down tax advantages and stick some bonds in there.
4) Have you created a safety net?
In an addition to an emergency fund (they say 3 months), the article states you should have adequate life and disability insurance. Life insurance is something I definitely want to get within the next year, and definitely before we buy a house.