Hi so im a 30 year old single man a d i want to retire at age 56 i make 95k a year who has the following...in my 457 plan i have 155k, my roth ira 10k, cash 20k, im fortunate to have 2 pension plans but... one i will get around 1000 a month when i turn 65 and the other i will get 72 percent of my final average pay when im 67 with 1.5% cola, i have no social security...the only debt i have is my house which i purchased recently for 200k and i owe 160k. Currently i max out my 457b 18k every year and i contribute 2k a year to my roth ira. Ive read alot of posts on this site and i feel the people on here can help point me in the right direction. Thank you!
30 year old whose looking for helpful advice to retire at 56
- Thread starter MJT411
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Welcome MJT411 -
It looks like you're doing a decent job with saving - 21% (20k-year savings / 95k-year income)
You're young - so compounding is your friend. And you have the added benefit of a pension qualified job. Nice.
I'd say you're on track for retiring at 56. You're ahead of where I was at age 30... and I retired at age 52.
That said - you're single now... but that might change and your spouse might have other ideas about spending vs. savings... I'd look for a partner that had similar long term goals.
It looks like you're doing a decent job with saving - 21% (20k-year savings / 95k-year income)
You're young - so compounding is your friend. And you have the added benefit of a pension qualified job. Nice.
I'd say you're on track for retiring at 56. You're ahead of where I was at age 30... and I retired at age 52.
That said - you're single now... but that might change and your spouse might have other ideas about spending vs. savings... I'd look for a partner that had similar long term goals.
I forgot to add i also pay into my pension plan that i get at age 67 which comes out to about 9k a year.
Thank you for the positive response. I would like to retire possibly earlier than 56 but i figure thats a good age for me to still do some fishing!
Thank you for the positive response. I would like to retire possibly earlier than 56 but i figure thats a good age for me to still do some fishing!
stepford
Thinks s/he gets paid by the post
You're doing pretty well on the savings side of things. The other big component, though, is to avoid "lifestyle creep" - i.e. increasing your standard of living and expectations as you get older and wealthier. The hobbies, and particularly the spouses, you choose can have a large impact on this - so choose carefully.
+1,000
ghh101
Dryer sheet wannabe
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I agree on the lifestyle creep. I don't have a pension but I was saving quite a bit at 30 and had to resist the temptation to spend more. I made some blunders along the way but I always tried to learn from them.
Blue Collar Guy
Thinks s/he gets paid by the post
As everyone else said your off to a nice start. Life does happen between 30 and 56. Marriage/divorce, kids. Layoffs, you know the routine. I hope to live to see your post at 56 that you retired and can live like a king for the rest of your life.
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Have you modeled out your situation in FireCalc or Quicken Lifetime Planner? If not, that would be a good first step.
MooreBonds
Thinks s/he gets paid by the post
Find ways to slash your expenses without having a significant impact on quality of life. For instance, buy used furniture and cars. Cook at home sometimes instead of eating out all the time. Shop around a bit more when making large purchases. It's a hell of a lot easier for most people to reduce expenses than it is to arbitrarily increase income on a whim. For every $1,000 you reduce your expenses by, you have a doubly beneficial effect:
1) You have more after-tax income to save.
2) If it is a permanent reduction in expenses, then you need 33x (or 40x) less money in your stash to be able to fund your retirement! With your situation with the pensions, it will take a bit more number crunching to determine the exact benefit, but you get the idea.
Adding 1 and 2 above result in a giant impact to your net worth growth.
aaronc879
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Do you have to work until age 56 to get the pension? All you have to do is save enough outside of retirement savings to cover years 56-59 then you can withdraw from your 457 to cover your expenses from 59.5 until your 67. After you hit 67, you'll be so loaded you will have a hard time finding ways to spend your money. That's a pension most can only dream of.
No i dont have to till 56 to get the pension. If i work till 56 i get 72% and if i work till age 59 i get 80% my final average salary of my last 8 years working. I can retire earlier but every year i go earlier i lose right around 2.5% so if i would retire at age 55 i would get 69.5% at age 67. I can collect at age 62 but because im not 67 theres a 6% age reduction for each year im not 67. So i figured wait till im 67 to get the maximum amount unless i needed it i would take it sooner. I thought with a 457 plan there was no age requirement or penalty for early withdrawl as long as i seperated from service
The most important advise I can give based on many associates, but not me personally is the following:
1.) When (most people do) you marry pick a conservative woman, who understands you are not a sugar daddy, and you are not here to make her life a dream. Don't pick someone too pretty, you will have trouble most likely. Pick someone who has your same values regarding religion, can save, is not a spender, and is not afraid to have sex. Finally does not have credit card debt!
2.) Stay on track always, save for your future. Many young people have the idea of forget tomorrow and spend today.
3.) You don't need everything today, live below your means. But don't forget to have fun.
Investment advise is everywhere, just follow John Bogle's blog and this site, it will all work out in time. Time is your friend.
4.) Get a dog if you have time! The best friend, wife, and investment adviser a man ever had. They just love you and don't care how much money you have.
Enjoy life, I went from $1,500 when I got out of college to multi seven figure net worth, but it took 40 years.
1.) When (most people do) you marry pick a conservative woman, who understands you are not a sugar daddy, and you are not here to make her life a dream. Don't pick someone too pretty, you will have trouble most likely. Pick someone who has your same values regarding religion, can save, is not a spender, and is not afraid to have sex. Finally does not have credit card debt!
2.) Stay on track always, save for your future. Many young people have the idea of forget tomorrow and spend today.
3.) You don't need everything today, live below your means. But don't forget to have fun.
Investment advise is everywhere, just follow John Bogle's blog and this site, it will all work out in time. Time is your friend.
4.) Get a dog if you have time! The best friend, wife, and investment adviser a man ever had. They just love you and don't care how much money you have.
Enjoy life, I went from $1,500 when I got out of college to multi seven figure net worth, but it took 40 years.
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aaronc879
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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It's nice to have options. What is the earliest you could retire and still get a (reduced) pension. I know little to nothing about 457 plans. I just thought they were the same as 401K's except for non-profit businesses.
Not non-profit businesses, but for city and local governments, such as a county, or in some places they call it a township.
My compliments on your savings discipline and having a plan at your age. Took me well into my 30's before I figured out what you already know.
+1 on the advice to carefully choose a partner, if you take that path.
Also, stay invested and don't freak out and sell your equity holdings when they decline. If you can stomach it, I'd be at 100% at this point.
+1 on the advice to carefully choose a partner, if you take that path.
Also, stay invested and don't freak out and sell your equity holdings when they decline. If you can stomach it, I'd be at 100% at this point.
So the earliest i can retire and collect a reduced pension at 62 is with 10 years of service. Thank you everyone for the advice and positive outlooks. I started saving heavily in my 457 when i found out about my pension not being able to collect later in life which i know im fortunate to have.
MooreBonds
Thinks s/he gets paid by the post
2 things on the 457:
1) Investment expenses - make sure you check the investment option expenses. Just like 401k plans, 457 (perhaps even moreso than 401ks) plans often are overflowing with expenses, and sometimes even have insurance/mortality expenses added in too! Could be worth it to simply bypass the 457 and just add to the taxable savings if the options are crappy enough.
2) Tax diversification - always pursue tax diversification. No one knows what future tax legislation will be. In 1901, no one thought there would be a personal income tax. In 1985, no one thought you would EVER have social security payments TAXED (because you paid income taxes on them when you were working). Will ROTHs be subject to some form of taxes? Will any Traditional 401k/IRA be subject to a new tax? Will there be a consumption tax instead of income tax? Will you live in an income tax-free state when retired?
Unless you know for a fact that your income will be one extreme while working, and the opposite when retired, I always suggest people pursue tax diversification just as you pursue investment diversification. You might only be "average", but like index funds, you're guaranteed to not get hurt regardless of what happens.
My expenses (excluding bar tabs that are now 0) went 3x when I got married had kids and that is with my SO covering half. You're counting on pension (need to stay with company?) and you need to fund gap between retirement and pension. You probably want some after tax savings in there (max out Roth first) but you can always do 72t
Illinois guy
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You're doing great. Your house will be paid off by then. You should have over a million in the 457b, but you can't collect until 59.5 right? Keep adding to the cash for a cushion
Also. Think about a prenup.......you don't want to get half your legacy stolen by a greedy ex wife
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Lifestyle creep for sure. I am 36 and saving > 35% of Gross, have similar #s to you but instead of the pension you paid into, I have income property. I am on my way to my first pension which honestly wouldn't be much with my plan to FIRE at Fifty!
My family, father, wife all give me reasons why this won't happen, I will get bored, I won't have "enough".
If I can save 75k/yr for next 15yrs that is 1.5mil + any market gains. Add to it a couple of paid off mortgages debt free, and I see no reason why I can't live off some cash reserves for a while. My father's estate will begin paying at 50, but that is by no means why I would quit, I had planned this before I even knew he had money.
I am already over 1/10th of the way there. If you are crafty with XLS, you can create a burndown chart month/month or yr/yr to see your progress of where you should be (green line) and where you are (orange line). Helps me stay inspired seeing that sucker sky rocket with each raise.
Nice work friend.
flintnational
Thinks s/he gets paid by the post
Good Job! As others have mentioned, watch out for lifestyle creep. Somewhere in our early 30's, the DW and I decided our standard of living was satisfactory. From that point forward, we only increased our spending for (our) inflation. All other increased income from raises and bonuses went into savings never to increasing lifestyle. Our savings rate went up significantly over the years.
FN
FN
Agree with others - you're doing great so far. I recommend not only tax diversification but also multiple income streams. If you leave your company or it is acquired or its financial outlook changes, you may or may not get the pension you're counting on. Having a healthy taxable portfolio outside of your employer is a good idea. May also want to consider rental property or hard money loans so you can get an income stream that isn't closely connected to the financial markets or your employer.
TrophyWife
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We have a 457 and we can withdraw now without a penalty. Husband is 52.
