I'm talking to myself, but maybe this helps some of you as well that are entering your final years of earning before venturing into the world of living off the fruits of your prior years labor. I had a slap looking at my 401K from my last job. While it did well enough in 2021, it lost a bunch just in January. Even with the loss, the gains were above what we're planning for the 12 month period, but it's sure hard to see 10's of thousands drop from an account balance. I took a swig of strong coffee and glanced at the whole 12 months. There was a lot of downs and ups over the year. If I fixated on just January, I'd likely spiral into panic. Looking at the whole picture and remembering to have patience calmed my fears.
Don't we all worry that we've planned well enough? None of us want to retire and live a lower quality life, in fact at least for the first decade and 1/2, I plan on squeezing in so many things we either put off, or enjoyed so much we want to do more. While these adventures won't be at the Ritz, I want comfortable. I don't mind continuing my thrifty ways, but I don't want worry and doubt to fill my mind when I try and sleep.
Even though DH is in striking distance, were still playing the long game. It still is important to see fluctuations and pay attention, but without anxiety inducing reactions or over confidence. For me it helps me look at short term savings goals in tandem with 401K's and Roth RA's as part of our overall plans. Cash in hand, money set aside in sinking funds, and not adding debt is assurance to ride through dips in the market value of our retirement portfolio. We have wobbly years-the years between me being 62 and 66 when I am both eligible for Medicare and my pension fully matures. Those are our cash years as I am calling them. This is where we will concentrate on using the Roth, because that was funded with after tax funds, so not subjective to additional taxes. We're focused, hopeful, still investing, in this portion of our overall portfolio. It's subject just like my 401K to the market fluctuations though. This is why a portion of the portfolio has to be actual cash, tying back to living a good life, but a thrifty life, now and in retirement.
Well if you worked for the State of Idaho that balances it's budget on the back of the state employee with federal funds (think food stamps along with your application) you would retire and think you are a millionaire as you take home would about triple.
ReplyDeleteYou must mean your hubs? I don't think we're headed for SNAP, though being generous and giving back is on that retirement list.
DeleteYou have to approach retirement with planning and a whiff of faith that all those plans will work out.
ReplyDeleteOh yes! And diversify.
DeleteI will be 62 and part time as of this year.I plan on waiting somewhere between 65 and FRA of 67, to draw SS. I started last month drawing my state retirement check. I just haven’t decided about when I am going to quit part time. I guess I will when I feel it. At the moment I am planning on working until 70. ……maybe. Cindy in the South
ReplyDeleteI'd only want to work seasonally if I work longer so likely take a few paid projects, but not committing to a regular schedule when I leave my job.
DeleteYou can't focus on just one month. The market goes all over the place short term. You're doing good, saving and focusing on the long haul. Celie
ReplyDeleteJust like too "happy" is a problem in a good month. I hope we're planning smart.
DeleteOur current plan is for M to keep working (his choice, he currently has zero desire to quit) until he gets closer to 59.5, when we can tap his 401k. My 401k will continue to grow, until we need it (if at all).
ReplyDeleteWe're having a hard time planning for the next 6-8 years, as the kids college choices will be a huge factor. If they end up doing two years of community college, followed by two years of a UC system school, we will have oversaved. If not, we will need to pay quite a bit out of our monthly cash flow to make up the gap. California has some wild taxes, but their community college systems are top notch, and we're within a 10 minute drive of two of the best in the state. From there, you can get guaranteed admission to a UC or CSU school. We'll see what they are ready for when the time comes.
If I ever get grandchildren I hope they benefit from the CA college system.
DeleteYes, I'm planning to retire soon and it's hard to actually contemplate leaving work behind. I've been striving so hard to catch up retirement savings after a late start that it's hard to stop working (which also increases my pension & retirement savings).
ReplyDeleteWe started really thinking hard about the time I was 29, but of course neither of us made that much and we had two kids. As soon as we could, we started maxing the 401K's and then started building on Roths. If it seems too risky, I can always delay retirement 6 months-year, which could make a big difference, but then of course that is true for everyone, and we'd miss that time doing other things we intend after retirement.
DeleteI hope all your plans work out for the best.
ReplyDeleteHope, pay attention, and stay optimistic is all we can do.
Delete