Retirement planning

[wmonroe]

I was reading the thread about calculating your lifetime earnings and some of the retirement discussion got me thinking about retirement planning. A thread with some discussion, experiences, current planning may be of some use to other members in addition to myself. Currently I am 32 and have been saving for retirement in some form (not always a lot) since I was about 24. My question for years has been, "how much money do I need to save to have a comfortable retirement" and the answer from people is usually "save as much as you can". That answer is all well and good but I don't really want to be the rich guy in the grave yard. A few years ago we did get a financial advisor to assist with the planning but for now I would like to leave him out of this discussion and get ideas from the members. We can start with my situation but I would like to move on to getting a broader experience range from numerous people with questions.

I'm 32 and my wife is 35 currently have an infant and plan on one more child. My wife and I both have pensions at our current jobs that we are vested in. We save what I consider to be quite a bit per month in 401k, mutual fund, and a retirement life insurance plan. The plan is to have the house payed off before retirement, we do not have any credit card debt, the only retirement debt I could foresee is a car loan (if it is a better interest rate than just paying cash). The plan is for me to retire at 55 and my wife at 58 so we still have about 23 years to go. Those who are retired or are planning what percentage of your working income do you need in retirement or what other advice do you have for those planning to get there?
Thanks

 

[nc redneck]

4% has always been the standard. In other words 1 million in cash investments would give you 40 K to spend each year. I use 3% in today's low return environment. Any pensions, SS or free lifetime health insurance can be deducted from 40 K. Keep saving.

 

[Parkanzky]

Fidelity's rule of thumb is that you need 8x your ending salary for retirement. You'd be able to reduce that to 8x your ending salary minus your annual pension benefit.
However, that's based on the rule of thumb that you need less income in retirement. 85% of your ending income is a common figure. Personally, I think that's way low. With all the free time I'll have in retirement and our love of travel, I want access to more money than we make now.

We have Roth 401k's, which means that the money is tax-free for us at retirement. Still, we're targeting ~20x our current salary (which will probably be ~15x our ending salary). What we're doing to get there is saving extremely aggressively (maxing both Roth 401k's and putting money into a taxable investment account) until we have enough to let it go on autopilot. Then we'll cut our contributions down to the minimum required to get the maximum company match and spend like there is no tomorrow.

 

[sam5570]

I sure hope some of the people here from the age of 62 to 70 reply this should be very interesting. I hope I have time to follow the thread.

 

[Steppenwolfe]

I was reading the thread about calculating your lifetime earnings and some of the retirement discussion got me thinking about retirement planning. A thread with some discussion, experiences, current planning may be of some use to other members in addition to myself. Currently I am 32 and have been saving for retirement in some form (not always a lot) since I was about 24. My question for years has been, "how much money do I need to save to have a comfortable retirement" and the answer from people is usually "save as much as you can". That answer is all well and good but I don't really want to be the rich guy in the grave yard. A few years ago we did get a financial advisor to assist with the planning but for now I would like to leave him out of this discussion and get ideas from the members. We can start with my situation but I would like to move on to getting a broader experience range from numerous people with questions.

I'm 32 and my wife is 35 currently have an infant and plan on one more child. My wife and I both have pensions at our current jobs that we are vested in. We save what I consider to be quite a bit per month in 401k, mutual fund, and a retirement life insurance plan. The plan is to have the house payed off before retirement, we do not have any credit card debt, the only retirement debt I could foresee is a car loan (if it is a better interest rate than just paying cash). The plan is for me to retire at 55 and my wife at 58 so we still have about 23 years to go. Those who are retired or are planning what percentage of your working income do you need in retirement or what other advice do you have for those planning to get there?
Thanks

My Two Cents : Retiring at 55 and 58 is way too soon. I've made more money between 50 and 56 than I did in all of my 40's. And I'm not done, yet. Why would I retire now, when I can still make some nice bank in the next 10 years? Don't give up your big earning years.

 

[reb]

Something to consider for early retirement--Medicare does not kick in until age 65. That means you would have to fund health insurance for a few years. Health costs increase with increasing age, so insurance is more important that at your age.

Another thought--raising children is expensive. Last figures I saw put the cost of raising a child in five figures. Your numbers put the second child in college near your retirement goal. You will want to keep that in mind in your planning.

Good luck.

 

[wmonroe]

My Two Cents : Retiring at 55 and 58 is way too soon. I've made more money between 50 and 56 than I did in all of my 40's. And I'm not done, yet. Why would I retire now, when I can still make some nice bank in the next 10 years? Don't give up your big earning years.

It may be true that 55 is too early but if I save enough why stay at work when I can be home and still be young enough to work on the projects I don't have time for now, spend time with my kids/grandkids. I may be very wrong but I don't want to have to be at work a day longer than necessary.

 

[wmonroe]

Something to consider for early retirement--Medicare does not kick in until age 65. That means you would have to fund health insurance for a few years. Health costs increase with increasing age, so insurance is more important that at your age. Another thought--raising children is expensive. Last figures I saw put the cost of raising a child in five figures. Your numbers put the second child in college near your retirement goal. You will want to keep that in mind in your planning. Good luck.

Health insurance is, to me, the big unknown and might change my plan as I get closer. We have started a college fund for our first child already and will start a second once the next one comes along. The plan is to save for the cost of a state school and if they choose to go some where else they can supplement the difference with student loans.

 

[Parkanzky]

My Two Cents : Retiring at 55 and 58 is way too soon. I've made more money between 50 and 56 than I did in all of my 40's. And I'm not done, yet. Why would I retire now, when I can still make some nice bank in the next 10 years? Don't give up your big earning years.

Because there's more to life than accumulating money? I have a target amount of money in mind that would allow us to maintain a fantastic lifestyle indefinitely. We may not retire as soon as we hit that number, but we'll only keep working past that point if it's because we'd rather work than not. I've been teaching a couple of laboratory sections at a local university for the past couple years. I do it because I enjoy it and find it to be rewarding. I plan to do more of that and to increase my volunteer time when I retire.

 

[Humblebub]

I am 68 and working because I like my employment. I have earned above Canadian average and have saved 8% of gross earnings since I was 40. I can retire when I want to and maintain my fairly modest life style. With low returns I will be spending principal.