Retiring in 7-8 Years But Have Been Big Spenders

[38Chevy454]

I realize your husband's goal is to keep working through 4 more years. Sucks they are freezing salaries at 2016 levels. Is the 4 more years to boost pension calculation factors, or from what you said it freezes soon? So continuing working is just to have the income and some increased savings? It seems you could make it no matter what happens, are there any voluntary incentives for your husband to possibly take and leave earlier? The incentive may be a nice offset depending on what it entails.

Overall, good to start tracking the spending and general budget. As I tell many of my co-workers and friends, you can make the best decisions when you have all the information. Good job on getting better information.

 

[robertf57]

I would re-evaluate the whole life you noted in your initial post. From what I see above, I don't see that you have a life insurance need at all. You don 't have dependents that need that cash at you passing and you don't seem to have an estate need for the cash at your death. Unless the guaranteed return is quite high because of the initiation date of the contract, you undoubtedly are better off investing the cash value outside the policy and foregoing the expense...

 

[Texan1636]

I don't think I saw a mention of whether one or both pensions are inflation-adjusted. That will make a huge difference in terms of determining how much of your future expenses the pensions are likely to cover.

 

[PandaBear]

I realize your husband's goal is to keep working through 4 more years. Sucks they are freezing salaries at 2016 levels. Is the 4 more years to boost pension calculation factors, or from what you said it freezes soon? So continuing working is just to have the income and some increased savings? It seems you could make it no matter what happens, are there any voluntary incentives for your husband to possibly take and leave earlier? The incentive may be a nice offset depending on what it entails.

So the freeze in 2016 is strictly salary. The last freeze is for years of service. In dh's case, if he were to retire today and start pulling his pension, he would make about 52K. At age 60 it is 72K. No voluntary incentives at all. His pension is not inflation adjusted. What he gets at 60 is what he gets forever.

I would re-evaluate the whole life you noted in your initial post. From what I see above, I don't see that you have a life insurance need at all. You don 't have dependents that need that cash at you passing and you don't seem to have an estate need for the cash at your death. Unless the guaranteed return is quite high because of the initiation date of the contract, you undoubtedly are better off investing the cash value outside the policy and foregoing the expense...

We really don't have a huge need anymore for life insurance, but we have had our whole life policies so long it seems the smarter one to keep. But you are right, we do need to look at it more closely.

I don't think I saw a mention of whether one or both pensions are inflation-adjusted. That will make a huge difference in terms of determining how much of your future expenses the pensions are likely to cover.

As I mentioned above, dh's pension is not inflation adjusted. Mine isn't either. Right now it gets 2% a year, but the legislature can change it and it would be applied to both current and future retirees. So we are basically looking at $10,700 per month (gross) in pension. DH also plans to start drawing SS at age 62. So that would be another $1900. I have tried to estimate, based on current expenses, plus what I'd like to do in retirement, what kind of monthly income we'd need in 6-8 years. I have come up with 11K per month. Say 12K just in case. So our pensions and SS just cover it. My goal will be to not withdraw from savings until we have to, and then withdraw the minimum, to accommodate for rising costs as we age.

Of course, if dh was interested in retiring somewhere less expensive, we could sell our house, buy a new one and bank a good chunk of money (easily 1/2 million) But that's not something I want to count on!!

Thanks, as always for the comments.

Panda

 

[PandaBear]

[FONT=&quot]It’s been a bit over one year, and I have regularly read this site, gaining knowledge and enjoying reading others stories. I am now 53 and dh will be 57 next month.[/FONT]
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[FONT=&quot]My husband continues to work (not laid off, hurrah!). He does not believe that he will make it to 60 in his current job-he believes he will face a layoff somewhere between now and then. But who really knows?? At this point we’ve decided just to not worry about it and deal with the aftermath if and when it occurs. [/FONT]
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[FONT=&quot]I made a big change this year in my job (I work in education) and traded a high stress, many hours job for a significantly easier job that offers me the opportunity to learn a new skill. I also always ended up putting a lot of extra hours in during the summer-some I was compensated for and some I was not. Pay wise it’s essentially the same….I receive the same base pay (as a teacher), but in my previous job I was able to work an extra 10 per diem days per year (basically 5 days before and after the end of the school year). In terms of hours, it’s so many less. I can basically plan my own schedule and almost develop the job. I’m super happy! It’s an extremely rare opportunity in any company, but in education it’s almost unheard of. [/FONT]
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[FONT=&quot]In my state, for teachers, there is something called the [/FONT][FONT=&quot]Reduced Workload Program. While there are some parameters to fill, if you meet the criteria, you can work part time at the end of your career, and you and the school district contribute to the pension as if full time. So, you get credit for a full year at full time towards retirement, but the pay is part time. I was so “done” with my job that I was counting the days until 55 when I could reduce my hours. With my new job, I know no longer feel that way. I figure every year I work full time (instead of part time) from 55 to 60 is pay I can use for extras during those years and into retirement (probably for travel).[/FONT]
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[FONT=&quot]The other advantage is that my new skill will be highly desirable for many school districts, so in retirement, I could choose to freelance a bit, at least the first few years. That could provide some fun money as well as nice transition away from the workplace.[/FONT][FONT=&quot] [/FONT]
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[FONT=&quot]Our home value has gone up, from about 750K to around a million. [/FONT][FONT=&quot]

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[FONT=&quot]Our pensions haven’t changed much. If dh were laid off today, his pension would be about $4791 per month. Mine is still about $4624 (at age 60, at 55, it’s about $2600). If he isn’t laid off and works until 60, it’s $6225 per month. Dh will receive social security, but I will not and I won’t have a survivors pension if he predeceases me. [/FONT]
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[FONT=&quot]Our current take home income is still about 13.5K per month.

Our retirement funds are almost 1.1 million (was higher until a couple of weeks ago!)[/FONT]
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[FONT=&quot]Our retirement cash savings isn’t as high as I thought it was, actually only about $155,000. Dh bought a car with some of his mom’s money and I don’t count the wedding account (with currently about 12K) because its earmarked for a specific purpose. Same with cash in our credit union saving accounts. We save for things like taxes, current educational needs, Christmas fund, etc. At any one time in the year it’s about 30-40K.[/FONT]
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[FONT=&quot]One child is out of college and this year we have two in college. (Senior and Freshman). We are helping to fund the entry level masters required for dd (the senior), so have two years after this school year left of double tuition and one year a single tuition. We currently have about 75 in our 529 plans. We expect to go through this year with paying cash, and will use the 529 as a backward chain. It really depends on if and where she is expected. She is applying to one program that would fund 70-80% of her tuition both years (first choice school), some hat would be about 20-30K per year and one that is an accelerated program and would be 67 K for the 15 months. If dh isn’t laid off, then I plan to divert the cash flow we use for college into three “piles” of money: more travel for us before we retire, into the wedding account and for travel after retirement.[/FONT]
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We also have long term care insurance and will continue that.[/FONT]
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[FONT=&quot]We know the terms of my parents trust and dh and will not receive the percentage of the estate that I kind of assumed/expected (but not planned for). Not a huge issue for me and I am actually happy with how my parents configured it (to include grandchildren). I’m pretty confident they did this because of my sisters spouse, who tends to be a spender-I think they wanted to make sure her children would get something. I always assumed that dh might help our kids with a down payment for a house (as both our parents did for us), but now it can be the grandparents doing it! It essentially has no impact on our life. [/FONT]
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[FONT=&quot]What remains our biggest unknown is dh’s job and we just have to accept that and not worry about it![/FONT]

 

[Katiek]

thanks for the update. With the pensions you already have secured and current savings, I expect you'd be fine no matter what happens in the future (although that depends on your expenses), but it's great that you were able to change your job into something you enjoy so much.