When can we retire?

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seligsoj
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When can we retire?

Post by seligsoj »

Mid 40s couple. Only debt that we have is 230k left on mortgage (home is currently worth around 700k). We currently earn 280k which is evenly split between DH and I. 2 kids are in public elementary and middle school.

We have 2.3 million saved with 150k earmarked for state college for the kids.

I have a vested local govt pension that I need to work 10 more years in order to get the full amount (60 percent of salary) otherwise it will be reduced a fair amount.
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Metsfan91
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Re: When can we retire?

Post by Metsfan91 »

seligsoj wrote: Sun Mar 31, 2024 9:45 pm Mid 40s couple. Only debt that we have is 230k left on mortgage (home is currently worth around 700k). We currently earn 280k which is evenly split between DH and I. 2 kids are in public elementary and middle school.

We have 2.3 million saved with 150k earmarked for state college for the kids.

I have a vested local govt pension that I need to work 10 more years in order to get the full amount (60 percent of salary) otherwise it will be reduced a fair amount.
How much do you spend annually?

You can retire after 10 years. You'll be getting 60% pension. I assume you'll be eligible for social security.
"Know what you own, and know why you own it." — Peter Lynch
sailaway
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Re: When can we retire?

Post by sailaway »

What are your expenses?

How do you expect expenses to change in retirement? Some folks spend more (ie, extensive travel while maintaining family home), some spend less (move the LCOL, which could mean less travel than ever if moving to be closer to family).
vk22
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Re: When can we retire?

Post by vk22 »

best to ask with expected expense and details on pension if you prefer.
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seligsoj
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Re: When can we retire?

Post by seligsoj »

Here is some general information about our budget and I can always come back with more specifics.


-Our biggest montly expense is our mortgage which is $2,400 for a 15 year at 2.25 interest. I need to see how many years are left exactly but approximately 10. Some stuff we could easily cut back on like the expensive travel sports for the kids, vacations (we actually prefwr to be at home), and salon visits for hair.

-food costs are approximately $1,300 a month including takeout
-childcare is 400 a month (summer camps)
-health insurance/scripts 300 a month
-rec/travel sports 700 a month
-vehicle insurance 160 a month
-clothing/grooming 300 a month
- vacation 500 a month
-utilities/phone 250 a month

The pension will pay out beginning in 10 years and will be around 60 percent of my final salary (im estimating my final salary will be somewhere between 165-180). I will be able to access the retiree healthcare. The Pension has colas.

I need to look at how dramatically reduced the pension will be if I stopped at 20 years. I think it would be worth approximately 40 percent of my final salary (currently 145k) and I couldn't access it until 62.
sailaway
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Re: When can we retire?

Post by sailaway »

You really need to work on figuring out how much you are spending. You are missing a lot of common expenses such has home maintenance, ongoing expenses for the car beyond insurance, sinking funds to replace the car...

Our checking account comes with a decent expense tracking feature. We pay all of the bills through there.
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Metsfan91
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Re: When can we retire?

Post by Metsfan91 »

seligsoj wrote: Sun Mar 31, 2024 10:20 pm Here is some general information about our budget and I can always come back with more specifics.


-Our biggest montly expense is our mortgage which is $2,400 for a 15 year at 2.25 interest. I need to see how many years are left exactly but approximately 10. Some stuff we could easily cut back on like the expensive travel sports for the kids, vacations (we actually prefwr to be at home), and salon visits for hair.

-food costs are approximately $1,300 a month including takeout
-childcare is 400 a month (summer camps)
-health insurance/scripts 300 a month
-rec/travel sports 700 a month
-vehicle insurance 160 a month
-clothing/grooming 300 a month
- vacation 500 a month
-utilities/phone 250 a month

The pension will pay out beginning in 10 years and will be around 60 percent of my final salary (im estimating my final salary will be somewhere between 165-180). I will be able to access the retiree healthcare. The Pension has colas.

I need to look at how dramatically reduced the pension will be if I stopped at 20 years. I think it would be worth approximately 40 percent of my final salary (currently 145k) and I couldn't access it until 62.
Adding all these up, you are spending about 76K a year...If you work 10 more years, your pension earning will cover all your expenses. Anything you have saved up are just gravy!

If you retired now, would you get retiree healthcare right away? If not, you'll have to pay for obamacare. This will add to your spending. If you don't have to pay for healthcare, 4% withdrawal from your portfolio will cover your expenses. You'll be getting pension and social security when you become eligible. So, you could retire now.

Ideally, it would be the best to retire after 10 years. Your mortgage will be paid off. You'll receive pension immediately. Your portfolio will be much larger.
"Know what you own, and know why you own it." — Peter Lynch
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Peter Foley
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Re: When can we retire?

Post by Peter Foley »

You have a good amount saved. In what type of accounts is that savings? Obviously savings in a Roth is worth more than savings in a IRA.

If you are planning for a mid 50's retirement, you will need access to some funds prior to age 59.5. Roth contributions can be part of the solution, but taxable account savings will be needed as well.
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greg24
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Re: When can we retire?

Post by greg24 »

Listed expenses from above are $76k. You surely forgot to list some stuff, your withdrawals from retirement accounts or taxable accounts will have taxes, and also life happens, so lets say you're withdrawing 100k to 125k per year. 125k on 2.15M in savings is a 6% withdrawal rate, but you're only doing it for 10 years. Then your pension kicks in and covers everything. Then social security at some point, increasing your income even more. At IRA RMD time, you'll have too much income. It seems like you probably have a safe retirement secured already.

Your spouse can retire now. You can retire any time in the next 10 years, with each day increasing the likelihood of your retirement success just a bit. I would plan on working the full 10 years or close to it. That decision can maximize the value of spouse retiring now with kids in school.
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Metsfan91
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Re: When can we retire?

Post by Metsfan91 »

greg24 wrote: Sun Mar 31, 2024 10:57 pm Listed expenses from above are $76k. You surely forgot to list some stuff, your withdrawals from retirement accounts or taxable accounts will have taxes, and also life happens, so lets say you're withdrawing 100k to 125k per year. 125k on 2.15M in savings is a 6% withdrawal rate, but you're only doing it for 10 years. Then your pension kicks in and covers everything. Then social security at some point, increasing your income even more. At IRA RMD time, you'll have too much income. It seems like you probably have a safe retirement secured already.

Your spouse can retire now. You can retire any time in the next 10 years, with each day increasing the likelihood of your retirement success just a bit. I would plan on working the full 10 years or close to it. That decision can maximize the value of spouse retiring now with kids in school.
Pension kicks in after 10 years only if the OP works another 10 years and will get 60%. If retires early, the OP will have to wait for age 62 and will get less.
"Know what you own, and know why you own it." — Peter Lynch
myfrogger
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Re: When can we retire?

Post by myfrogger »

Like the others are saying, I think you can target to retire once the pension starts. How does that sound? Does it accomplish what you want? If not, what are you aiming for?
runswithscissors
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Re: When can we retire?

Post by runswithscissors »

seligsoj wrote: Sun Mar 31, 2024 9:45 pm
I have a vested local govt pension that I need to work 10 more years in order to get the full amount (60 percent of salary) otherwise it will be reduced a fair amount.
What is a fair amount? When do you prefer to retire by? Is mid 50s an acceptable retirement timeframe or do you want to retire sooner or later? Agree with another poster you have a lot of holes in your summary of expenses. You may be underestimating your total annual expenses.
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JaneyLH
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Re: When can we retire?

Post by JaneyLH »

No budget for healthcare costs/medical insurance?
Property taxe?
Income tax?
Homeowners' insurance?
Home maintenance?
Replacement vehicles?

Suggest you carefully track expenses for a year and develop a detailed budget. There will be new expenses as you age and can't clean the house, mow the lawn, etc. to consider as well.
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