2018 Savings Goals

If you read my post on our laughably-low 2017 savings rate, then you (and I) know that we have a way to go. So, enter my plan to step our savings.


Max out our Traditional IRAs

As of this writing, this is done!
If you want to know why I’m going for a traditional IRA instead of a Roth IRA, read this enlightening post by the Mad Fientist. Don’t feel like reading? Here are the cliff notes:


  • The rule of thumb suggests Roth for folks early in their careers.
  • Traditional tax-deferred accounts (IRAs and 401(k)s, etc.) for folks later in their careers.
  • But, if you’re retiring early, you are later in your career.

Max out the HSA

We contribute the max to an HSA regularly. That brings our 2018 savings to $17,900 so far!

Max out the Wife’s 401(k)

This is in progress via paycheck deductions. By year-end, we’ll have contributed $18,500 – and have a tax deduction to boot.
If we manage to max out this account for 2018, that’ll increase our savings to  $36,400 for the year.


Set up and Max out a Solo(k)

This one is more elusive given my limited income and having to set this up. But, if accomplished for 2018, I’d likely be able to put away another $20,000.
Update: This account is now open. Once I get our giant tax refund for 2017, this account is going to be funded! That will bring us to an estimated savings of $56,400.


That Savings Rate

For 2018, we’ll be saving:

  • $6,900 into an HSA (done!),
  • $11,000 into IRAs (done!),
  • $38,500 in 401(k)s – assuming a $2,000 employer-contribution (in progress),
  • $1,200 into a Betterment account (just for fun)
  • roughly $5,000 in home equity

This means hitting a 54% savings rate – assuming an income of $120,000 for the year. (That’s a yet unknowable figure. We won’t know that until 2018 comes to a close, given unknowable business income, how much a raise the wife will get a work, etc.)

According to MMM, hitting a 50% savings rate means being able to retire in 17 years. Or from the lense of Fisker, it means only having to work every other year.


Maxing out these accounts should pull us from the 22% tax bracket (formerly 25%) into the 12% (formerly 15%) Federal tax bracket. This almost halves our marginal tax bracket – which is fantastic. For the state of Taxifornia, we should also be decreasing our marginal rate as well. Since taxes one of one of the biggest line items in our household budget, this is a big win.

Aligning Savings and Spending

However, just because we’re putting money into a tax-advantaged account, does not necessarily mean that we are going to spend less money. So, focusing on reducing spending is critical to the success of this plan.