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Subject:  Re: Beginning Retirement Investing Date:  2/18/2013  4:44 PM
Author:  JLC Number:  71418 of 88775

I have just graduated with a degree in Mechanical and Aerospace Engineering.

Congrats. That took plenty of hard work, planning, and discipline. The same qualities that will work in your favor in planning for retirement. My first word of caution, do go nuts spending on toys, trips, etc., when the paychecks start rolling in. Its tempting after leading a life of relative deprivation.

Before beginning on retirement, work on two other things first. One, an emergency fund. Most suggest 3-6 months living expenses. I'd lean toward 6 months. This will help with car breaking down, roof needs fixing, illness, or waiting for disability insurance to kick in after you've been hit by a car and you're doing rehab for a year. Two, pay down/off debts, everything from credit cards to school loans. Even if you have a loan at a "good rate", debt is debt and can come back and bite you at the most inopportune time. At a minimum it gives you peace of mind, one less thing to worry about.

Plus, evaluate your disability insurance needs. Many people think of life insurance, but you are much more likely to become disabled at an early age than die.

JCI has a 401K with a company match that I plan on using from the beginning.

To take to the company match limit and no more.

How much is a good average % of income to begin saving with?

You could easily start at 10%, I'd even go 20% with no wife and kids. And another thing to consider, in the future, when you get a raise, don't just think 20% of the raise, think 50% of the raise goes to retirement.

I would like to set up a Roth IRA to invest in as well as my company's 401K. Does anyone have any recommendations on what to invest that Roth IRA into?

The simplest, easiest thing to do is index funds or ETFs, and in both cases I'd lean toward Vanguard. So VOO (S&P 500 index) is very easy. They even have a total market index. And if you feel like expanding your horizons, VEA and VWO which are international and developing market index ETFs.

For retirement, are these two accounts going to be enough if I continually save in them over the course of my working years?

It all depends on what your income does, your future needs and expenses, and what your investment returns are. Bottom line, better to save too much than not enough. Plus, it gives you more flexibility later on, if you retire "early" you don't have to worry about early with drawl limits/penalties/etc.

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