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Should I be worried?
Old 05-21-2006, 01:56 PM   #1
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Should I be worried?

My wife and I retired in summer of 2001. My wife was always a stay at home Mom so has no retirement. We live solely on my retirement income which is a government pension of about $58,700. per year. I am not worried about pension going away since it would take a vote of the state legislature and I really don't see that happening plus the fund is fully funded. We have accumulated savings of $153,000. in taxable funds.

I am starting to worry that inflation will eat up our retirement. My pension is COLAed but not until I turn 62.

I am 59 years old and my wife is 58. Our home is paid for in Florida and we could get about $300,000. for it if we sold today.

We pay about $425. in premiums a year for health benefits. This amount goes up whenever a new union contract is negotiated- every 3 years. The only other money we put out for health are small co-pays for office visits, hospital visits and drug co-pays. We have no dental or vision coverage. Dental runs us about $1500. on average per year and eye about $300. per year.

We live pretty frugally but do not go without anything we need and we travel about 4 times a year. We do save about $2500. of our pension each month.

Both my wife and I will take Social Security at 62. I will get approximately $1500. per month or another $18,000. per year and my wife will get 1/2 of my amount at 62 or approx. $9000. per year.

I have lurked on this board for a while and see all of the great advice people give. So can you tell me if I should be worried? Also will our social security be taxed since I have a taxable pension?

Thanks!

Mike
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Re: Should I be worried?
Old 05-21-2006, 02:28 PM   #2
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Re: Should I be worried?

Quote:
Originally Posted by Worried in FL
My wife and I retired in summer of 2001.* My wife was always a stay at home Mom so has no retirement.* We live solely on my retirement income which is a government pension of about $58,700. per year.*

I am starting to worry that inflation will eat up our retirement. My pension is COLAed but not until I turn 62.

We live pretty frugally but do not go without anything we need and we travel about 4 times a year. We do save about $2500. of our pension each month.

Both my wife and I will take Social Security at 62.* I will get approximately $1500. per month or another $18,000. per year and my wife will get 1/2 of my amount at 62 or approx. $9000. per year.

I have lurked on this board for a while and see all of the great advice people give. So can you tell me if I should be worried?* Also will our social security be taxed since I have a taxable pension?

Thanks!

Mike
The 30+% increase to your yearly retirement income that will take place in 3 yrs when your SS kicks in along with the COLAs that will start at the same time should definately provide inflation protection from then on. So the next three years is all you have to provide for and if you are really saving $2500/mo the next three years will be no problem either.* Even if the $2500/ month was $2500/year, you have enough in savings to provde for any inflation that occurs over the next three years.

And yes at least some of your SS will be taxed based on what you have stated.
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Re: Should I be worried?
Old 05-21-2006, 05:54 PM   #3
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Re: Should I be worried?

Welcome to the board, Worried.

I recommend that you plug your numbers into FIRECalc and see how the withdrawals look. You might have to show the pension as two separate pensions: your current non-COLA pension that "ends" at age 62 and your COLA pension that starts at age 62.

Then add in your Social Security, your savings, and your expenses to see how your income matches your spending.

But if you're saving $2500/month of your current pension then I doubt you guys are going to be choosing among cat foods. Between the COLA and your savings I think you'll stay well ahead of inflation.
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