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Just got married, and a plan!
Old 09-12-2012, 05:02 PM   #1
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Just got married, and a plan!

My husband and I just got married in August (weddingmoon elopement roadtrip to Canada, just the two of us). I am 36 and he is 34. We do not plan to have kids.

Together, in the past year, we are maxing out two 457b accounts, two ROTH IRA accounts, and one HSA account. We both work for a university so we each have a 401(a) plan where the employer contributes 14.2% of each salary. By my calculations that is about $66,000+ a year going into some kind of retirement vehicle - which I am assuming we can keep up this pace, well as long as we both work at these jobs!

Combined income: ~$134k (I will get a raise here soon as well)
401(a)/403(b)/457(b) value combined: $351,998
ROTH value combined: $49,548
HSA: $12,000 (about?)
House: $177k left on $255k home (guess)
Cash: $10k
NET WORTH: ~$501,000

We have no CC or student loan debts.

Once some of these larger expenses get out of the way, we plan to contribute again to the 403(b) as during "normal months" we still have some leftover income that goes unspent - plus I have that raise coming. We've had a few large expenses this year (new deck, new braces for each of us, several flights home/funeral, a wedding - all without debt), so the cash on hand took a dent.

Should we have more liquid on hand? We're thinking the contributions of the ROTHs could be used in an emergency. However, when they say "How many months of living expenses on hand do you have?" they are not talking ROTH contributions, right?

We've been tracking our expenses for over a year now (me for like 10 years), I keep detailed categories so I know all the expense breakdowns.

My husband has projected a very early retirement and showed me the numbers (I think he uses an MSN retirement calculator), yet it seems way too early and you just never know what big expenses lie ahead.

Any words of wisdom? Build more liquid savings? I've tried the FIRE calculator and I'm just not getting it.
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Old 09-12-2012, 05:20 PM   #2
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The FIREcalc is one of the more comprehensive calcs... Are you hitting all the different tabs at the top? Not just the first/default front page.
The tabs that come after that page let you choose everything from expected SS and when you expect it, pensions, whether you're still working, and saving....

I also run quicken lifetime planner. It lets you play "what if" with quite a few variables.

Running the two of them allows me to compare/sanity check things.

Congrats on your marriage. It's nice to be able to combine all the numbers, isn't it.

One more thing to add to your plan - an accurate budget. Start tracking what you spend. Keep it in a spread sheet - you can adjust out the things that go away in retirement (like saving for retirement). But you'll probably need to add in other things (higher health care costs).
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Old 09-12-2012, 05:31 PM   #3
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I'll give FIREcalc another crack, not sure what I was doing...

I track every cent we spend in Excel with categories that I set up.

Thanks! It is nice to combine the numbers!
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Old 09-12-2012, 05:33 PM   #4
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Congratulations on your marriage ginadog.

Looks like your finances are in good shape, and if you can keep up that pace of saving you should do well. Your emergency fund looks light. The ROTH is money you should keep, because it grows tax free and is not subject to RMD. Emergency money is typically in a bank or short term bond fund, most folks here would suggest no less than 3 months spending plus enough for a major repair, such as a new roof.
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Old 09-12-2012, 06:05 PM   #5
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Quote:
Originally Posted by rodi View Post
The FIREcalc is one of the more comprehensive calcs... Are you hitting all the different tabs at the top? Not just the first/default front page.
The tabs that come after that page let you choose everything from expected SS and when you expect it, pensions, whether you're still working, and saving....

I also run quicken lifetime planner. It lets you play "what if" with quite a few variables.

Running the two of them allows me to compare/sanity check things.....
+1

This is what I do. Quicken Lifetime Planner is the base and then I run Firecalc with the same assumptions to get a Monte Carlo-type view (and yes, I know that Firecalc is not truly Monte Carlo).
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Old 09-12-2012, 06:49 PM   #6
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Start building up some non-retirement accounts, you can use them for emergency funds and if you're retiring really early, you'll need some money before you can start taking money out of your retirement funds.

Things like CD's, a regular brokerage account, money market funds, etc. DH and I are in that stage and still looking for the best options.
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Old 09-12-2012, 06:52 PM   #7
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I'd like a little more in the emergency fund also. The Roth is great as a fund for real emergencies, like well after a job loss, but you want to have enough on hand for those "spending emergencies" like a new roof. I just add that kind of stuff into the budget and the monthly contributions build into sort of an emergency fund.
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Old 09-13-2012, 09:04 AM   #8
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Maybe your emergency fund is about right. If your university jobs are permanent positions then they are probably pretty secure (unless you are facing real budget cuts). If one of you loses a job, and that person gets unemployment and the other partner keeps the job but maybe trims back the retirement contributions a little, can you make the monthly expenses be less than the monthly income? If so then you are ok.

At least that is how I run my own emergency fund. I have very little because our generous unemployment plus one spouse's income is more than enough to meet our monthly liabilities (operating expenses plus required debt service).

And yes, your husband is probably correct in that you will be set up to have a very early retirement if you maintain this course. Especially if you bank most of the raises over the years. I would guess mid-40's (without crunching the numbers).
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Old 09-13-2012, 11:21 AM   #9
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Congrats on your marriage!

Quote:
Originally Posted by ginadog View Post
We do not plan to have kids.
This will make the most bang to your plan. I would conservatively estimate that your decision probably expedites your ER for at least 10 years.
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Old 09-13-2012, 01:56 PM   #10
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We were planning for the 457b to be used for preretirement age income. But, we'll need to stock up some other savings as well since this could be quite a few years.

Jobs have been secure for a while - despite each being soft funded.

So we could let the emergency fund build up slower and sporadically (using what is left over income after maxing the other stuff out)

Or we could hold off on ROTH contribs for a while and put that $833 a month towards the emergency savings to build it up.
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Old 09-13-2012, 10:24 PM   #11
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Or we could hold off on ROTH contribs for a while and put that $833 a month towards the emergency savings to build it up.
Definitely do the Roths instead of merely leaving the money in cash. You can always pull the cash out of Roths later penalty free (your contributions, not earnings). But you can't go back to years you missed your $5000 per capita contribution and make it up.

Good catch on the 457s - I have one as well and it is awesome that it can have unlimited withdrawals without penalty before the normal age 59 1/2 (just pay taxes on withdrawals as ordinary income). This will allow you to tap those after tax retirement savings without having to lock yourself in to a withdrawal using a 72t plan. I am a government employee and max the 457 every year, hoping to use it to smooth my income stream during ER as needed.
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