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Old 03-15-2014, 08:14 AM   #21
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Get an app for your phone that tracks expenses and every time you spend a dollar, put it in the app. After a month, I think it will open your eyes as to,where all your money goes, and where you might trim spending if necessary.
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Old 03-15-2014, 11:11 AM   #22
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Originally Posted by seraphim View Post
Get an app for your phone that tracks expenses and every time you spend a dollar, put it in the app. After a month, I think it will open your eyes as to,where all your money goes, and where you might trim spending if necessary.
While this can be useful to identify the categories of where your money goes (* see note below), I'd say it might be better to take a simple step first. If you are like us, there are only one or two accounts used to pay the bills. So simply add up the summary monthly withdrawals from those accounts for a year. Then add back any line items that were reimbursed, or where really a 'transfer' (like an IRA contribution - that just moved money, it isn't 'gone').

With very little effort, you have your annual 'spend'. That's a good starting point. Now you can start identifying the things that might change in retirement, and add/subtract as needed.


(*) I still struggle with how helpful this would be. So I see that I spend $189.64 at Costco, and $43.26 at Trader Joe's, and fill up the tank for $xx.xx today? What does that tell me? What can I learn from that?

For me, it just seems to make sense to think in terms of 'value' for every purchase I make. When I purchased our vehicle, mpg was factor, and we conserve miles - so our gas costs is what it is. I honestly don't think tracking it would change any behavior whatsoever - we don't go driving for the heck of it. If I'm buying steak & lobster, it's because I want it and it is of value at that moment. Another week, I might decide I'm fine with more mundane meals. And if that fits within my annual budget, I'm fine. If I feel I need to cut back, I'm going to start to look at things more closely, and question that value proposition. But $189.64 at Costco probably includes toilet paper - I'm not cutting that out, so what does $189.64 tell me?

-ERD50
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Old 03-15-2014, 12:00 PM   #23
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I have started tracking only the highly variable categories each month. Big expenses we review and try to lower, like car insurance and cell phone bills, but generally they are otherwise the same month after month. Bills like medical are what they are. We get doctor care when we need it. We wouldn't consume extra medical care if we had money left over so I don't really track that.

The categories I do bother to track are variable categories like gas, entertainment and groceries. It is a game to me to try to stay under budget. Yesterday we went out for lunch to a nice restaurant in a marina with views of San Francisco, The Golden Gate Bridge, etc. with a gift certificate I received from a previous special. I have a notebook with plastic sheets filled with gift cards and coupons like that that I collect. I really like the restaurant, but being able to go places like that and not spend much money was almost the best part. I like the thrill of the (bargain) hunt and coming in under budget. That is one of my hobbies these days.
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Old 03-15-2014, 02:32 PM   #24
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Thanks Gumby. That is good information.
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Old 09-29-2014, 01:10 AM   #25
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Iím not sure my husband and I fit in here, as we are looking at a retirement age of 60.

Our facts are as follows, as much as I know right now.
At age 60, my husband can draw a pension at approximately $6375 per month (in fall 2018)
I am 3 Ĺ years younger and can also draw a pension at age 60, at approximately $4624 per month.
Our current take home income is $13,466 per month.

Currently we fund college and one childís competitive sport from savings and from our current salaries (about 43K a year from our salaries, the rest from savings). We also have a mortgage of close to $2000 per month, which will be paid off in a couple of years. S

We have a million dollars in our 401Kís and IRAís. We also have just regular savings of maybe $200,000 (not exactly sure) from some inheritances. While my husband has the opportunity for social security, we are not including that in our planning. Anything we get is a bonus. Itís quite possible I will inherit money from my parents, but thatís not something we will plan for. If I had to guess, I would think low 6 figures.

We currently have term life insurance purchased when our kids were young which expires in about 5 years. We are getting pressure from our agent to continue it, or change to whole life. However, we are thinking of just letting it expire. We are thinking it did its job, which was to protect of family in those years of kids being at home and going to school (we maintained enough insurance to pay off the house and provide a financial buffer for the remaining parent) We still have whole life policies that continue to provide term insurance, as well as cash payout which we plan to continue at least for now.

We also have long term care insurance and will continue that.

Unknowns for us right now:
  • My husband could be laid off. If he is, heíd take retirement right away. Depending on when this would happen, his pension would be reduced by about $5000 per year away from age 65. So if it happened tomorrow, weíd lose about 22K per year. Itís not that itís likely, but he has survived many layoffs and his department is a lot smaller than a few years ago.
  • With an anticipated retirement at 60, I can begin to work part time at age 55. Iíd have my yearly salary reduced, but my retirement would accumulate as if I was full time. Something I can consider.
  • We definitely would want any kids marrying to have a nice wedding, so I feel we need to set aside 100K for all three.
  • Weíre not really sure what weíd want to do in retirement. My husband is a golfer and I think would like to be a marshall on a course. The pay is ridiculous around here (just above minimum wage) but you get free golf. I may decide to do volunteer work. I may also need to provide care to my own mom. Often, people in my position go back to the previous workplace and help with projects/training/etc, especially the first couple years transitioning from work to retirement.
  • Both of us will want to travel. We own 2 timeshares and will likely end up with one more (from my parents).
  • If my kids have their own kids, I hope to be able to be a nanny when the babies are young (the first year). If my kids live out of this area, I am open to temporarily relocating to help them out. Of course, thatís a big unknown. My daughter is already certain sheíd want that, but with boys and their wives, who knows If we have our children in the area, I am absolutely open to providing day care when they are young and being the after school nanny when they are in school, if their parents want that help (My mom babysat my kids and was the afterschool nanny, ferrying the kids to activities when I worked, etc)
  • In terms of relocating for retirement, that is a huge unknown. I donít see that happening. But I also wouldnít rule it out. So much depends on variables that I donít know as of nowÖ..if our siblings stay in the area, if our kids do, what our health is like.
  • My husbandís sister is unemployed and her unemployment is getting close to ending. Not sure how much we will need to help her. Also, her daughter (who is about 20 years older than our kids and 10 years younger than me) has special needs. She works as a transporter at a hospital but isnít really independent. We want the mom to make sure the house is in a trust so her daughter canít get manipulated by someone after the mom is gone. We may need to provide some financial support as well.

Thatís all I can think of at this moment. Thanks for any insight.
Well, I have done a few things over the last few months. We've started looking at our budget more carefully. I know all our bills, the hard part is all the misc credit card charges and cash!

We have looked at our college expenses and will begin pulling from the 529 account next year. That frees up cash from our monthly cash flow. We plan to put that money aside to save for a car for me (maybe not the entire amount, but a significant down payment)

DH's pension will be frozen soon. The company will freeze salaries in 2016 and length of service in 2020. DH hopes/plans to retire in 2019, so will only be impacted by the salary freeze.

DH and I have started the discussion on how we might help out his sister. No final decisions, but at least the conversation has started!

We have also decided to let our term insurance lapse when the 20 years is up, despite the pressure from the agent.

Hearing about our nephews wedding, as well as a friends daughter, has made me realize our 100K may be a little high, but not too outrageous. I think we will target 75K.

My husband just survived a small layoff and it is expected another layoff will happen this spring. Obviously, the longer he can hang on, the better.

Anyway, I continue to read here and educate myself. I feel better knowing we are moving forward and making decisions.

Thanks
Panda
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Old 09-29-2014, 09:03 AM   #26
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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.
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Old 09-29-2014, 10:27 AM   #27
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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...
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Old 09-29-2014, 05:16 PM   #28
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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.
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Old 09-30-2014, 12:01 AM   #29
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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.



Quote:
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.



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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
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Old 09-14-2015, 10:05 AM   #30
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Itís 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.

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 weíve decided just to not worry about it and deal with the aftermath if and when it occurs.

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 itís essentially the sameÖ.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, itís so many less. I can basically plan my own schedule and almost develop the job. Iím super happy! Itís an extremely rare opportunity in any company, but in education itís almost unheard of.

In my state, for teachers, there is something called the 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 ďdoneĒ 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).

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.

Our home value has gone up, from about 750K to around a million.


Our pensions havenít 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, itís about $2600). If he isnít laid off and works until 60, itís $6225 per month. Dh will receive social security, but I will not and I wonít have a survivors pension if he predeceases me.

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!)


Our retirement cash savings isnít as high as I thought it was, actually only about $155,000. Dh bought a car with some of his momís money and I donít 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 itís about 30-40K.

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 isnít laid off, then I plan to divert the cash flow we use for college into three ďpilesĒ of money: more travel for us before we retire, into the wedding account and for travel after retirement.

We also have long term care insurance and will continue that.


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). Iím 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.

What remains our biggest unknown is dhís job and we just have to accept that and not worry about it!
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Old 09-14-2015, 10:13 AM   #31
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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.
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