Goal Update: Retirement

Jen

Retire

In 19 years, my husband will be old enough to retire with full Social Security benefits. Ten years after him, in 2045, I will be 67 myself. (He robbed the cradle- at least that’s what he tells everyone.)

He plans on retiring at the traditional age, but I would like to join him when he does. What’s the fun of hanging around all by yourself? In 16 years, our youngest will be graduating high school, and hopefully heading off to college or the great wide world. Wouldn’t it be nice if we were in a place to make sure our youngest has a little help with school, but we don’t have to get up every morning and work unless we really wanted to?

Mr Thrifty envisions a retirement of hanging out with his wife, reading, playing hockey, hiking, and woodworking. He may even be dragged around on a few trips by that wife, once a year or so.

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I envision a retirement of working on writing projects I like, maybe a little teaching here and there, a daily trip to the YMCA,  bike trail,  or state park for exercise, volunteering as an usher for the Broadway Series so I can see every show for free, lunching at my favorite foodie spots once a week, meeting friends and family, and doing some volunteer work with a local foster agency. I plan on being just as busy, but with the ability to pick and choose and even donate my time if I want.

Most of our parents get Social Security for their retirement benefits, with the amount only dependent upon retirement age. The question is, once we hit that magic number, will we be getting just as much back as we’ve put in? Plenty of things can happen over the next few decades, but as things stand now, the Social Security trust fund reserves will be depleted by 2034, and those receiving Social Security benefits after this year will only get about 79% of the expected benefit. Say what?!

We are opting to take the “better to be safe than sorry” approach, and not include any Social Security benefit into our future retirement planning. Whatever we get, if we get anything, will just be the icing on the cake. Maybe we’ll use it to fund college funds for grandkids? Who knows.

We have a predefined number we are looking to hit before retiring, and it is in the 7 figures. Right now, we are at 20% of that goal. We have a good start, but have a ways to go, especially if we want to retire in 16 years. Once we no longer have a mortgage, our expenses will be pretty low.

How are we doing at getting there?

My income fluctuates every month, but after 6 months of this, I can see what I average per month, and what our new yearly income will be. Based on my plans to fully fund a Roth IRA, plus my husband’s contributions, we are putting 16% of gross income into retirement accounts. If you count what we are putting into traditional savings as well, we are saving/investing about 30% of our income.

While that is more than the average American saves for retirement, it is far below the 50-60% of our income we would like to be saving.  Even though we are above average savers, and we aren’t in the half of Americans who have nothing saved at all, that is no reason to rest on our laurels.

What’s the plan?

We have two big hurdles we need to leap before we can increase our savings rate. The first is getting through with paying for graduate school for me. That is costing us between $12000-14000 per year for two years. Our last payment will be in January 2017, which is almost a year away.

The second is that we have a host of major home repairs/improvements that we need to complete, including getting a new roof, replacing the windows, replacing the HVAC system, putting up a fence (and possibly a play set), getting a new dishwasher, and replacing a toilet.  The original builder went cheap, and now that the house is about 20 years old, we are reaping the harvest of those poor choices.

We have a couple years (we hope) to save for the roof and windows, but we probably will not be able to limp along and hack the air conditioning for the third year in a row in order to survive another summer. We have no choice but to replace the toilet soon, and will probably get a new dishwasher within the next few months. Because of a safety issue with the kids, we would like to get the fence done this coming spring.

We’re debating staying in this house and paying it off within 10 years, and not building until the youngest graduates high school. If that happens, we will probably finish the basement as well.  But let’s not think about that today.

How much will this cost? Possibly around $35,000-45000.

For the next 1-2 years, we won’t be increasing contributions very much, as we plan for the Great House Overhaul. Once that happens, and I get additional work teaching, we think we will be on target to sock away at the 50% level.

Does that mean nothing happens in the meantime? No! The faster we can fund the Overhaul and Grad School, the faster we can start funding freedom from the work hustle.

Action plan:

  1. At the moment, I have 3 different 401K accounts with three previous employers. Since I dropped to float pool, I am no longer eligible for the 401K or for the generous 6% match at my current job *sniff*. I have been researching, trying to decide if I want to consolidate those 401Ks into one IRA.  On my long to-do list is finding out the fees for each one, and seeing if I can roll them over to a different placement with lower fees.
  2. I have a savings account fund for my 2015 Roth, but I still need to open one with Vanguard.
  3. We have a lot of research and learning to do, when it comes to deciding where we are going to put the “early retirement” portion of our funds. I have a list of books on my list, and we plan on hitting up my father-in-law for advice over the holidays.

I know we can do this within 19 years, and I think we can do it in 16. The magic number, in my book, is 2032. The kids all grown and retired- woo woo!

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