Worried in Duluth

[kenpoed]

My wife and I are mid 40's and somewhat concerned about retirement.

We are both working and make about $200 combined but neither of us loves our job. With one small child (3) and my wife wanting to stay at home to spend more time with our child, we tend to stress a bit about our finances.

When I work as the sole breadwinner our income in 2-3 years will drop to about $120k and I should be able to sock away $25k for retirement, mostly in tax deferred plans and a little in low cost index funds.

we have a portfolio of $1.1 m in total with about a 75/25 mix of stocks to bonds. We are fortunate to have a small house paid off worth about $250k.

I guess my worry is, can we retire and live off about $100k annually as we do now in 16-17 years if we change course as I explained with going to one income.

We also worry about ss and health care costs and frankly, do not plan on ss being around in it's present form when we retire. We may get something but we will not plan for it. It is hard to tell if we are in good/bad/or ok shape as we head into a change in income and have a goal of retirement in 16 years or so.

 

[MichaelB]

Hi frugalinvestor, welcome to the forum. Have you run your numbers thorough FIREcalc ?

 

[kenpoed]

Hi frugalinvestor, welcome to the forum. Have you run your numbers thorough FIREcalc ?

thanks, yes we have, it all depends on inflation. It says we would be ok if we put $21k in a year with 3.6 % inflation, which I like to use as a hedge.

 

[MichaelB]

thanks, yes we have, it all depends on inflation. It says we would be ok if we put $21k in a year with 3.6 % inflation, which I like to use as a hedge.

That's a lot of inflation. Your financial situation looks good. You have already built a nice portfolio and an additional $25K yearly should fund a comfortable retirement at the levels you are aiming for. You might find saving at that pace challenging as your child grows and especially at college age, but by not considering Social Security you also have flexibility.

 

[militaryman]

If you are thinking that in 2-3 years you will have 120k coming in and you are saving 25k of it then you are definitely RAISING your yearly budget by going with 100k per year

Is that what you meant to do?

1. 120k minus 25k = $95k

2. Currently 7.45% goes to SS and Medicare and that will not in retirement

$95,000 - 8,900k (ss/medicare) = $86,100

3. I am thinking it is a real diservice to think that SS will be non existent -- I think figuring that it will be about half of what they indicate it to be is much more realistic and if it is cut by more than that I bet that it will mean that the future cost of living would be far cheaper than it is today as mainstream folks would have far less income. So sorta a win win in that respect.

So even if you considered SS to give about $14k ( half of what my DW and I's is to be) then your looking at needing about 72,000 to live off of which with the numbers you give in your nest egg and your savings rate is much more secure.

 

[kenpoed]

If you are thinking that in 2-3 years you will have 120k coming in and you are saving 25k of it then you are definitely RAISING your yearly budget by going with 100k per year

Is that what you meant to do?

1. 120k minus 25k = $95k

2. Currently 7.45% goes to SS and Medicare and that will not in retirement

$95,000 - 8,900k (ss/medicare) = $86,100

3. I am thinking it is a real diservice to think that SS will be non existent -- I think figuring that it will be about half of what they indicate it to be is much more realistic and if it is cut by more than that I bet that it will mean that the future cost of living would be far cheaper than it is today as mainstream folks would have far less income. So sorta a win win in that respect.

So even if you considered SS to give about $14k ( half of what my DW and I's is to be) then your looking at needing about 72,000 to live off of which with the numbers you give in your nest egg and your savings rate is much more secure.

Yes, that is a good point. My guess is our income will drop to about $125k and we should be able to save $20-$25 k of that annually. It is also a great point about SS, as I foresee us realistically receiving about half of what we are targeted to get.