Status Update after 10 months
I was thinking of updating the status on this post or our retirement plan in general and justanotherperson provided the nudge needed. OK here it goes -
* I managed to lock approx. $125K+ @ 9.5% per annum fixed deposit (pretax and my effective tax rate is < 10%) in govt. bank for 10 years. So that amount guarantees us living expenses till age 57-58 (Till younger kid is 26-27 so both of them are adult well settled , educated and we are clearly done with them financially) if DH retires after next 2 years. Inflation will have to be fixed at 6%, if its more than that too bad, that's the raise we got.
* Now side note is for kids education till high school (practically school fees has to be paid in India) we have separate escrow with 20% inflation rate assumed. ( Eating / Shelter & Kids Education being top priorities and education is high inflation even in USA).
* We have earmarked needed amount of money (8% inflation) for kids graduation , postgrad & marriage. We have made our peace with the fact that it is the max we can afford, they can always borrow from one bucket for other or take education loans if any further amount is needed.
* We have created buffer for medical / Emergency / taxes etc.
* Will move into own house next year 2013 so rental expenses gone. House 2 will start earning rental income 2014 to provide us vacation expenses.
* DH's job situation continues to get crappier.
* We are set till age of 58 if we retire 2014 end or beyond. Big question is will market + fixed portfolio give us 9% post tax returns needed and also can we live with 4% inflation adjustment beyond 60 and we do not live beyond 100 years of age.
Overall going towards income flooring + discretionary / bucket kind of model with heavy reliance on fixed income instruments. After age of 60 we'll get access to 9% guaranteed return instruments or more regardless of interest rate cycle. ( Rates have come down to 8.5% since inflation is down
Doesn't look like DH will be able to pull till 2016 as thought earlier so I did tweaks in the plan to bucket model instead of generic SWR. (Anyway WR comes out to be < 4% and keeps going up with age as % of folio) We have second house to sell and some gold and Social Security. Working on creating an inflation adjusted source of income.
We'll see how things go.
Regards,
DesiGirl