Turning 30: Adam Black

Adam Black is close to where he needs to be by virtue of a federal job that includes both a monthly pension and retiree health insurance. Black, who turns 30 in December, is a quality assurance coordinator for the Employee Benefits Security Administration in the Department of Labor, a job that brought him into contact with struggling retirees and sharpened his interest in making sure he was on track. His wife, Katherine Black, is a vice president of product development for a mid-size company that makes online lobbying tools. Black earns $80,000 and his wife earns $85,000.

"As a federal employee, Adam has a great employee benefits package," said Salisbury.

If he works until age 67 with 43 years of service, he'll receive a pension equal to 43 percent of the average of his three highest-paid years -- or an estimated $151,704 in 2043 dollars, said Salisbury. On top of that, he'll receive an estimated Social Security benefit of $95,256 (about 27 percent of his final salary in 2043 dollars). That's a total of 70 percent of earnings.

And (drumroll here), the Blacks will have lifetime retiree health insurance for which he will pay only about 25 percent of the premium cost. That's worth about $300,000 in today's dollars and will be worth far more in 2043, as health-care costs continue to soar, according to Salisbury.

The couple also contributes $8,250 a year to 401(k) plans, on top of which Adam Black receives an employer matching contribution of $4,000. Katherine Black's company has a profit-sharing plan that makes an annual discretionary match. So together, the annual amount invested in their 401(k)s adds up to more than 7 percent of total pay. They own a townhouse in Arlington in which they have about $80,000 in equity. And they both have Roth individual retirement accounts. Altogether, their retirement savings are about $85,000. Another savings account, earmarked for a down payment on the larger house they hope to buy, has about $70,000 in it, invested in mutual funds.

Adam Black has $50,000 in student loans at an interest rate of about 3.3 percent, on which he is paying $270 a month.

What our experts recommend:

According to Diekvoss, assuming the Blacks will need retirement income of 75 percent of their salaries, realize an after-tax rate of return on investment of 7 percent and receive no Social Security benefits, they will be underfunded by $295,000. To make up the shortfall, they would need to increase retirement savings by $2,000 a year. They should do that first by maximizing participation in their 401(k)s, which will allow them to defer taxes on income and appreciation until after retirement. That would also reduce their taxable income to below $150,000, the income ceiling for making the maximum contributions to a Roth IRA. You pay taxes on money contributed to a Roth IRA, but it grows tax-free and may be withdrawn without penalty at any time. Third on their list of where to put their savings should be the taxable account.

Making the more optimistic assumption that Social Security will be around 35 years from now, Salisbury said he thinks their current retirement savings rate is good.

Both Salisbury and Diekvoss underscore that making a career change could be costly for Adam Black. If he gives up the federal benefits to which he is entitled, he'll need a much bigger paycheck to make up the difference -- and he would need to save a big chunk of his increased pay for retirement. "He and Kathy would need the discipline to save over 20 percent of all future income, just to make up for the loss of these benefits," Salisbury said.

Diekvoss recommends that the Blacks consider increasing their life insurance to enough to pay off any outstanding balance on their home. And Salisbury recommends that, when they buy a larger home, they do it with a 15-year, traditional mortgage, which would free them in 15 years to save and pay for college educations for the children they hope to have.