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Is this enough?
Old 11-07-2020, 08:43 PM   #1
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Is this enough?

OK...DH is retiring next spring; I will as well, possibly work one more year.
DH will be 58; I will be 55 or 56.
Currently make about $135K/yr combined.

$90K/year guranteed retirement income combined for 2 of us.
No debt at all.
$300K+ or so in savings.
SS--well, not worried about that for a few years...
We live in a moderately sized Midwest town. We hope to move to the SW in the next several years--my arthritis will thank me. Planning on a similar COL.

Currently we still cover 3 children: car insurance, health insurance & phones. (mostly due to COVID; DS25 moved to CA in January...he is working but CA COL is killing him). We plan to have that $1K/mo. total gone by the time we retire.

The financial guy we spoke with (just an introductory visit) said because we are both teachers we are in good shape due to our excellent retirement plan where we live.

I see $1M in bank to retire. Obviously we don't have that much, but we do have our guaranteed retirement income. We love to travel & don't want to give that up. We have done Vegas 2-4x/yr for near 30 years & cruise at least annually.
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Old 11-07-2020, 08:56 PM   #2
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Start here : https://www.early-retirement.org/for...ire-69999.html

Pay special attention to questions about expenses. You've given very little info about them, so nobody can answer your question.

Are your pensions COLA?
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Old 11-07-2020, 08:56 PM   #3
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How good are the finances of the state that is backing your pensions? Are they inflation adjusted?

What is your travel budget/expectation for retirement? (Ours went way up, as planned, but we try to be traveling minimum of half the time. Even this year we'll manage about 4 months.). Luckily, travel costs are discretionary and can be trimmed/chopped as needed!

If your pensions are sound and you don't go nuts on spending for too long, you should be golden. A million in savings/investments is a lot of money, but way too little for some to retire--and darn near irrelevant for those in your position.

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Old 11-07-2020, 09:08 PM   #4
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Your necessary and desired expenses are what I key in on. Having $300K saved after making $135K per year is an indicator you have been spending most of what you made. I'd be sure to flesh out exactly what is going down in your proposed budget. Especially important since $300K isn't that much of a buffer if you grossly miscalculate.

The other thing to flesh out is Social Security. How much will you eventually be entitled to ? Did you pay into SS under the retirement plan where you worked ? You may be entitled to a substantial amount if you were working in a FICA covered job, or next to nothing if your pension is offset with SS.

With a $90K pension, you can definitely retire and pretty well. Just make sure it is as well as you want.
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Old 11-07-2020, 09:18 PM   #5
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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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Old 11-07-2020, 09:22 PM   #6
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Your necessary and desired expenses are what I key in on. Having $300K saved after making $135K per year is an indicator you have been spending most of what you made. I'd be sure to flesh out exactly what is going down in your proposed budget. Especially important since $300K isn't that much of a buffer if you grossly miscalculate.

The other thing to flesh out is Social Security. How much will you eventually be entitled to ? Did you pay into SS under the retirement plan where you worked ? You may be entitled to a substantial amount if you were working in a FICA covered job, or next to nothing if your pension is offset with SS.

With a $90K pension, you can definitely retire and pretty well. Just make sure it is as well as you want.
Our pension has taken 10% of our incomes since we began. $300K is what we have saved in recent years on our own.
2 teachers with 3 children in daycare...then activities didn't leave much extra for many years.

I appreciate everyone's comments! We have done retirement seminars with our state retirement plan plus met with a financial advisor who specializes in teachers here. There is SO much to think about...trying to get as much info as possible.
So questions you point out are appreciated!

We will both be entitled to full SS benefits. We contributed fully throughout retirement (I know my cousins who taught in CO did NOT).
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Old 11-07-2020, 09:59 PM   #7
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Our pension has taken 10% of our incomes since we began. $300K is what we have saved in recent years on our own.
2 teachers with 3 children in daycare...then activities didn't leave much extra for many years.

I appreciate everyone's comments! We have done retirement seminars with our state retirement plan plus met with a financial advisor who specializes in teachers here. There is SO much to think about...trying to get as much info as possible.
So questions you point out are appreciated!

We will both be entitled to full SS benefits. We contributed fully throughout retirement (I know my cousins who taught in CO did NOT).


Hi, what are the pension survivor benefits?
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Old 11-08-2020, 05:40 AM   #8
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Sounds like your expenses are under 90k yearly, plus with SS on top of the cola'd pensions, it sounds like you are good to go.
As mentioned above, the pension survivor benefits could also come into play.
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Old 11-08-2020, 08:29 AM   #9
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I tend to weigh in on these types of posts with a dose of negativity, for which I apologize. I freely admit that it could be driven by jealousy, in that no pension awaits me. Many days I wonder what it must be like to have a pension waiting at the finish line.

So with that caveat, which reveals my biases and failings, I just note the following.

1. It doesn't seem like you have a good handle on your expenses, at least the way you have expressed them here.

2. Your burn rate seems to be pretty significant, at least by our standards. And you don't seem to be overly worried about how much you are spending -- at least not in the language you have used here. And it looks like you intend to spend even more going forward.

3. You are both well into your 50's (two wager earners, with a nice combined total income), yet apparently only have about $300K in savings. That suggests a lifetime of spending, not saving. And that may portend outcomes in retirement that could be challenging.

4. You state your pensions provide "guaranteed retirement income." I'm not a pension expert, but my sense is no pension is guaranteed. Pre-pandemic, state/municipal budgets weren't in great shape. Now, they are in dire straights. Even if a pension is guaranteed by the PBGC (and it isn't clear to me if that federal program would apply here), I don't think dollar-for-dollar recovery is guaranteed.

I'm sure it will turn out well for you, and I hope it does. It just feels like you are hoping that a state (which is now likely to be in some financial difficulty, as most if not all of them are) is going to continue to pay for 30 or 40 years (plus SS, of course).
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Old 11-08-2020, 09:08 AM   #10
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I tend to weigh in on these types of posts with a dose of negativity, for which I apologize. I freely admit that it could be driven by jealousy, in that no pension awaits me. Many days I wonder what it must be like to have a pension waiting at the finish line.

So with that caveat, which reveals my biases and failings, I just note the following.

1. It doesn't seem like you have a good handle on your expenses, at least the way you have expressed them here.

2. Your burn rate seems to be pretty significant, at least by our standards. And you don't seem to be overly worried about how much you are spending -- at least not in the language you have used here. And it looks like you intend to spend even more going forward.

3. You are both well into your 50's (two wager earners, with a nice combined total income), yet apparently only have about $300K in savings. That suggests a lifetime of spending, not saving. And that may portend outcomes in retirement that could be challenging.

4. You state your pensions provide "guaranteed retirement income." I'm not a pension expert, but my sense is no pension is guaranteed. Pre-pandemic, state/municipal budgets weren't in great shape. Now, they are in dire straights. Even if a pension is guaranteed by the PBGC (and it isn't clear to me if that federal program would apply here), I don't think dollar-for-dollar recovery is guaranteed.

I'm sure it will turn out well for you, and I hope it does. It just feels like you are hoping that a state (which is now likely to be dire financial straights, as most if not all of them are) is going to continue to pay for 30 or 40 years (plus SS, of course).

If the OP couple is currently making $135,000 per year, paying 10% into a pension and paying 7.65% into social security and medicare, that would be equivalent to $111,117 per year received via pension (from which neither is deducted). Their actual pension is $90,000 per year, so they would have ~ $21,000 per year to cover from savings until social security kicks in (4 years for DH, 6 years for OP). I'm guessing their social security, if they take at 62, will be a combined $25,000-30,000 per year at the least. OP says they have $300K in savings. So, it seems to me that their savings + COLA'd pensions will carry them to SS, and then SS + COLA'd pensions will carry them after that. This assumes that they don't spend more after retirement than they do now. I also see that there is substantial discretionary spending in their budget, so they can cut back if they must. One area that I would be concerned about, however, is health insurance. They are likely getting that through their employer now. How will they get health insurance between retirement and medicare age, and how much would it cost? Their income will be over the cliff for ACA subsidies (even if the ACA survives) and they could easily find themselves spending $25k per year for private insurance, which would be double what they are paying now.

You make a good point, though, regarding the financial stability of the entity paying the pension, but I'm not sure there is anything they can do about that other than work longer and save a little more. If they are public school teachers, they'll have public pensions, which are not covered by PBGC.
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Old 11-08-2020, 09:18 AM   #11
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I see Librarian did list expenses, but my concern is $135k-10% pension=$121,500 minus $13,500 Fed taxes= $108,000 minus SS/Medi tax 7.45%= $98k
When retired, $90,000-$7,550= $82,500.

I see reduced spend ble mount of $7,500.
Rerun my numbers, prob bly got the order of reductions wrong. $7,500 is not terribly signific nt out of the gross.
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Old 11-08-2020, 09:33 AM   #12
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If $90K covers all your future expenses (including medical and travel), then you are good to go. SS will definitely provide more buffer later.

I have lived in the Midwest and getting tired of long winters. Moving to SW is definitely nice. Are you thinking about Nevada, New Mexico, Arizona or Texas? California is simply too expensive albeit the climate near the ocean is quite desirable. Many of our pickleball friends have moved to Arizona. Both income and sales tax are lower than those in Minnesota.

Congrats.
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Old 11-08-2020, 09:40 AM   #13
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One area that I would be concerned about, however, is health insurance.
Do most teachers receive health care benefits after they retire?
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Old 11-08-2020, 09:53 AM   #14
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Do most teachers receive health care benefits after they retire?
Certainly anecdotal and likely not relevant in OP's situation, but the WSJ just published an article about how state/municipal health care benefits are at risk of being reduced, and in some cases are being so reduced (e.g., replacing coverage with a stipend): https://www.wsj.com/articles/tighter...ts-11604745001.

A salient quote from the article:

"America’s retired workers are getting squeezed on their health care.

"Cities and states can’t afford to keep the same medical benefits they promised government retirees.

"For all 50 states combined, revenue declines for 2020 and 2021 could reach 13% cumulatively, according to Moody’s Analytics projections, while the average cost of an employer health-care plan for an individual increased 4% in 2020 to $7,470, according to the Kaiser Family Foundation nonprofit.

“'With Covid, revenue coming into governments is diminished, making it even more difficult for cities and states to fund retiree health care,' said Marianne Steger, director of public sector and labor strategy for Willis Towers Watson , a multinational insurance brokerage and adviser.

"The pandemic has crushed sales-tax income and tourism dollars, leaving local governments struggling to find ways to cut costs."
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Old 11-08-2020, 10:09 AM   #15
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Do most teachers receive health care benefits after they retire?

I don't know about most teachers. Here in Connecticut, when my my young wife retired, she had the option to continue her coverage through her school district (and to add me). However, she would need to cover 100 % of the premium cost versus only 23% of the premium while she was active. She would receive a subsidy of $220 per month from the Teacher's Retirement System to help pay those premiums.

Since the 100% premium for two people in her employer plan is running about $19.2k per year, even with the subsidy the cost would be about $16.6k per year, versus around $4.4k when she was working. If that were the only choice, we'd take it, since a non-subsidized ACA plan with similar coverage here in CT would run about $34k per year (premium plus annual deductible). Fortunately, my retiree healthcare package is substantially better, so we are both on that.
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Old 11-08-2020, 10:14 AM   #16
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How good are the finances of the state that is backing your pensions? ...
@Librarian, this is a very critical question.

You need to look at both your state and city finances, but also at the underfunding in your particular pension fund. Sometimes all pensions in a state are paid from the same or a few funds. Other times the funds are lined up with the job. A teachers' pension fund for example. But politicians will certainly think hard about robbing Peter to pay Paul, moving money between funds to kick the can down the road.

I think almost 100% of public pensions are underfunded to some degree and the current underfunding estimates probably do not consider the effects of this zero-rate interest environment continuing for a few years. Hopefully you are not ensnared by the Illinois disaster (https://www.illinoispolicy.org/illin...ate-predicted/) but wherever you are you should evaluate your risk and consider it in your planning. Your "guaranteed retirement income" may not be guaranteed at all.
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Old 11-08-2020, 10:51 AM   #17
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I would not plan on spending any of the $300K in savings since you are both still young and may need that money to cover medical expenses later in life that are not covered by Medicare.

So this becomes a really simple analysis. You will have $90K in income if you both retire. Are you comfortable living on a $90K budget? If so, you are good to go.

Will your pensions continue to increase if you work a few more years?
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Old 11-08-2020, 10:57 AM   #18
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I see $1M in bank to retire. Obviously we don't have that much, but we do have our guaranteed retirement income. We love to travel & don't want to give that up. We have done Vegas 2-4x/yr for near 30 years & cruise at least annually.
That's really for people with no pension. Having a pension instead of a large nest egg has pros and cons.

Pro: you won't have to cut back on spending during a recession, as your income is guaranteed.
Con: you won't see an increase in your nest egg and your safe withdrawal rate during a bull run, the way many here have in the last 10 years.

Pro: since you each have your own pension, you probably don't have to worry about outliving your money, individually or together.
Con: you won't have much room in your budget, as it sounds like your pension will not quite cover your expenses.

Have you lived frugally when you were younger, and are you prepared to cut back on things if there is some unforeseen snag or expense or misfortune? In my mind, the most important part of a plan are the worst-case scenarios, since if you have the good fortune to avoid those, obviously it is much easier to achieve your goals!
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Old 11-08-2020, 11:18 AM   #19
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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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Old 11-08-2020, 11:44 AM   #20
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OP - a pension of $90,000 is approx equivalent to having $2 Million in the bank. Which many feel is LOTS.

However, a $90K /yr pension is much easier to understand.

Like a few others, I question the accuracy of your expenses, I found once I actually tracked by writing down every purchase, I had solid numbers to use. It turned out I was very far off on some estimates.

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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