It feels like I will never get in front of the wave....

[Sniggle]

Warning: Personal cathartic post...no one else wants to listen so I thought you all might)

Anyone else feel this way? If you could just get to a certain level of saving, or payoff a lingering debt you would get in front of the wave and the momentum of your saving and planning efforts would carry you worry free for the last few years into retirement...would that not be great.

I linger on this site, and have posted a time or two, but unlike some of the stellar, smart, aggressive, lucky and/or accomplished folks that post on here, I am just an average megacorp minion with a non-working spouse that balances paying the bills and saving....holding on to the hope that I can retire a few years early at 62.

Recently my company got purchased, and although I still have my job, the pension plan I had been counting as a leg in my retirement stool is going to be closed at the end of '19, eliminating approx. $11,000 in annual income for the 6 years of service I will miss out on from the close to age 62. More retirement anxiety...yea.

I am not in a bad position having made a few good decisions throughout my working life (28 years army reserves to earn a retirement (at 60) & health care, $1.4 million saved in 401K and Roth, refinance my house to a 15 year loan), but I am not where I feel I need to be ($2.5 million 401K/Roth). With 9 years of working (hopefully only 9) to go, I can not seem to get comfortable with where I am and spend too many waking hours and sleepless hours contemplating where I am, looking at my 401K balance and weighing the what ifs.

It seems the closer I get....the more anxiety that builds. I wish I had a rich relative that would leave me $ 2 million to put me on the glide path, but alas I do not.

Anyway, thanks for listening

 

[euro]

Looks to me like you are in pretty darn good shape - better than many even on this site. Especially with the health insurance squared away. Nice assets! Alas, it is all in the expenses - how much do you need per year? You may be much closer than you think!

 

[brett]

Be thankful for what you have. You are far better off than many others.

You need to change your way of thinking otherwise your chances of attaining happiness will be extremely low.

 

[Hermit]

You are a megacorp minion, your wife does not work, and you have stashed 1.4 million! I would venture a guess that to achieve all that, your living costs are not too high. I would further guess that if you add up your pension, military pension, and Social Security at 62, you will be able to retire at 62 and not skip a beat! Have you done a detailed review of your spending vs. future income? Not having that pair of golden handcuffs called "bigger pension" might just encourage you to think about retiring even earlier!

 

[Enuff2Eat]

Be thankful for what you have. You are far better off than many others.

You need to change your way of thinking otherwise your chances of attaining happiness will be extremely low.

agree with Brett. Your level of happiness is low. Be thankful because you have A LOT compare to an average person.

 

[HawkeyeNFO]

I don't understand. What's the issue? You may be able to retire already! More details please.

 

[DrRoy]

I also had a megacorp pension plan get capped in 2007. it just requires you to adjust to the new reality. Even though you have lost something (as did I), you are still in far above average condition.

 

[samclem]

I also had a megacorp pension plan get capped in 2007. it just requires you to adjust to the new reality. Even though you have lost something (as did I), you are still in far above average condition.

Yes, it is a setback, because the final years of contributions/time in service can add a disproportionately large percentage to the expected monthly retirement check. But, contributing to other accounts for the final few years (tax advantaged or not) can help offset the loss. For some people with a disproportionate amount of assets in the "single pot" of an employer's non-COLA'd pension plan, it might even turn out better in the long run.

For the OP--the best use of your time at this point may be to concentrate on the spending side. You should probably keep saving, but it's unliely to move the needle very much. Look at what you spend now, crunch the numbers on what you'll be getting from various income streams long term (and don't forget to decrement that non-COLA'd pension in the outyears to account for inflation), and see where you stand. If you aren't going to be in good shape when you expect to retire, then now is the time to start tightening your belt rather than waiting until the day you clean out your desk. Getting a healthy cushion in cash equivalents to cover your withdrawals for the first few years can reduce your sequence-of-returns risk appreciably, especially if a market downturn is more likely. Stock valuations are quite high right now, which (historically) increases the risk of a fall (through we can't say when), and this might come at a bad time for you.

 

[pb4uski]

No whining! If you contribute the max and your account grows at 5% you'll be there. Slow and steady wins the race.

Age	Year	Contrib	5% Earnings	Balance
53	2016			1,400.0
54	2017	24.0	70.6	1,494.6
55	2018	24.5	75.3	1,594.4
56	2019	25.0	80.3	1,699.7
57	2020	25.5	85.6	1,810.8
58	2021	26.0	91.2	1,928.0
59	2022	26.5	97.1	2,051.6
60	2023	27.0	103.3	2,181.8
61	2024	27.6	109.8	2,319.2
62	2025	28.1	116.7	2,464.0

 

[NW-Bound]

There ya go. Not OMY but NMY.

Or you can try to cut expenses to retire on a smaller stash.

 

[W2R]

It seems the closer I get....the more anxiety that builds. I wish I had a rich relative that would leave me $ 2 million to put me on the glide path, but alas I do not.

Anyway, thanks for listening

Your situation sounds like a dream come true. I'm not sure what the source of your anxiety could be. Many of us had less of a stash than you do, did not inherit $2 million, and retired before age 62 with more than enough. I agree with the others that you might be able to retire earlier than you think. A lot depends on what you spend, so you'll need good records of that.

 

[ponyboy]

You have 1.4million in retirement...I cant relate.

 

[OneDay]

Try this calculator, I like it because you figure in SS and a pension. Good job on your savings so far.

Future Value/Annuity Calculation

 

[sheehs1]

Sniggle, From your post I can tell you are very goal oriented and had set a goal of close to 2.5 million as your comfort level. You evidently had a plan to get there that included the pension at the projected value at age 62. It is more than understandable that loosing the additional $11,000/yr in your projected pension would feel like a wave of resistance. How big a wave only you can say.
The positive is that you are doing well and have 9 years to go. My bet is that you will make it or be close enough that it may be inconsequential. All you can do is what you can do. Good luck to you!

 

[Sniggle]

Thanks all for the replies. As I stated at the top, my retirement stress may not be entirely rational, and this post was basically cathartic.

On the spending side, I still have a few hurdles:

- 14-year old son. Not sure yet what his future holds as he is academically inconsistent (as I was at that age), but I anticipate college in his future. I have about $20,000 of new GI benefits he can use, and then will need to pay the rest. My thought would be that he will fund some of it with student loans, which I will just pay off for him over time. Goal is for him to have no debt.
- I have a French wife who likes horses. She is not fiscally irresponsible, but she does grumble under the relatively loose constraints on spending I impose(basically I need to be able to pay all the bills, have no credit card debt, and keep dumping some money into the 401K before we look at a vacation).

Recent changes have affected my ability to add to savings:
- Retired from the Army Reserves 2 years ago, which reduced my income by $20,000 annually. That income will return in 7 years as Army retirement kicks in at 60.
- Refied the house to 15 year, 3% (from 24 years left, 4.375), which added an additional $200 month on the mortgage.

As a result, I have had to drop my 401K contributions down to 8%, although I think I can start increasing them annually next year. I also have suspended contributing to my Roth's.

'Spending' understanding and control is something I need to do much better. I do not track spending currently, and kinda live from Bonus/Tax refund to Bonus/tax refund (bank account gets health in February/March, and I start worrying about my balance vs. upcoming credit card bill in November-January, rinse and repeat) I think that will be my mission next year, to start to get a clear picture of what our expenses will be in retirement.

 

[Sniggle]

And here is my thinking on why I need $2.5 mil. That amount will give me an annual income of $100,000 (before taxes) using the 4% rule. My total pension starting at 62 will be approx. $50,000 (I need develop a more precise estimate..good project for the holiday break), with the army portion COLA'd (approx. 2/5 of that amount). So that will put me at around $150000 annual income....which will be just about my income in 9 years, give or take, which is my goal.

SS seems too far away, and at this stage I am ignoring it when mulling the numbers in my head although I need to figure out how and when it needs to be factored in. I could probably just view it as a big shot of COLA when I hit 67.

It will mostly be pre-tax, so the tax burden will be about the same. I obviously will no longer be putting $10,000+ into savings annually. I will probably have a mortgage..hard to downsize too much and have land/facilities for a couple of horses, and the expenses that go with horses. I will need to buy another car, as I drive a company car now.

 

[gauss]

SS can make a huge difference in the analysis. For many years I left it out. When the time finally became appropriate for me to consider leaving, I added in the SS. Wow!, what a difference.

I assumed both DW and I would collect at age 70 and live about 30 years. Between the two of us the present value, using cpi as discount rate, of the two SS income streams is over $2 million dollars. Granted, we both worked full careers in engineering.

Regarding pension capping; I also had my Megacorp pension pulled out from under me after 22 years. I had planned to work a full 30 years and get the official retirement, but after this change, NO Way. My pension would not be one penny different if I worked another 8 years for them vs leaving now.

Nobody understood why I, being so valuable, would leave. I guess I could do pension math and they could not.

-gauss

 

[kgtest]

You will be amazed at how much MORE you can spend with that strategy in retirement (assuming you own a home outright). Your income tax liabilities will shrink considerably making that extra $11,000 loss to the pension mute IMHO. You've got more than enough legs to protect your retirement from even wobbling the slightest.

 

[kgtest]

Nobody understood why I, being so valuable, would leave. I guess I could do pension math and they could not.

-gauss

I'm willing to bet most people struggle to do this math or simply cannot be patient enough to learn the math and calculate the pension out. You'd better believe I calculated it even before vested, I absolutely need to know what I am worth in order to know if a better opportunity is lingering. Amazing how people fly blind.

 

[sturbridge]

So that will put me at around $150000 annual income....which will be just about my income in 9 years, give or take, which is my goal.

Wow, I can't even imagine how I could possibly blow 150K a year- I think I'm super spendy in a lot of areas now (though no mortgage) and I spent 47K last year. No horses though.

Don't really understand why you need to have the level of income you expect to be making in 9 years. You are currently paying your bills and saving on your current level of income, do you really expect your expenses to go up that much?

 

[W2R]

'Spending' understanding and control is something I need to do much better. I do not track spending currently, and kinda live from Bonus/Tax refund to Bonus/tax refund (bank account gets health in February/March, and I start worrying about my balance vs. upcoming credit card bill in November-January, rinse and repeat) I think that will be my mission next year, to start to get a clear picture of what our expenses will be in retirement.

Very smart! I'll bet this really helps you to feel better about everything and will help tremendously.

In retirement, I keep track of everything I spend. It really helps. Even though I don't exactly have a budget, just recording every single little expense seems to help me to keep my spending in line.

 

[timemoveson]

You have won, actually

I have to agree with the majority of our friends here, that actually you are free and financially independent right now and don't realize it. You've done exceptionally well, and should be very proud of your accomplishments.

I think you have great flexibility going forward, particularly if you are able to reduce your expectation on spending. I cannot imagine you failing to be able to do that, and perhaps materially. And I don't see any reason you need to work into your sixties if you don't want to.

 

[Sniggle]

Wow, I can't even imagine how I could possibly blow 150K a year- I think I'm super spendy in a lot of areas now (though no mortgage) and I spent 47K last year. No horses though.

Don't really understand why you need to have the level of income you expect to be making in 9 years. You are currently paying your bills and saving on your current level of income, do you really expect your expenses to go up that much?

I will probably have a mortgage, so that is lets say $24k annually. We will have 2 horses, which is probably $4000 annually, if nothing goes wrong. I hope to take 2 or 3 good vacations annually....maybe $24,000 (on the high side). Normal bills (telco, elect, heat, Ins) are probably $5000. Food $12000 annually including restaurants. $69000/ annually, after tax income. And then another $8000 for health insurance. So, very conservatively, rough top of head I would need $77000 annually, after taxes. $150k pre tax would give me about $115K after tax, so I would have a cushion of approx. $38K.

I do need to work on getting better numbers, but that back of the envelope calc makes me feel better....if I can get there.

 

[samclem]

I will probably have a mortgage, so that is lets say $24k annually. We will have 2 horses, which is probably $4000 annually, if nothing goes wrong. I hope to take 2 or 3 good vacations annually....maybe $24,000 (on the high side). Normal bills (telco, elect, heat, Ins) are probably $5000. Food $12000 annually including restaurants. $69000/ annually, after tax income. And then another $8000 for health insurance. So, very conservatively, rough top of head I would need $77000 annually, after taxes. $150k pre tax would give me about $115K after tax, so I would have a cushion of approx. $38K.

I do need to work on getting better numbers, but that back of the envelope calc makes me feel better....if I can get there.

On the plus side:
+ The 24K mortgage goes away in about 15 years (though you'll still have property taxes and insurance). That's a pretty big deal.
+ The health insurance goes away/way down when you reach Medicare age.
So, you may have a slightly higher withdrawal % for the first few years of your retirement, then it goes down. And SS comes online.
One the minus side: College costs for the kids aren't in these numbers.

But, when you get out the sharp pencil and figure out the real numbers you'll have a better view of the road ahead, especially if you spend a year tracking your spending in order to validate your estimates. Also, the "when to take SS" endless debate we have here affects you, too. I'm among the crowd that views the COLA'd SS benefit as very important longevity insurance, so we'll be putting off taking it for quite awhile (there's no cheaper way to buy a COLA'd lifetime annuity, assuming SS keeps their promises). If your wife is younger than you and will be drawing on your SS record, that is generally the approach most people would recommend. Something else to consider as you run the numbers.

 

[Texas Proud]

I know a couple of people here have mentioned losing a pension.... but everybody that I have ever heard of taking away a DB plan started a DC plan...

It might not get you to where you were going to be, but it is not zero either....

When my mega changed, they had a pretty good DC amount based on the number of years working... it was pretty generous... I was getting 8% of my salary into an account... some were getting 14%... however, they have since lowered that to where I think the max is 6%....