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Dipping in my toe....
Old 04-10-2012, 06:20 PM   #1
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Dipping in my toe....

I've been obsessively running every calculator there is for several years... to plan for early retirement. I think we'll be able to get there in 2-3 years.

I'm 50. Spouse is 60.

We were late to the marriage/kid thing so our kids are 9 and 11.... which adds a challenge to retirement planning - retirement concurrent with raising teenagers and funding college. We have 529's that are funded about 1/2 towards my goal for them. I expect to continue funding them until they're in college... so that's an expense that will continue for the first several years of retirement.

I contribute the max to my 401k (including the catchup now that I'm 50). Spouse does an IRA every year ($6000). I have 2 microscopically small pensions. Depending on when I start collecting them it will range between $400 and $700/month.

We've got 2.5 years till the house is paid off if we keep up our extra principal payments. That's a prerequisite to retirement for us - it's the one area we're spending a LOT. When that debt is retired, we'll need less to get by.

We're also putting our house in order. Working on a budget kitchen remodel (after years of living with the original 1960's kitchen.) Also plan to put in new windows while we still have income. Other than those two things, our house is in good shape.

We're both savers. That makes a big difference.

I haven't seen too much discussion in how an inherited IRA (with RMDs required) plugs into the various calculators. A big chunk of our net worth is in an inherited IRA. Currently we're using the RMDs to fund the 529's and pay extra principal on the mortgage.

I also haven't seen to much discussion about whether you should plan on 100% of the college expenses to be funded by 529, or some smaller amount. Any advice appreciated.

Our goal is to be retired and in our kids faces during their teen years - make them miserable with our smothering love. (And prevent them from getting into trouble.)

We're tweeners -caught between kids and aging parents - we have a unit that his parents live in (rent free)... but will be renting that out in the next year or two. (Aging parents are reaching the point they can't live independently). So that will provide about $1200/month rent when it comes online.

Looking forward to joining into the discussions here.

Rodi
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Old 04-10-2012, 09:36 PM   #2
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Quote:
Originally Posted by rodi View Post
I haven't seen too much discussion in how an inherited IRA (with RMDs required) plugs into the various calculators. A big chunk of our net worth is in an inherited IRA. Currently we're using the RMDs to fund the 529's and pay extra principal on the mortgage.
Welcome to the forum!

I also have an inherited IRA (although not FIRED yet). If you are only going to take out your RMD each year, then IMO, I would simply treat it as an annuity/pension, with a COLA that depends on when you're starting your calculations from. Here are the approximate average annual increases in the RMDs for each decade of the beneficiary's age:
50-60 0.10%/year
60-70 0.19%/year
70-80 0.39%/year

Based on the above average increases and when you said you'd like to retire (in a few years), you could call it a pension with a COLA of, say, 0.25% to get a rough approximation to put into your calculator to add in the effect with your other investments.


Quote:
Originally Posted by rodi View Post
I also haven't seen to much discussion about whether you should plan on 100% of the college expenses to be funded by 529, or some smaller amount. Any advice appreciated.
As some would caution you, if you are hoping your children qualify for some student aid (grants/loans/work-study/etc.), then you should think twice on those 529 plans. A much higher percentage of a student's assets are expected to go towards their college education, versus their parents - so every additional dollar your children have in their 529 plans is much less loans/grants/aid they'll qualify for...whereas, if you keep the money in your name, they'll have a (perhaps) relative easier time to qualify.

If you are expecting to have 100% of their college tuition in their 529s by the time they start school, then by all means keep it up...but if not, I'd suggest researching the matter further.
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Old 04-10-2012, 10:37 PM   #3
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Welcome!

There are a number of threads on the forum with good insights and varying perspectives on how to handle college expenses (put "college" in the search bar and read away).

This is a very helpful group so ask away!
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Old 04-10-2012, 11:04 PM   #4
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Are you sure about the 529 impacting financial aid? The 529s are owned by me, not the kids... so they count the same as other assets of mine. It's one of the reasons we went with the 529 vs cloverdale or ugma. But I could be wrong....
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Old 04-11-2012, 05:45 AM   #5
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Hi rodi, welcome to the forum.
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Old 04-12-2012, 05:25 AM   #6
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Welcome, rodi.
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Old 04-12-2012, 09:05 AM   #7
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Welcome aboard, we look forward to hearing more from you. Sorry that I can't add much on college funds or inherited IRAs having not dealt with either...
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Old 04-12-2012, 12:10 PM   #8
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You probably already know this but if your Spouse is entitled to SS then at 62 your spouse can get SS and your children will also receive SS based upon your spouse's full retirement age. (I think your spouse might be able to file and suspend and still get children's benefits but I'm not sure). This can be a very significant amount of money. My DH receives $1847 a month SS and our two kids each receive $879 a month. When our son shortly turns 18 he will no longer receive but our daughter's benefit will increase about $300 a month.
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Old 04-12-2012, 05:40 PM   #9
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I learned that from lurking on these forums. It was something I had no idea about prior to reading it here - but confirmed it on the SS website.

I didn't mention it in my intro because it seemed to be a hot-button topic for some folks. Why start my entry into the ER forums with a hot topic debate.

Thanks for the heads up Katsmeow.
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