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52 now, hoping to make it to 60 and RE
Old 09-14-2017, 01:42 PM   #1
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52 now, hoping to make it to 60 and RE

Hi all. Been lurking a while and I like the neighborhood. The reason for my title is that I work for a large company that has been continually restructuring for a few years. Axe could fall at any time.

Demographics:
  • DW has steady job in IT working for State Gov't. Also 52 yo.
  • Mortgage ($150k left) will be paid in June 2022, unless we knock it out sooner.
  • 2 kids...one is soph in college and other is junior in HS.
  • No debt besides house.
Financials:
  • We both have pensions coming. If we both work until 60, we'll have $90k coming in annually starting at 60.
  • DW & I will get retiree medical thru State plan at employee cost.
  • Will probably start SS at 62 unless something changes my mind. I would just rather start using that money as soon as I can and thereby use less of mine.
  • Projected 401k balances will be $1.9 mil...conservatively. Maxing out until 60.
  • Primary residence worth $600k...may downsize immediately after RE depending on kids.
  • College is being paid approx. 75% from 529 savings and 25% cashflow.
  • Estimated expenses in retirement...$140k annual (post-tax). This is our dream number....if we did everything we wanted to do. Realistically, it will be between $110k and $130k
Concerns:
  • Kids independence. This will be on my concern list forever. I worry about my kids future all the time. Genetic thing from my DM.
  • After tax savings. We have very little beyond emergency that I can tap to bridge me to 60...should I be squeezed out early. I know about SEPP but not totally enamored with it. The option gives me some peace of mind.
  • LTC. Been reading a lot about LTC insurance and the way the premiums have been escalating, I'm leaning toward self-insuring but need to do more research.
Would love to hear thoughts good/bad on my situation.

R2G
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Old 09-14-2017, 03:20 PM   #2
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Quote:
Originally Posted by Ready2Go View Post
Hi all. Been lurking a while and I like the neighborhood. The reason for my title is that I work for a large company that has been continually restructuring for a few years. Axe could fall at any time.

[*]Estimated expenses in retirement...$140k annual (post-tax). This is our dream number....if we did everything we wanted to do. Realistically, it will be between $110k and $130k[/LIST]Would love to hear thoughts good/bad on my situation.

R2G
Did you run everything thru firecalc ? What did it say?
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Old 09-14-2017, 03:57 PM   #3
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Quote:
Originally Posted by Ready2Go View Post
Hi all. Been lurking a while and I like the neighborhood. The reason for my title is that I work for a large company that has been continually restructuring for a few years. Axe could fall at any time.

Demographics:
  • DW has steady job in IT working for State Gov't. Also 52 yo.
  • Mortgage ($150k left) will be paid in June 2022, unless we knock it out sooner.
  • 2 kids...one is soph in college and other is junior in HS.
  • No debt besides house.
Financials:
  • We both have pensions coming. If we both work until 60, we'll have $90k coming in annually starting at 60.
  • DW & I will get retiree medical thru State plan at employee cost.
  • Will probably start SS at 62 unless something changes my mind. I would just rather start using that money as soon as I can and thereby use less of mine.
  • Projected 401k balances will be $1.9 mil...conservatively. Maxing out until 60.
  • Primary residence worth $600k...may downsize immediately after RE depending on kids.
  • College is being paid approx. 75% from 529 savings and 25% cashflow.
  • Estimated expenses in retirement...$140k annual (post-tax). This is our dream number....if we did everything we wanted to do. Realistically, it will be between $110k and $130k
Concerns:
  • Kids independence. This will be on my concern list forever. I worry about my kids future all the time. Genetic thing from my DM.
  • After tax savings. We have very little beyond emergency that I can tap to bridge me to 60...should I be squeezed out early. I know about SEPP but not totally enamored with it. The option gives me some peace of mind.
  • LTC. Been reading a lot about LTC insurance and the way the premiums have been escalating, I'm leaning toward self-insuring but need to do more research.
Would love to hear thoughts good/bad on my situation.

R2G
I would make building up your after-tax savings a priority. Gives you some cushion against 3 of the things you're concerned about:
-Bridging to 60 if you get "expelled"
-Long term care
-financially transitioning your kids to independence.

Will also give you some flexibility in how you manage your drawn down after 60. Everything in your tax-deferred accounts will be taxed as ordinary income, while your after-tax accounts are likely to have a mix of capital gains, dividends and interest.
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Old 09-14-2017, 07:00 PM   #4
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The pension + retiree medical should give you some comfort. (Wish I had those!).

LTC is a tough issue. I bought insurance. If I had it to do over again, I probably would not have done so because of the unknown premium increases and the fact that I am able to self insure. OTOH, my policy is an unusually good once (group coverage; no longer available).

The "kid thing" is pretty individual. My view is I will pay for the kids to go to college, wherever they want & can get in. So they will graduate with a good degree, in whatever they want to study, and no student loans. Beyond that, they need to pay their own living expenses.
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Old 09-14-2017, 07:05 PM   #5
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I caution you on the state retiree medical. The government I worked for dumped all the pre-Medicare retirees off the employee plans. The retirement system had to scramble to find replacement plans. My portion of the monthly premium went from around $300 to over $700 in a few years.
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Old 09-15-2017, 09:52 AM   #6
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Originally Posted by Blue Collar Guy View Post
Did you run everything thru firecalc ? What did it say?
Just recently started using firecalc. I like to see the hard numbers in a spreadsheet. When I plug in numbers for age 60, all is good. Not close to zero.
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Old 09-15-2017, 11:29 AM   #7
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Welcome Ready! If you haven't found them already, we have a helpful list of things to think about, particularly since you are concerned about the axe falling before you make it to 60.

Some Important Questions to Answer

I second the motion for you to work on your after-tax savings, even if it means cutting back on discretionary spending for a few years.
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Old 09-20-2017, 06:47 PM   #8
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I don't see any Roth money. Post tax stocks (tuned for tax drag) in my portfolio are very important, also I harvested some LTcap loss during the market down turns in those accounts. That post tax stock account combined with LTcap loss is a ready source of tax free cash for unaccounted expenses like buying a car. The government has a surprise for you at age 70. You will be required to take required minimum distributions from your 401K's which may very well kick you into a high tax bracket given your pensions and SS income, so do some tax planning now for that FOR SURE eventuality while you have some time to maneuver before age 70.

Best
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Old 09-21-2017, 10:23 AM   #9
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I don't see any Roth money. Post tax stocks (tuned for tax drag) in my portfolio are very important, also I harvested some LTcap loss during the market down turns in those accounts. That post tax stock account combined with LTcap loss is a ready source of tax free cash for unaccounted expenses like buying a car. The government has a surprise for you at age 70. You will be required to take required minimum distributions from your 401K's which may very well kick you into a high tax bracket given your pensions and SS income, so do some tax planning now for that FOR SURE eventuality while you have some time to maneuver before age 70.

Best
Thanks of the feedback! We have approx. $100k in roth.
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