My bride and I have recently done some retirement planning with a local financial planner; the type that buys you a free meal at Ruth’s Chris while they pitch their services. They make money off commissions from selling annuities and life insurance, and then put together a nice portfolio of all our accounts and assets.
My bride is in her early 50s and wants to stop working in the next five years. I’m in my mid-40s and want to work my current job (consulting systems engineer to the federal gov’t) for another 15 years and then switch to a “retirement job” that is a little more leisurely, like delivering new boats to customers on Chesapeake Bay.
Anyway, this is what we’re working with so far:
Real estate:
Our house is worth around $600k and we owe about $230k. We have 13 years remaining on a 15-year note, but we’re making bigger payments and should have it paid off in about 10 years.
Pensions:
My Air Force Reserve retired pay will begin when I’m 59-1/2, should get about $1,300/month after taxes.
We both will get the maximum Social Security payments.
My bride worked in Canada early in her career and will get a small gov't pension, probably around $400/month.
Retirement accounts:
I had a costly divorce a few years ago that decimated my 401k and I had to liquidate my IRA for a family emergency. My 401k is currently only $165k but is growing fast. I’m fortunate that my employer has a 10% match, and I am contributing the maximum every year. I try to buy stocks and ETFs at cheap prices and sell at high prices, along the lines of Peter Lynch (former Fidelity Magellan fund manager) as he outlined in his books. For instance, in the last week I bought $10k of the ETF “UCO,” which is 2x-leveraged in crude oil. I bought it in six separate purchases that bracketed the low price earlier this week. If oil goes back up to $80/barrel I will turn that $10k into $40k.
My bride has a 401k with about $400k in it. She contributes the maximum, including the additional $6k/year because she’s over 50, and her employer contributes 3%. Hers is in an account that lacks the flexibility of mine, so right now it’s mostly in a high yield bond fund to avoid the currently overpriced equities market. After she quits working we’re thinking about rolling most of her 401k balance into a pension annuity and hold off withdrawing from it as long as we can so it grows a bit. If we can wait until after I quit working my regular job, we can probably get about $2,300/month for life out of that annuity.
Anyway, with all that I think we can have a pretty comfortable retirement. Our fallback plan is my stepson, who we’re putting through law school. Hopefully he’ll become a big-shot lawyer and let us live in his guest house.
