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Slow but Steady
Old 08-27-2013, 02:14 PM   #1
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Slow but Steady

Hello, recently found this site via iphone app. I have enjoyed reading the stories so thought I would share ours, kinda bland but here goes.

Married in 1989, NW zero, Income zero.

I am a business analyst at a major corporation (never without a job) and my wife is a school teacher (took about 7 years off when children were young).

Consistently saved about 15% of Income to tax deferred accounts. Also saved the maximum to Roth's since they started.

2 Children, both expected to graduate from college and independent within the next 5 years.

Currently ages 46 and 45, hope to retire in the next 5 years
Current / At Retirement
Tax Deferred: $800K / $1.3M
Roth: $160K / $288K
Home: $300K / $300K
Cash: $60K / $60K
Debt: $0 / $0

Plus Pension about $15,000/yr (today's dollars) age 65 (has cola starting immediately).

AA about 80/20

Assumptions: Currently invest about $35,000 to tax deferred accounts and $11,000 to Roth each year, 7% ROI

Investment Strategy: Buy and Hold Low Cost Mutual Funds, Mixture of Growth and Balanced, Small to Large Cap, Primarily Vanguard and T.Rowe Price

Would like to travel the world during retirement staying 6-12 months at each stop. Once we tire of this will likely settle in the Seattle WA area.

Thanks for reading, comments/thoughts/suggestions welcome.
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Old 08-27-2013, 03:27 PM   #2
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Welcome aboard, RetireAge50. Hope you make it and don't have to change your name.
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Old 08-27-2013, 05:27 PM   #3
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How do you plan to fund retirement ages 51-59? Are tax deferred accounts accessible without penalty before 59 1/2?
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Old 08-27-2013, 06:25 PM   #4
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Will use combination of Roth contributions (not earnings) and then get tax deferred money via IRS 72t provisions (no penalty but will pay regular taxes.).

Will also try to save after tax money between now and then but budget is tight with college expenses (paying as they go).

I am going to do all I can to not have to "change my name"
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Old 08-27-2013, 08:04 PM   #5
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- Two Children, expected to graduate and be independent within the next 5 years


I thought the same thing about my 2 kids, but things did not exactly work out as planned. One decided to do a Masters in the UK ( $40K/yr for 2 years ) and the other worked at fairly low paying jobs after graduation before finally joining the Military.

I continued to work for a few years more to handle the extra load.

Hope your expectations come about, but be prepared for the possibility it may not...
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Old 08-27-2013, 09:07 PM   #6
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Yeah, great point and thank you. I'll let them decide their own future and will be there if they need me.

I hope all worked out well for you and the kids. Thank him/her for serving, I think that is awesome.
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Old 08-27-2013, 09:15 PM   #7
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Originally Posted by RetireAge50 View Post
Yeah, great point and thank you. I'll let them decide their own future and will be there if they need me.

I hope all worked out well for you and the kids. Thank him/her for serving, I think that is awesome.

Yes, I am proud of them both.

DD is working in a high tech company in the SF Bay Area.

Son did a tour in Afghanistan, was accepted into the Green Beret course and graduates soon from Ft. Bragg, NC. We're looking forward to attending the ceremony.

When such things happen., the pain and effort ( and expense ) of bringing them up seems to magically dissipate.......
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Old 08-27-2013, 10:35 PM   #8
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Welcome to a great source of information.

Is tax deffered an IRA, or employer sponsored 401k? This may make a difference for you at age 55, with the decision to use 72t. Not that 72t is bad, just understand all your options.

MRG
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Old 08-28-2013, 12:27 AM   #9
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Both 401k and a Rollover IRA. I will check into the age 55 rule but I believe I would have to keep working until the year I turn 55 to use it.
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Old 08-28-2013, 08:04 AM   #10
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Quote:
Originally Posted by RetireAge50 View Post
Both 401k and a Rollover IRA. I will check into the age 55 rule but I believe I would have to keep working until the year I turn 55 to use it.
Yes, you would need to stay on to 55 in order to use it. But you might be able to go 50% reduced hours from 50 to 55 and would qualify (at least it did at my previous employer).

What are you plans for health insurance?

As an ER I think it is also important to be diversified in terms of types of accounts. Some ER people even reduce tax-deferred saving to just optimize the company match and build taxable savings.

More taxable funds would give you more flexibility in managing your income to avoid losing out on Obamacare subsidies, get 0% tax on qualified dividends and LTCG, etc. (all assuming the rules don;t change between now and your ER).

It is nice to have choices.
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Old 08-28-2013, 10:06 AM   #11
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Thanks. I'll have to read up on the health subsidies. Always assumed I would just buy a private health policy.

If I do not use 401k above the match I would essentially lock in a tax rate of 25% ( my current marginal rate). For example if I save $100 and it doubles between now and retirement.
After tax fund would be $150 ($100-$25 immediate taxes * 2 * 0% LTCG).

So this would be good only if I think my marginal rate would be higher than 25% in retirement correct? Or like you said to be able to get health care subsidies...
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