Some initial comments:
Expenses: What is your expectation as far as annual expenses when you are no longer working? I fully recognize that it may be challenging to look that far into the future...so just make your best estimate. This is fundamental to start getting a handle what your portfolio will need to look like as far as $$ to support those expenses. For example, if you need 70k / year to last 30 years...will be something like $1.75M. You may need more or less depending on if you stop working earlier or later.
https://www.bogleheads.org/wiki/Safe_withdrawal_rates
Pension: Does the pension have cost of living adjustments (COLA)?
Social Security: Keep in mind that Social Security is based upon the 35 years in which you earned the most. If you work less than 35 years, your benefit will be reduced to some extent. Utilizing the calculator below, you utilize your earnings record and then make some assumptions for the years still remaining...how many you will work and what income you expect during those years.
https://ssa.tools/
The decision on when to take Social Security can be a tough as people want to maximize the benefits they receive. One of the critical benefits of Social Security is that the longer you wait to collect, the larger your benefit amount. Some people decide to wait as long as possible to receive the maximum benefit with the idea that it will help make sure you do not run out of money if you live longer than expected...particularly in cases where you may have a spouse who has a significantly lower benefit. For example, my wife is a stay at home mom...I will wait longer to file for Social Security to provide her with a larger benefit to help ensure she will have enough (assume she will live longer than I will).
College Savings (529): You have saved a significant amount. Everyone has a different idea what is an acceptable college education. For example, some think it is important their child has the "college experience" and live on campus...which adds considerable cost. There is no right or wrong, just think it through as you decide where and how much you contribute to your various accounts (ex: savings for future retirement vs kids education for example).
In my own case, we have 4 children and do the following:
* 2 years community college
* 2 years state university
* All while living at home.
Naturally, there are trade offs...but affordable and our children will have an education and be debt free which is our primary goal. YMMV.
HSA: is one available to either of you? This can be a great vehicle for savings.
General:
* Focus on what you can control: Savings, and expenses for example. Of course, there is nothing wrong with making estimates about the future, but no one knows what will happen, whether there is another lost decade, financial crisis, pandemic, or other.
* Choices: You want to retire earlier than most. You save accordingly to do so. Not surprisingly, other things are sacrificed...better cars, vacations, eating out more...and on and on. In my own case, I could absolutely retire earlier if we wished to do so, but we also place a high value on and enjoy vacations and eating out with our family. I simply accept I will work longer for the privilege and am perfectly satisfied with that decision. You are making a choice as well...you could decide differently. What your neighbors and friends are doing is irrelevant. Maybe they have more resources, debt or other...do what makes sense for you two.
* Important to remember...
- Always live beneath your means
- Save consistently and increase contributions as your income grows
- Enjoy life along the way
Best wishes.
Expenses: What is your expectation as far as annual expenses when you are no longer working? I fully recognize that it may be challenging to look that far into the future...so just make your best estimate. This is fundamental to start getting a handle what your portfolio will need to look like as far as $$ to support those expenses. For example, if you need 70k / year to last 30 years...will be something like $1.75M. You may need more or less depending on if you stop working earlier or later.
https://www.bogleheads.org/wiki/Safe_withdrawal_rates
Pension: Does the pension have cost of living adjustments (COLA)?
Social Security: Keep in mind that Social Security is based upon the 35 years in which you earned the most. If you work less than 35 years, your benefit will be reduced to some extent. Utilizing the calculator below, you utilize your earnings record and then make some assumptions for the years still remaining...how many you will work and what income you expect during those years.
https://ssa.tools/
The decision on when to take Social Security can be a tough as people want to maximize the benefits they receive. One of the critical benefits of Social Security is that the longer you wait to collect, the larger your benefit amount. Some people decide to wait as long as possible to receive the maximum benefit with the idea that it will help make sure you do not run out of money if you live longer than expected...particularly in cases where you may have a spouse who has a significantly lower benefit. For example, my wife is a stay at home mom...I will wait longer to file for Social Security to provide her with a larger benefit to help ensure she will have enough (assume she will live longer than I will).
College Savings (529): You have saved a significant amount. Everyone has a different idea what is an acceptable college education. For example, some think it is important their child has the "college experience" and live on campus...which adds considerable cost. There is no right or wrong, just think it through as you decide where and how much you contribute to your various accounts (ex: savings for future retirement vs kids education for example).
In my own case, we have 4 children and do the following:
* 2 years community college
* 2 years state university
* All while living at home.
Naturally, there are trade offs...but affordable and our children will have an education and be debt free which is our primary goal. YMMV.
HSA: is one available to either of you? This can be a great vehicle for savings.
General:
* Focus on what you can control: Savings, and expenses for example. Of course, there is nothing wrong with making estimates about the future, but no one knows what will happen, whether there is another lost decade, financial crisis, pandemic, or other.
* Choices: You want to retire earlier than most. You save accordingly to do so. Not surprisingly, other things are sacrificed...better cars, vacations, eating out more...and on and on. In my own case, I could absolutely retire earlier if we wished to do so, but we also place a high value on and enjoy vacations and eating out with our family. I simply accept I will work longer for the privilege and am perfectly satisfied with that decision. You are making a choice as well...you could decide differently. What your neighbors and friends are doing is irrelevant. Maybe they have more resources, debt or other...do what makes sense for you two.
* Important to remember...
- Always live beneath your means
- Save consistently and increase contributions as your income grows
- Enjoy life along the way
Best wishes.
Statistics: Posted by invest4 — Sat Jan 13, 2024 6:02 am — Replies 4 — Views 756