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Getting Personal: Family financial matters
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On tap this weekend: A new father of two teenage boys needs to make and achieve some new financial goals fast and a wife is wondering how to keep her family afloat while her husband goes back to school.
Please follow up on the statement that $200,000 in retirement savings at the age of 37 "is not a whole heck of a lot." That has to be a misstatement. I would like to hear her follow up on it and others (Chris Farrell, Eric Tyson, etc.) weigh in.
I was surprised by your suggestion to the family who needed some money until the father finishes his nursing school. Many 401k programs would let you borrow money (without withdrawing - without penalty) at about 7% interest rate and what you pay back in interest goes back to your own account. If the family owns a home with home equity, then they can borrow money from it to pay for anything they need even to pay the mortgage payment. They would go deeper in mortgage debt but it would help them buy time until the father starts earning money (i.e. 11 months).
I was surprised by Kathy Kristof's comment that $200k in retirement savings by the age of 37 is "not that much". We have been saving at least 11% of income, and typically 15%-20%, in mixed investments since the age of 28. Now at 45, we apparently don't have much in retirement savings according to Kathy. How can a normal family possibly have enough? This is just more evidence that the entire retirement system is broken.
