boilerman
Recycles dryer sheets
- Joined
- Sep 29, 2007
- Messages
- 155
Hi, I just discovered this board a few weeks ago and I have to say I am impressed and looking forward to learning more about the whole subject of retirement planning. Finding this forum has been a superb wake up call for me!
I had seen in about 3 or 4 different magazine and newspaper articles a reference to only withdrawing 4% of your savings each year to be able to preserve it throughout retirement. I could not figure out how they had come up with it so I did some searches and found this board as a result. I have read through some of the “best of” threads and I think this will be a wonderful resource in the years to come.
OK, here are my vitals:
Age: I am 47, wife is 48, and we have one 12 year old kid. We live in Colorado but I’m not sure if we will stay here after retirement.
Income: $140K+ per year for me and about $50K for wife. Kid has no income and, in fact, is a complete black hole as far as money goes
Pension: Yes, I’m lucky to still have a pension. If I retire at 57, I will receive about 66K per year fixed (i.e. no cost of living increases.) As I think is probably typical with pensions, every year I work beyond that increases it greatly and so I found the thread on “one more year…” to be fascinating. If I actually waited until 65 the amount is in the 6 figures somewhere but then again if I wanted to wait until 65 I would not be posting to the ER forum. One of my concerns is about my company freezing pension benefits as IBM and some others have done.
401K: We have about $500K spread in about 90% stock mutual fund and 10% in company stock. I have periodically moved money out of the company stock just for diversification purposes since all of the 401K match comes in the form of company stock. I currently put 15% of my income into the 401K each year which maxes out the IRS limits on doing pre-tax contributions. The company converts it to post-tax contributions and still does the match.
No debt except for a mortgage, about $240K at 5.25% for 30 years. I’m currently paying an extra $700 a month extra in principal with the goal of being done with house payments when I retire.
I’m looking at retiring in 10 years at age 57. I’ve been doing spreadsheet projections for several years but when I recently turned 47 and realized that it’s only 10 years away I started to give it more serious thinking. My 401K should grow to somewhere between $1.1M and $1.8M given a growth rate of 5% to about 10%. (and of course I’m still making contributions and getting the company match.) For 10 years, is 5% growth about right? I know the market averages are more in line with 9 or 10% but what do people use for a 10 year horizon?
I have looked at the FIREcalc tool and found it pretty cool – can it do something similar to project how much I’m likely to have in 10 years based on the various combinations of 10 year runs in the past? That would be pretty interesting to see.
Here are the issues I hope to learn more about in the coming months:
- Since we have never used a written budget, I really don’t know how much money we will need in retirement. I’ve seen some say that $50K a year is fine if you live simply but I’m afraid we’ve become used to some luxuries that we might not want to give up. So one major goal is to get a good estimate of post retirement expenses.
- Since my pension is fixed, I’ll looking to see if I can treat it like more like a lesser pension with an increase each year for inflation. For example, say I get $66K a year but I only spend $52K the first year. I bank the difference and then next year spend $52K + 3% for inflation and bank the rest. My spreadsheet says that if I invest (at 6%) the saved amount each year the money should last 30+ years. Looking for feedback on that approach.
- Places to live in retirement. Do most people stay put? If you move to a cheaper locale, are most people happy? I realize there’s no “right” answer but I think I can learn from other’s experiences.
- I have the advantage of enjoying my job and feeling like I do really contribute something to society with my work. So learning how others make that adjustment will be interesting. It also makes the “one more year” dilemma interesting to read about.
I hope this isn’t too long-winded for folks…
I had seen in about 3 or 4 different magazine and newspaper articles a reference to only withdrawing 4% of your savings each year to be able to preserve it throughout retirement. I could not figure out how they had come up with it so I did some searches and found this board as a result. I have read through some of the “best of” threads and I think this will be a wonderful resource in the years to come.
OK, here are my vitals:
Age: I am 47, wife is 48, and we have one 12 year old kid. We live in Colorado but I’m not sure if we will stay here after retirement.
Income: $140K+ per year for me and about $50K for wife. Kid has no income and, in fact, is a complete black hole as far as money goes
Pension: Yes, I’m lucky to still have a pension. If I retire at 57, I will receive about 66K per year fixed (i.e. no cost of living increases.) As I think is probably typical with pensions, every year I work beyond that increases it greatly and so I found the thread on “one more year…” to be fascinating. If I actually waited until 65 the amount is in the 6 figures somewhere but then again if I wanted to wait until 65 I would not be posting to the ER forum. One of my concerns is about my company freezing pension benefits as IBM and some others have done.
401K: We have about $500K spread in about 90% stock mutual fund and 10% in company stock. I have periodically moved money out of the company stock just for diversification purposes since all of the 401K match comes in the form of company stock. I currently put 15% of my income into the 401K each year which maxes out the IRS limits on doing pre-tax contributions. The company converts it to post-tax contributions and still does the match.
No debt except for a mortgage, about $240K at 5.25% for 30 years. I’m currently paying an extra $700 a month extra in principal with the goal of being done with house payments when I retire.
I’m looking at retiring in 10 years at age 57. I’ve been doing spreadsheet projections for several years but when I recently turned 47 and realized that it’s only 10 years away I started to give it more serious thinking. My 401K should grow to somewhere between $1.1M and $1.8M given a growth rate of 5% to about 10%. (and of course I’m still making contributions and getting the company match.) For 10 years, is 5% growth about right? I know the market averages are more in line with 9 or 10% but what do people use for a 10 year horizon?
I have looked at the FIREcalc tool and found it pretty cool – can it do something similar to project how much I’m likely to have in 10 years based on the various combinations of 10 year runs in the past? That would be pretty interesting to see.
Here are the issues I hope to learn more about in the coming months:
- Since we have never used a written budget, I really don’t know how much money we will need in retirement. I’ve seen some say that $50K a year is fine if you live simply but I’m afraid we’ve become used to some luxuries that we might not want to give up. So one major goal is to get a good estimate of post retirement expenses.
- Since my pension is fixed, I’ll looking to see if I can treat it like more like a lesser pension with an increase each year for inflation. For example, say I get $66K a year but I only spend $52K the first year. I bank the difference and then next year spend $52K + 3% for inflation and bank the rest. My spreadsheet says that if I invest (at 6%) the saved amount each year the money should last 30+ years. Looking for feedback on that approach.
- Places to live in retirement. Do most people stay put? If you move to a cheaper locale, are most people happy? I realize there’s no “right” answer but I think I can learn from other’s experiences.
- I have the advantage of enjoying my job and feeling like I do really contribute something to society with my work. So learning how others make that adjustment will be interesting. It also makes the “one more year” dilemma interesting to read about.
I hope this isn’t too long-winded for folks…
