Is this enough?

Carol1862 said:
I had a spreadsheet with every expense years before retirement. You’d be shocked at the unexpected expenses that add up. Both my husband and I who are very healthy had surprise surgeries. You said you have children. Are they married? Parents of both sons and daughters now contribute to weddings. What about future grandchildren? You state you like to go on trips and you mention Disney. Your children might be too old now, but once the grandchildren come you’ll want to go on family trips. If you move will your children live near you? Parents, siblings? That means traveling home for visits and probably paying for your kids to visit you. This all adds up.

You do have a very impressive pension. But one serious illness and your nest egg could drop considerably.

Best of luck with retirement. You’ll certainly love it!
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I actually have a very good handle of our expenses. While we make this income NOW, as public school employees it has been very slow coming. We get raises of about $1K/yr each. Putting money away when the children were still in daycare was not even an option. Once they were done with daycare we put that money away toward college expenses. That in addition to the 529s from their grandparents means DS 25 got his Masters & is debt free, DD 22 is debt free with a nice 529 rollover for her own children one day as will DS20.
It is only in recent years we have been able to sock that money away. I recall my parents (also public servants) mentioning they couldn't put money away until they were 50.

We do have a house payment at this time as well as a car payment. Both of these will be paid IN FULL by retirement.

We are not contributing to weddings & our children know this--we believe it is an extravagant waste of money. None are currently dating anyone, so grandchildren are some ways off.

That all being said, I am taking notes & looking at various options. This year with combination remote & live classes is very taxing, physically & emotionally. It makes me want to leap now. But research is my game so I need ALL the information before decisions are made.

Thank you all for giving me things to think about that I may have not.
 
Curious

MarieIG said:
I'm a strong proponent of taking the joint and survivor options in the pensions when available.

My opinion is that a spouse faced with the death of the other spouse, does not need the additional stress of having to redo their budget. Also, one SS stream disappears.

Also, while you can certainly cut your discretionary expenses in early years, you may come up against big ticket items related to care in later years, such as funding a purchase into the CCRC of your choice.

Part time work is fine, but most likely just a little gravy - in that (typically) it won't pay anything near your current job; and will not offer the same benefits.

Just my thoughts YMMV. Good luck!
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Would you take 25%, 50% or 100%?
 
State/local governments are all over the map as to how funded their pension plans are. In Illinois/Chicago some pension funds are underfunded by as much as 90% and would run out of money within a couple of years without new money flowing in or subsidized by other tax revenue. To me, the OP really needs to sit down and get a better handle on what they may have to spend on in the future in addition to regular expense - what big expenses may be on the horizon - new car(s), significant home repairs like new roof, new furnace, new kitchen or bathroom?
 
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marinauser said:
State/local governments are all over the map as to how funded their pension plans are. In Illinois/Chicago some pension funds are underfunded by as much as 90% and would run out of money within a couple of years without new money flowing in or subsidized by other tax revenue. To me, the OP really needs to sit down and get a better handle on what they may have to spend on in the future in addition to regular expense - what big expenses may be on the horizon - new car(s), significant home repairs like new roof, new furnace, new kitchen or bathroom?
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Speaking for myself, I am a retired teacher who took early retirement. I took a significant hit on my pension to retire when I did. He is civil service retirement. so two pensions, one social security check, and savings. I have not touched the savings. I have been retired 14 years, have enough income to live on, deferred taking my social security . I took a small 2nd career, ( taxes ) more for the stimulation than for the money. You sound fine to me. Just retire all the debt, and be sure that you can deal with any large expense that will come up. ( car, wedding, travel, )
 
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me: pension 16k, DH pension 60k, me projected social security 28k ( if I take it now ) it isn't living high , but plenty of income for travel , car replacement, and whatever else we want to do. earned income while I work is around 18k. no debt, more saved up than you have. apparently when you collect your social security , your retirement income will match your earned income. ( no fica , no retirement contributions ). That is a good place to be. especially if you get a 3% COLA . Take the money you spend on the children out and you will be ahead, spendable income wise. Don 't forget to refigure out your tax ramifications. Normally , and this depends on state tax rules, also, your taxes will likely go down. Do the math to see what you will actually "take home" and then do it again adding the SS income stream. Compare those numbers to what you take home now.
 
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Librarian said:
Would you take 25%, 50% or 100%?
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That depends, at least on part, on the level of expenses you would expect if (when) one of you dies. This is truly a choice that should be tailored to the specifics of your situation. Taking a hard look at expected income remaining when each of you dies is an important part of the analysis.

In our case we each had a pension (one small, one large) and decided 100% survivability for the higher pension and 0% for the lower.
 
Librarian:
The discussion of expenses was hard for us to follow. If you add everything including state and federal income taxes, health insurance, a reserve for major non-scheduled costs (major home repairs, surgeries), are your expenses below your pension? If so, you are good to go, though I would personally defer those up front moving costs, golf course memberships, etc. for a year or two to make really sure your budget was right.

Are you sure you will get SS? It varies state by state, but my daughter is a teacher and so in our state, she contributes to their pension plan, but has not had SS deducted over the years so does not qualify. It's easy to check, just go to the SSA.gov website and if you don't have an account, just create it. They've upgraded the site so now it shows you the benefit you qualify for at various ages.
 
Librarian said:
Our pension is extremely safe; low volatility. Over the many years they have never had to lower the incomes of those using the pension.
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Sorry, I must not be communicating the issue clearly. I will try once more and then I will shut up.

I have no doubt that your pensions have been reliable to date. Probably that has been the case for the vast majority of public pension funds. No politician wants the bad press that comes from cutting retirees' pensions. So those cuts will only happen with the fund runs out of money or is so close to running out that the problems can no longer be denied.

The situation is kind of like Taleb's Turkey:
: https://www.businessinsider.com/nassim-talebs-black-swan-thanksgiving-turkey-2014-11 But ... not to rain doom and gloom the risk, if any, depends on the particular financial and political circumstances of the pension fund(s) you are relying on to be "guaranteed."

So IMO the fund needs a critical look so you can assess what risk you may have. Best would be if you have a CPA who can examine it for you. If you know an Accounting teacher, he or she may be a good first stop because they probably have the same financial interest as you do.

Please understand I am not making any predictions about your pension fund, but public employees' pensions are in general very underfunded and hence at some risk. Hopefully yours is the golden case where there is no risk.
 
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OldShooter said:
Sorry, I must not be communicating the issue clearly. I will try once more and then I will shut up.

I have no doubt that your pensions have been reliable to date. Probably that has been the case for the vast majority of public pension funds. No politician wants the bad press that comes from cutting retirees' pensions. So those cuts will only happen with the fund runs out of money or is so close to running out that the problems can no longer be denied.

The situation is kind of like Taleb's Turkey:
: https://www.businessinsider.com/nassim-talebs-black-swan-thanksgiving-turkey-2014-11 But ... not to rain doom and gloom the risk, if any, depends on the particular financial and political circumstances of the pension fund(s) you are relying on to be "guaranteed."

So IMO the fund needs a critical look so you can assess what risk you may have. Best would be if you have a CPA who can examine it for you. If you know an Accounting teacher, he or she may be a good first stop because they probably have the same financial interest as you do.

Please understand I am not making any predictions about your pension fund, but public employees' pensions are in general very underfunded and hence at some risk. Hopefully yours is the golden case where there is no risk.
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In general states change the pension going forward not backwards. They honor the contract they have made with their retirees. (ie). Florida has discontinued the 3% cola going forward, as of 2011). ( Illinois has made some changes to its pension for newer hires ). There is probably minimal risk here, some possibility that they could try to take out the COLA, but unlikely to be successful.

It really is a similar situation as social security. Those at or near social security age are not going to lose or see reductions in their benefits. Going forward , ?
 
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rothlev said:
In general states change the pension going forward not backwards. They honor the contract they have made with their retirees. (ie). Florida has discontinued the 3% cola going forward, as of 2011). ( Illinois has made some changes to its pension for newer hires ). There is probably minimal risk here, some possibility that they could try to take out the COLA, but unlikely to be successful.

It really is a similar situation as social security. Those at or near social security age are not going to lose or see reductions in their benefits. Going forward , ?
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No point in speculating on probabilities in the absence of actual facts. My point is only that the value of "guaranteed" is only as good as the guarantor and that it would be wise for the OP to take a look.
 
Librarian said:
Yes, our pension is COLA.
Approx. expenses (could be a bit higher/lower depending on where we land...ie elec/car insurance more if we move to Vegas but house taxes less...)
Utilites: 600-700 (electric, phones, HOAs, streaming subscriptions)
Health insurance: 1100
Car/House insurance: 400
House/car taxes: 400
(Housing--we are budgeting the current value of our home to purchase a home when we move; we have done the research & this is very doable)

DH wants a golf membership when we move--we have budgeted 300-400/mo.

I budget 500/week for groceries/household items/gas/dining out/entertainment. Have for years, and by & large it works.

Travel...family trips stretch the budget...but I'd say $5K/yr...but we have gone up to $10K once in a while. More & more trips are just DH & I and there would likely be no high priced Disneyworld trips at this point...Honestly we would travel as much as our budget would allow...

As far as working in retirement...DH has considered working at a golf course; I have looked into more temporary occasional work--I actually have some feelers out for this. I like the idea of doing something I like without having a regular schedule; works better for travel.
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Here is my summary of your monthly list above:
Utilites: 650
Health insurance: 1100
Car/House insurance: 400
House/car taxes: 400
golf membership: 350
household items: 2200
------------------------
Total so far: 5100/mo

Changing to annual basis: 61,200 (total so far)
income tax: 7500
Travel: 10,000
-----------------
Grand total $78,700

So for your 90k income, you have on the surface about $11k/yr flexibility - HOWEVER:

1. As a previous poster commented, nothing is listed for occasional/unexpected, big-ticket expenses. Moving to your new location/house, replacing car, house roof, HVAC, any other big ticket items. Maybe one of your kids gets in a pinch and you decide to help them financially more than you have currently planned. Perhaps you can pay some of these types of items from your $300k savings, but it would certainly be nice if you can pay for all within your normal annual budget. It could easily take $2k-$4k/yr to save/reserve enough money for the years when a big item happens.

2. I missed if you went into any detail about your health insurance. Is this insurance via your teacher benefits, or ACA? Is $1100/mo just premiums or does it include deductible, prescriptions, other out of pocket expenses? What about dental and vision expenses? Do you have a long-term care policy? If your medical is ACA, and ACA is declared unconstitutional (or even as a result of normal raises from year to year), this could balloon. Either way, in a few yrs, this expense could double - which would eat up all the $11k flexibility you currently have in your budget. Hopefully by then you will have reached medicare/SS age.

You will probably be okay, but I don't see a lot of wiggle room. It can be easy to underestimate expenses and be off by $10k/yr, plus the notes above for big ticket items and medical costs.
 
I have read many articles suggesting that you should include in your yearly budget 1% of your home's value to account for maintenance and repairs. The controller on our furnace crapped out early this year and it was a several hundred dollar fix. The dishwasher is also acting up and we'll have the repair guy out later this week. I'm sure that will be another several hundred dollars..

You also need to budget for car maintenance and repair. Just this year, I got a nail through the sidewall on one of my Subaru's tires. Can't be repaired and must be replaced. Since it's AWD, that means replacing all 4 tires. There's a quick $800. Then, a few weeks back, some guy sideswiped the young wife out on the highway. Unless we can get the deductible back from his insurance, we're out $1000 to fix that. We don't drive all that much, and our cars are almost brand new, so I don't know if we need to have a sinking fund for replacement, but it is something to keep in mind.

Do you have any pets? One of our cats developed Hodgkins-like lymphoma early this year. Between the diagnostic testing, surgery and chemotherapy regimen, we're out over $7000. I hope it's not repeated, but it was nice to be in the position where we could just say to the vet "fix her up".

I also don't see anything for personal expenses (haircuts, clothing, drycleaning, hobbies, etc.), nor for gifts or charitable contributions.


Bottom line - really knowing current and expected spending is the key to any retirement plan. That includes accounting for things that are not planned or desired but reasonably should be expected to occur occasionally.
 
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I think the best way to determine your budget is to review your spending. So, rather than catalog $x for Y, etc., just pull out your bank statements.

Even if you use multiple credit cards, most people pay those and everything else out of a smaller number of checking accounts. So just dump out all the debits for a few years and add it all up.

That way you'll include your property taxes, home owners insurance, annual things that don't show up regularly. And yes the big hits that aren't every year. The repairs and replacements that are easy to miss when looking at a short term of expenses.
 
Gumby said:
I have read many articles suggesting that you should include in your yearly budget 1% of your home's value to account for maintenance and repairs. The controller on our furnace crapped out early this year and it was a several hundred dollar fix. The dishwasher is also acting up and we'll have the repair guy out later this week. I'm sure that will be another several hundred dollars..

You also need to budget for car maintenance and repair. Just this year, I got a nail through the sidewall on one of my Subaru's tires. Can't be repaired and must be replaced. Since it's AWD, that means replacing all 4 tires. There's a quick $800. Then, a few weeks back, some guy sideswiped the young wife out on the highway. Unless we can get the deductible back from his insurance, we're out $1000 to fix that. We don't drive all that much, and our cars are almost brand new, so I don't know if we need to have a sinking fund for replacement, but it is something to keep in mind.

Do you have any pets? One of our cats developed Hodgkins-like lymphoma early this year. Between the diagnostic testing, surgery and chemotherapy regimen, we're out over $7000. I hope it's not repeated, but it was nice to be in the position where we could just say to the vet "fix her up".

I also don't see anything for personal expenses (haircuts, clothing, drycleaning, hobbies, etc.), nor for gifts or charitable contributions.

Bottom line - really knowing current and expected spending is the key to any retirement plan. That includes accounting for things that are not planned or desired but reasonably should be expected to occur occasionally.
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In the OP's post #5 (which I quoted in my post #38 just above), OP said, "I budget 500/week for groceries/household items/gas/dining out/entertainment. Have for years, and by & large it works." Which translates to a little more than $2k/month. I think this was intended to include all the personal expenses, and probably includes normal car maintenance ranging from oil changes to tires. But I'm pretty sure it does NOT include replacing the car itself once every few years. In general I agree with you about big-ticket repairs & replacements not being accounted for, which I also talked about in my post.
 
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Sunset said:
I do question, why you folks are supporting the kids, and have you told them the free $$$ is ending next year when you retire ? It seems like it would be kind to let them know a year in advance, so they can prepare, and not guilt you into continue paying.

Overall I'm sure you can retire and survive, you seem to be in better shape than some others, assuming your pension continues.
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I agree, why are you spending approx $1000/mo supporting kids that are out on their own? That is money you could have put toward savings right now. It seems you don't save much from your income. I know you said 10% is pulled for pension, but many people save much higher than 10% of income.



Overall, I concur that with your pensions, and the limited budget info you provided, you seem OK. I do think that you will need to get better understanding of your expenses, and especially for the retirement budget. $300-400 for golf membership may or may not be a good choice for example. Also be sure to include all taxes, health care, maintenance on house and vehicles, etc. You are fortunate to have the pension, but beware that the cautions of many of that being cut back are real.


Why don't you give which state you live? Then people can provide better advice on state pension funding and stability.
 
We both have state pensions. Before 2013 it was a full COLA. In 2013 that changed to a 1% yearly benefit adjustment that could also be taken away later from the legislature. It does make a huge difference not having a full COLA so just be aware that it could change in the future.
 
We travel monthly or did Pre COVID. DW thought 10K would be enough. Reality is 30K or more and we tend to go low cost, but often.

Just let the kids know that the home bank will be mostly closed once you pull the plug.

If you are comfortable, go for it.
 
Librarian said:
Would you take 25%, 50% or 100%?
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I am a belt and suspenders type person. We took the 100% but only DH had a pension. If I had a pension, I would have taken the 100 percent joint and survivor for DH. It typically does result in a slight reduction in current income, which some are not willing to tolerate.

Now, I attended one of those meetings regarding my DH's pension plan. I noticed they were really pushing the 50% joint and survivor - because the cost was small and it allowed for a higher monthly payout to the member. Precisely no attention was given to how the spouse was to get by on a 50% cut. In your case - you will each have your own pension - so that's great (but there would still be significant overall reduction in income). Also, if one spouse will have a larger pension than the other, the spouse with the smaller pension would be disproportionately effected.

Sometimes a financial advisor will recommend a life insurance policy instead. They prefer to have their clients getting in more money now; and potentially having more assets under management as well as a potential fee for the sale of life insurance. The problem with even term life insurance (which certainly has its place), is that the costs tend to increase as the insureds get older and they are frequently allowed to lapse when most needed.

The hope is that you will both live to be 120 and pass on holding hands in your sleep. The plan (from my point of view) is to afford the survivor the most comfortable, high standard of living.
 
The young wife and I have taken what I see as the two different primary approaches to providing for the survivor, which are dictated by the nature of the income stream:

1) We both took the 100% survivor benefit on our pensions. It knocked the pension amount down by about 10%, which we can live on just fine. It also ensures that we can continue retiree healthcare on each other's plans. (We're both on mine right now.)

2) I will start social security in 3 months. Due to the GPO, the young wife will get neither a spousal benefit nor a survivor benefit. Accordingly, when I die, the social security stops. To cover that loss, I have a paid up whole life insurance policy. If I die first (more likely) she can take the payout as an annuity and it will cover the lost SS income.
 
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I didn't read all the responses, so I apologize if I have repeated things:

Are your pensions inflation adjusted?

When you say your income income is guaranteed, are you sure? If through a state run pension, what if the state goes bankrupt? I don't see too many things as guaranteed these days. I have friends who told me their pensions were guaranteed, but the company went out of business in one case and his pension got cut 30% because it was underfunded. In another case, they "froze" the pensions when they went to a DC plan and it was much less lucrative than he thought it would be.

What is your annual spending? If your pensions are COLA-adjusted and you can live on $90k/year, then you're probably in good shape. Just remember that COL for seniors is not the same as the COL that's reported in the media. Seniors use more resources for health care, which tends to rise at a higher rate than most other items.

Congrats on nearing FIRE!
 
Your caution is a wise one. Just to be clear, however, states cannot be debtors under the Bankruptcy Code (11 U.S.C. Sec 1 et seq.). They can default and otherwise try to weasel out of their contractual obligations, but they can't be "bankrupt" in the same sense that a private company can. It's a technicality, certainly, but it could turn out to be an important one.
 
Gumby said:
Your caution is a wise one. Just to be clear, however, states cannot be debtors under the Bankruptcy Code (11 U.S.C. Sec 1 et seq.). They can default and otherwise try to weasel out of their contractual obligations, but they can't be "bankrupt" in the same sense that a private company can. It's a technicality, certainly, but it could turn out to be an important one.
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Yes, actually that is Illinois' current problem. There is no legal mechanism for them to do what they have to do, which will also require an amendment to the pension language in the state constitution. Hopefully the OP is not in Illinois however. Call it bankruptcy or call it something else, the fact is that some states and some cities owe more money than they will ever be able to pay from their tax bases. So ... their creditors, almost certainly including pensioners, will suffer.

I know that there have been some small California cities that have gone through this although I don't know the details.
 
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