Hi everyone!
I have been reading about other's experiences here for about a year, and thank you to everyone who shared their thoughts, concerns, successes, and lessons learned. It has really made me think though some of my thoughts related to retirement, especially how common some of these concerns / thought processes are.
I will likely retire this year, or next year at the latest (unless something completely unexpected changes). I say likely, because we have one more meeting with our FA to run the numbers (yet again). Intellectually I feel confident that we are fine, but am very conservative in terms of financial risk, so have to get over that mental hurdle. Our FA has run our plan through their software and gave a 99% success rate (or as he said: “I am not allowed to say 100%, otherwise I would say 100%). I have also run Firecalc with similar results.
Personal background: Married 56yo, with 49yo wife and two grown children. DW is working full time for at least the next three years, and possibly for a few years after that. One of our children is out of the house already, enrolled in college and getting married this year. Other child is applying to colleges as I type.
Goals: Main goal is to finally relax, turn off that workaholic side of my brain (or at least reduce it to the things that matter to me, instead of the things that matter to my employer), and enjoy life. I love to travel and am planning several trips over the next few years to see parts of the world that I have not made the time to see previously.
Current Expenses: We are living off of my DW's paycheck for all monthly expenses. We shifted to this model a couple of years ago to test if we can actually pull this off when my income reduces by retirement (more on this later). My salary has gone into a separate savings account (mid-term savings) and has been used to fund 'big ticket' items such as house remodeling, vacations, etc. So far, this strategy has worked (living off of her income), and I have built out our spreadsheets itemizing monthly expenses, down to expenses that are optional vs necessary. The past six months, we have shifted to plussing up our short-term savings from this income stream (rather than from my paycheck) to see if her salary can handle the stress-test of unexpected expenses like major appliance repairs, vacations, etc. Short story: we are spending on average $10k/month in daily living, are running at a profit from DWs paycheck, and are planning on continuing this as a base plan for retirement expenses.
We do have several large expenses we are anticipating over the next several years:
1. We are helping our daughter out with her startup expenses for life / wedding. We have been funding this from our mid-term account (my salary), so the balance (~35k) will come from our overall cash savings (below). Her college is taken care of by her GI Bill.
2. Our son is about to start the college life. The balance of his expenses will be covered by my GI Bill, but the program he is interested in (Maritime industry) requires a summer work program to get the hours necessary for his licenses, which the GI Bill does not cover. This will be on the order of 15k/year for 3 years. He will receive a housing allowance as part of the GI Bill which can help fund the summer expenses. We have a 529 investment that we can use for these expenses.
3. Like with our daughter, we intend to help him with his startup expenses for life when he graduates. This will be funded by my pension (below).
Finances: Here is what has been psychologically holding me back from retirement until I have read the experiences of others, and really analyzed needs / wants / and where we are.
Emergency cash on hand: we currently have $340k in high interest savings accounts to keep it liquid. Yes, a lot of money earning a (relatively) low interest rate, but we intend to use a portion of this to potentially purchase a retirement property (if we can ever agree on where to retire lol) so keeping it sheltered from the volatility of the stock market is more important to us than maximizing growth. If things change, we will reduce this to 1 year of DW’s salary and put the remainder into investments.
Pension: I am receiving a (cola) pension of around $55k annually (after taxes). I also receive a VA disability payment of around $45k (COLA and tax free). This yields a little over 8k/month. This is currently not part of our spending plan as of now, and is used to build up our cash savings and investments. If / when I pass, DW will receive half of my pension (~ $25k in today’s dollars) annually.
When DW retires from her current job, she will get a pension as well, estimating at $60k annually (pre-tax), but will not start receiving this until she turns 55. We are not planning on any VA disability for her at this time, as we cannot predict how the voodoo science of VA claims will work in the future, but she will likely get something. With no VA figured in, she would pull in about $5k monthly (pre tax).
Combined, our pensions will be $13K/monthly minimum, so below our planned monthly budget.
Investments: I am quite happy with where we stand considering I did not get started saving for retirement until my 30s. Growing up, finances were never really a discussion in my family, so I didn't think of this in my early adulthood. Our kids on the other hand were required to start a Roth IRA as a condition of their first jobs while they lived at the house; so as long as they stick with it, they should be so much better off when they retire! Our plan is to leave our investments alone until at least after DW retires, and probably for a few years after this. Once we do start tapping into this, we will likely use a modification of the 4% rule, as we want to have a balance remaining upon our passing for inheritance and charity.
We currently have a little over $1,535,000 in investments, spread across 2 TSPs, 2 401ks, IRAs, Roth IRAs, and conventional accounts. I know I need to clean this up, and that will be a focus when I have the freedom of not working crazy hours.
TSPs: $242k: (My TSP will likely roll over to my IRA when I retire, hers likewise.)
401Ks: $360k (I intend to move mine over to our IRA once I retire.)
Roth IRAs: $190k
IRAs: $180k
Taxable Acct: $500k
529 acct: $70k
Investments are currently 70% stocks, and 30% bonds. We will start Roth conversions of 401ks and IRAs after I retire as my DWs taxable income is below her actual income, thanks to the way the tax code works.
Social Security: We intend to delay social security benefits as we don’t feel we are reliant on them to meet goals.
Other:
We have a rental property that breaks even yearly with an estimated equity of about $200k. Our primary residence has a mortgage due of $364k at a low interest rate, and has an equity of about $490k. If we end up moving after DW retires, we would sell our primary residence, and the rental.
I have been reading about other's experiences here for about a year, and thank you to everyone who shared their thoughts, concerns, successes, and lessons learned. It has really made me think though some of my thoughts related to retirement, especially how common some of these concerns / thought processes are.
I will likely retire this year, or next year at the latest (unless something completely unexpected changes). I say likely, because we have one more meeting with our FA to run the numbers (yet again). Intellectually I feel confident that we are fine, but am very conservative in terms of financial risk, so have to get over that mental hurdle. Our FA has run our plan through their software and gave a 99% success rate (or as he said: “I am not allowed to say 100%, otherwise I would say 100%). I have also run Firecalc with similar results.
Personal background: Married 56yo, with 49yo wife and two grown children. DW is working full time for at least the next three years, and possibly for a few years after that. One of our children is out of the house already, enrolled in college and getting married this year. Other child is applying to colleges as I type.
Goals: Main goal is to finally relax, turn off that workaholic side of my brain (or at least reduce it to the things that matter to me, instead of the things that matter to my employer), and enjoy life. I love to travel and am planning several trips over the next few years to see parts of the world that I have not made the time to see previously.
Current Expenses: We are living off of my DW's paycheck for all monthly expenses. We shifted to this model a couple of years ago to test if we can actually pull this off when my income reduces by retirement (more on this later). My salary has gone into a separate savings account (mid-term savings) and has been used to fund 'big ticket' items such as house remodeling, vacations, etc. So far, this strategy has worked (living off of her income), and I have built out our spreadsheets itemizing monthly expenses, down to expenses that are optional vs necessary. The past six months, we have shifted to plussing up our short-term savings from this income stream (rather than from my paycheck) to see if her salary can handle the stress-test of unexpected expenses like major appliance repairs, vacations, etc. Short story: we are spending on average $10k/month in daily living, are running at a profit from DWs paycheck, and are planning on continuing this as a base plan for retirement expenses.
We do have several large expenses we are anticipating over the next several years:
1. We are helping our daughter out with her startup expenses for life / wedding. We have been funding this from our mid-term account (my salary), so the balance (~35k) will come from our overall cash savings (below). Her college is taken care of by her GI Bill.
2. Our son is about to start the college life. The balance of his expenses will be covered by my GI Bill, but the program he is interested in (Maritime industry) requires a summer work program to get the hours necessary for his licenses, which the GI Bill does not cover. This will be on the order of 15k/year for 3 years. He will receive a housing allowance as part of the GI Bill which can help fund the summer expenses. We have a 529 investment that we can use for these expenses.
3. Like with our daughter, we intend to help him with his startup expenses for life when he graduates. This will be funded by my pension (below).
Finances: Here is what has been psychologically holding me back from retirement until I have read the experiences of others, and really analyzed needs / wants / and where we are.
Emergency cash on hand: we currently have $340k in high interest savings accounts to keep it liquid. Yes, a lot of money earning a (relatively) low interest rate, but we intend to use a portion of this to potentially purchase a retirement property (if we can ever agree on where to retire lol) so keeping it sheltered from the volatility of the stock market is more important to us than maximizing growth. If things change, we will reduce this to 1 year of DW’s salary and put the remainder into investments.
Pension: I am receiving a (cola) pension of around $55k annually (after taxes). I also receive a VA disability payment of around $45k (COLA and tax free). This yields a little over 8k/month. This is currently not part of our spending plan as of now, and is used to build up our cash savings and investments. If / when I pass, DW will receive half of my pension (~ $25k in today’s dollars) annually.
When DW retires from her current job, she will get a pension as well, estimating at $60k annually (pre-tax), but will not start receiving this until she turns 55. We are not planning on any VA disability for her at this time, as we cannot predict how the voodoo science of VA claims will work in the future, but she will likely get something. With no VA figured in, she would pull in about $5k monthly (pre tax).
Combined, our pensions will be $13K/monthly minimum, so below our planned monthly budget.
Investments: I am quite happy with where we stand considering I did not get started saving for retirement until my 30s. Growing up, finances were never really a discussion in my family, so I didn't think of this in my early adulthood. Our kids on the other hand were required to start a Roth IRA as a condition of their first jobs while they lived at the house; so as long as they stick with it, they should be so much better off when they retire! Our plan is to leave our investments alone until at least after DW retires, and probably for a few years after this. Once we do start tapping into this, we will likely use a modification of the 4% rule, as we want to have a balance remaining upon our passing for inheritance and charity.
We currently have a little over $1,535,000 in investments, spread across 2 TSPs, 2 401ks, IRAs, Roth IRAs, and conventional accounts. I know I need to clean this up, and that will be a focus when I have the freedom of not working crazy hours.
TSPs: $242k: (My TSP will likely roll over to my IRA when I retire, hers likewise.)
401Ks: $360k (I intend to move mine over to our IRA once I retire.)
Roth IRAs: $190k
IRAs: $180k
Taxable Acct: $500k
529 acct: $70k
Investments are currently 70% stocks, and 30% bonds. We will start Roth conversions of 401ks and IRAs after I retire as my DWs taxable income is below her actual income, thanks to the way the tax code works.
Social Security: We intend to delay social security benefits as we don’t feel we are reliant on them to meet goals.
Other:
We have a rental property that breaks even yearly with an estimated equity of about $200k. Our primary residence has a mortgage due of $364k at a low interest rate, and has an equity of about $490k. If we end up moving after DW retires, we would sell our primary residence, and the rental.
