45yrs old, Looking to retire by 2025

[aaronc879]

$550k in 529s for 2 kids? Are you expecting them to go to med school or what? Seems like you can probably stop any new contributions to that account.

 

[SecretlyFI]

$550k in 529s for 2 kids? Are you expecting them to go to med school or what? Seems like you can probably stop any new contributions to that account.

+1. I just paid for 4 years for my son, full freight, no discounts. Tuition, room, board, books and some spending money: $130,000. The best advice these days is don't fall into the nonsense of looking at "top schools" or any of the competitive insanity from other parents or students. Focus on choosing the right major and the ROI on it. A while back, you just had to be smart enough to avoid the worthless majors (art history, etc..). Starting about 10 or 15 years ago, it became important to choose a field that isn't likely to be outsourced. Now, you need to envision 5 more years of AI and its job eliminations and figure out what will be left. That's what to major in. And definitely go to a state school. With 2 kids at 16 and 18, you'll be done with this expense in 6 years. It shouldn't cost $100,000 a year from now until then.

 

[SecretlyFI]

Oh, and if you're retired, which means your income is lower than while working, you get much more in the way of financial aid and you qualify for various tax breaks for education. Look into all that and run the numbers. I didn't retire until after my son graduated, so I didn't qualify for any of that. But I was very aware of the many low cost or free tuition programs that have sprung up in the last 5 years or so. Many of them are quite generous with income limits, like up to $100,000.

 

[fognostic]

LTC, from what I've seen, is one of those items that just seems to continue accelerating in price faster than ordinary inflation. Nor are there many substitutes (it's not like buying a used car instead of a new one). I would at least go through the exercise of looking into LTC insurance.

This concerns me as well. For now I am "winging it" by requiring our portfolio never dips below our conservative estimate for LTC needs in the FIRECalc "Investigate" tab. For a couple, there seems to be a fallacy in my doing this, in that if too much of that reserve must be applied to LTC too many years before the second spouse also needs LTC and subsequently dies, it is no longer available to add inflation beating returns needed in the portfolio by the surviving spouse. But my thinking is that our annual spend is pretty close to one person in LTC perpetually, so that helps covers the survivor entering LTC. Finally, selling our home and the survivor renting more modest digs if not entering LTC themselves (which will probably be a welcome home upkeep reduction at that point anyway) can also provide a secondary backup if my spouse and I enter LTC and die too many years apart. At some point, if we try to cover every tails risk permutation, OMY turns into work until taking social security at age 70, death by age 71 from the stress of working so long (if not sooner) and passing many millions onto our heirs instead of retiring early.

My enthusiasm for vetting LTC insurance more thoroughly (I admittedly have not done this) also dimmed when I started seeing most if not all insurers now cap their liability to limit their risk after learning the hard way with their earlier policies that not capping payout was more risk than their profit margins could stand. With this change, LTC insurance started looking a little less like insurance and a little more like a savings account with a capped balance.

That led me to think we could "invest" (reduce our projected annual spend) in our portfolio to create a capped COLA long term care "fund" that works in 100% of FIRECalc histories via a forced portfolio minimum value, or we could make payments to an insurance company to essentially provide the same thing. Those would be the two scenarios I think I would compare (i.e., is the annual LTC premium less than the spending reduction needed to maintain the portfolio floor equivalent to the LTC policy payout cap). I'm guessing the insurance company will be no better than a push (with or without COLA on their CAP, which FIRECalc can model either way), except the insurance company, not our heirs, will of course pocket anything left unused below the payout cap plus any profit they make above the cap from investing our premiums.

 

[Koolau]

Lots to think about with LTCi for LTC. No trivial answers unless you are pretty well off already. Sounds like you are asking yourself all the right questions. Best luck going forward.

I know I'm praying that my LTCi is a waste of my money!!

 

[kingfisher]

LTC self-insurance is a viable plan, but you still may want to consider including its cash flow in your spending plan. This will help you avoid setting too high a spending target in your early retirement years that may leave you unable to cash flow LTC in your later years. A non-reversible "Oops" in your final years would be unpleasant to say the least.

Admittedly, my planning philosophy may skew over-conservative - not enjoying retirement as early or as much as you could have is a mistake too. But as long as DW and I are comforable, I view excess stash from this mistake as an opportunity to help our children earlier in their lives as risks clear over time and, if that final LTC risk clears, it adds to any inheritance too.

This is definitely something that I should put more thought into it. I didn't bother with LTC insurance since I believe we have enough assets to self insure, and the insurance has limitation and caps anyway.

 

[kingfisher]

Lots to think about with LTCi for LTC. No trivial answers unless you are pretty well off already. Sounds like you are asking yourself all the right questions. Best luck going forward.

I know I'm praying that my LTCi is a waste of my money!!

Thank you, LTCi can get complicated, and the thought of needing that at some point in our lives depresses me. However, it's like many other things in life, it's not good that we are in a situation that requires LTC, but it's a lot better if you have the resources to pay for it (insurance of self financed) than not.

 

[kingfisher]

$550k in 529s for 2 kids? Are you expecting them to go to med school or what? Seems like you can probably stop any new contributions to that account.

College has gotten a lot more expansive these days, even the in state college's total cost per year is over 40k. Our agreement with the kids are basically that we will pay their college cost if they can get into a top school (top 10 or 15 in the nation for their field) or in-state school. The cost for the top schools are close to 90k/year these days (65k-70k tuition).

 

[kingfisher]

Oh, and if you're retired, which means your income is lower than while working, you get much more in the way of financial aid and you qualify for various tax breaks for education. Look into all that and run the numbers. I didn't retire until after my son graduated, so I didn't qualify for any of that. But I was very aware of the many low cost or free tuition programs that have sprung up in the last 5 years or so. Many of them are quite generous with income limits, like up to $100,000.

With large amount of non-retirement assets, we have ran the numbers on multiples schools, it's unlikely that we will get any financial help even if we have no wage income at all.

 

[aaronc879]

College has gotten a lot more expansive these days, even the in state college's total cost per year is over 40k. Our agreement with the kids are basically that we will pay their college cost if they can get into a top school (top 10 or 15 in the nation for their field) or in-state school. The cost for the top schools are close to 90k/year these days (65k-70k tuition).

I guess it varies a lot by location. In my state of Wisconsin, my local state university cost under $10K/yr for tuition. Figure another $10K for on-campus room and board bringing you to $20K/yr or $80K per kid for a bachelor's degree. A little more if you are paying for them to live off campus for a couple years.

 

[fognostic]

Our agreement with the kids are basically that we will pay their college cost if they can get into a top school (top 10 or 15 in the nation for their field) or in-state school. The cost for the top schools are close to 90k/year these days (65k-70k tuition).

One of our children had to decide between a top tier public in-state school ranked in the low 20's nationally for their major, or a bespoke out of state school ranked in the high teens nationally for the same major. The ground rules we set were that we had saved enough for each of our children to attend 6 years in-state (i.e., through a masters degree or part of a PhD). The bespoke out of state school would have been an additional $200K+ for the first 4 years, which would have required our child to take out student loans just to finish their bachelors degree and left nothing for graduate school beyond piling on even more debt. There was a little disappointment, sure, but at the end of the day it was a no-brainer. In-state. Had the market price of the bespoke school been "free" due to 100% parent subsidy, a different decision would have been made, but I don't think the outcome would have been materially different.

We have friends that paid full ride for top 10-15 in the nation and later regretted it. Their children found any employ-ability advantage the bespoke degrees lacking and the parents found their retirement date further away after doing this for each of their children.

I share these anecdotes to illustrate possible effects of the student having some skin in the game, or not.

There may be some "golden ticket" exceptions - University of Chicago MBA, Harvard JD, specialist MD (from just about any medical school, so maybe MD is not a great differentiating example)? But with these salary outcomes, it seems like the student taking out loans would be a legitimate good investment paid off in a few years, followed by a gravy train with biscuit wheels.

 

[Koolau]

We had a group of PhD scientists at Megacorp everyone referred to as "The Harvard Mafia." They DID seem to live separate lives from the "State School Also Ran" crowd with faster promos, better assignments, more "status."

Heh, heh, with my measly MS degree from a state school I did fine, but the elite degrees did seem to pay off at Megacorp. YMMV

 

[SecretlyFI]

I think it also depends on your major, as to whether the school you attend makes a difference or not. With my degree in accounting and my son's degree in nursing, there are licensing/certification exams after you graduate. And those exams are uniform nationally. So it didn't matter which school you went to, since they all have to deliver the same material to enable you to pass the licensing exam at the end. For my son, we did look at the licensing exam pass rates for the different public state schools and picked the most successful one. When I was picking a school back in the 80's, it was pre-internet so I went with an in-state school that I knew the big firms hired from. Throughout my career, at 2 different major firms, I can say the school an employee went to played no part in assignments, advancement, etc.

 

[kingfisher]

I guess it varies a lot by location. In my state of Wisconsin, my local state university cost under $10K/yr for tuition. Figure another $10K for on-campus room and board bringing you to $20K/yr or $80K per kid for a bachelor's degree. A little more if you are paying for them to live off campus for a couple years.

I think you are under estimating the costs a bit. I was curious so I checked the COA for University of Wisconsin Madison. Their latest data is only from 2021-2022, and the total for in-state is already 27.5k. https://financialaid.wisc.edu/cost-of-attendance/.

 

[fosterscik]

Our kids are long through college, but your post made me curious why such old data from U Wisconsin. Current figures (25-26) $30,644 for an in-state student. Also a great deal for students from Minnesota ($36.3k vs $63.3k for all other states).

 

[kingfisher]

2025 year end updates:
It was another great year for us NW wise. We moved investments into more conservative and diverse holdings. US total market index was 80%+ of our portfolio before, now it's around 50%. International moved from 5% to 25%.

Total NW: 4.16M (+ 16%)
Tax free: 850k
Tax deferred: 970k
Taxable (including cash): 2.33M

-----------------------------
529: 560k combined for 2 kids (+25%, deposited 48k last year). The older one wants to go into CS, the younger one is leaning towards med.

 

[ncbill]

Our kids are long through college, but your post made me curious why such old data from U Wisconsin. Current figures (25-26) $30,644 for an in-state student. Also a great deal for students from Minnesota ($36.3k vs $63.3k for all other states).

Or join the WI National Guard to pay tuition

 

[aaronc879]

I think you are under estimating the costs a bit. I was curious so I checked the COA for University of Wisconsin Madison. Their latest data is only from 2021-2022, and the total for in-state is already 27.5k. https://financialaid.wisc.edu/cost-of-attendance/.

My numbers were right for the university closest to me. Madison is more expensive for tuition and housing costs than where I am 100 miles away.

 

[livingalmostlarge]

2025 year end updates:
It was another great year for us NW wise. We moved investments into more conservative and diverse holdings. US total market index was 80%+ of our portfolio before, now it's around 50%. International moved from 5% to 25%.

Total NW: 4.16M (+ 16%)
Tax free: 850k
Tax deferred: 970k
Taxable (including cash): 2.33M

-----------------------------
529: 560k combined for 2 kids (+25%, deposited 48k last year). The older one wants to go into CS, the younger one is leaning towards med.

what are you going to do with all the excess 529? It'll be only like $150k right for 4 years for each kid?

 

[Aiming_4_55]

what are you going to do with all the excess 529? It'll be only like $150k right for 4 years for each kid?

Not OP, but in a similar position with excessive 529 contributions. I plan to use SECURE Act 2.0 to gift up to $35k to kid as a Roth conversion, then leave some for kids' future kids.

 

[kingfisher]

what are you going to do with all the excess 529? It'll be only like $150k right for 4 years for each kid?

I will know more next year when my son's college choice is decided, but at this point, I don't think there will be any excess for 529. Son wants to go to CS and ED on Cornell or CMU, either one is going to ~350k for 4 years. Daughter wants to become a doctor or dentist, even at all public in state school, that's like 550k or close to 700k (did not realize dental school is actually quite a bit more expansive then medical school until recently).

 

[livingalmostlarge]

I will know more next year when my son's college choice is decided, but at this point, I don't think there will be any excess for 529. Son wants to go to CS and ED on Cornell or CMU, either one is going to ~350k for 4 years. Daughter wants to become a doctor or dentist, even at all public in state school, that's like 550k or close to 700k (did not realize dental school is actually quite a bit more expansive then medical school until recently).

are you not doing public school then for the kids? I have a ridiculous amount until you consider they are probably both going private

 

[kingfisher]

are you not doing public school then for the kids? I have a ridiculous amount until you consider they are probably both going private

Not sure about my son since the in state option isn't too good for CS and out of state public school are almost as expansive as private schools. For the daughter, if she wants to go into Med or Dental, it will need to be in-state college as first choice. But Dental is so expansive even for in-state. From school's website, 4 years of undergraduate is about 170k, and 4 years of Dental school (only 1 school in the state) is 483k. It's insane really. I am considering give her a loan for 200k instead, but I am not sure we'll be able to collect .