Retirement Goals: Month 1 of 78

     

Warning-long and tediously detailed post is ahead, but if you like number crunching, money management, and to laugh at others financial naivety, this post might be for you.  This will be the start of roughly, fingers crossed, 78 monthly posts documenting my financial preparedness to retiring on November 26, 2027, give or take a month.  I would be exactly 62, and  if planned right, following my husband who should retire four years earlier. As this is month one, I'm dumping all the assets we will be able to draw from in text as a starting reference. My intent will be to post this on the last Monday of each month to November 29th, 2027.

401K:This is the where my deferred compensation has been going since I was 31, when I went back to work full time and both of our kids we had at the time, were in school full time. I started small, and each year whatever I received as a percent raise, I increased the same into the account. This first account was 19 years in the making and is holding tight. My second one has about 1/3 the value of the first, an dis the one I am currently putting the max in each years. Combined, it is at 58% of my long term savings target. 

DH has both a 401 K and a profit sharing account from a previous employer that  acts lie a 401K. He was smart in that he converted the original format profit sharing while it was still earning-the company has since folded. Had he not converted, he would have lost those funds. Since he will only be putting in another two years plus a few months, he is about 66% of the target to my retirement date. 

Roth: While we might be able to make nominal additions to this after DH retires, likely we'll only have two more deposits to this after tax account. Currently we can put $14,000 per year as we are both over age 50. This is the account we will use to  cover health insurance once I am no longer working until we reach Medicare age, and then will use for wrap around coverage. What's nice about this account is since we funded with after tax money, unlike the 401K, we'll withdraw principal and interest tax free. Here's my embarrassment. I don't have an accurrate one place tracking for the Roth accounts so that's a must action.

Pension: I have a small pension from a job 30 years ago. It has a tiny value comparably, but it just sort of sits and accrues interest each year, and will be a nice little top off for things like gifts or an annual vacation. I forget I have it when once a year I get a statement. I have a pension with my current employer, but started later in my career, so while it will be nice, it won't cover much of our living expenses. I plan to retire early, but leave it sit  until I reach age 66 so I do not incur any penalties. 

Social Security: While we both according to the  federal government will be eligible to start drawing down at age 62 in a reduced benefit, and 67 in full, I'm leery of putting faith there. DH is still researching if long term would he be better drawing at 62 regardless of whether we need it to cover any expenses. If it goes belly up before we hit 67, we'd have some benefit, but will not be part of our calculator. 

Cash: We have a target of cash that needs to be in our savings when I retire that includes not 3, not 6, but 12 months of living expenses in todays dollars. Some could be in CD's, but not long term-needs to be liquidable. That alone is  risky as inflation will make living expenses higher each year no doubt. The plan for that much is to ride out any dips in the stock market. We have a whole lot more research  to do on how much we are required to withdraw. We have several untouched savings accounts between the two of us that will cover at least six months, so the other needs to be in our cash flow. If we had no priorities to spend on between now and November 2027, I'd claim victory now, but that is not the case. Here's the list of things we are earmarking/have placeholders in our cash flow for:

• Four semesters of college for DD2 (including a study abroad semester though she has earned those added costs herself)
• Bathroom remodel-upstairs
• Bathroom retouch-downstairs
• Bedroom redecorate
• Office redecorate
• Pull old deck, patio pour, furniture, back yard landscaping
• Supporting wedding costs for three kids
• Two cross country road trips
• At least one European vacation
• Mini vacations on years not doing the road trips or Europe 
• Replace my car (though we pay ourselves each month and that would come out of a different account like the boat)

     I think you get the picture-a lot of cash will be going out the door in massive chunks over the next 6 1/2 years. For monthly updates, I'll likely track where we are above or under  target for cash savings, not including outputs on the above life priorities. As we spend in those areas, I'll update as to when complete and if we stayed on , under, or over budget. This plan requires us to save in all areas, 52% of our income. Granted, some is pretax and some is after, but in general, that's what is required. 

     Our plans are not to be filthy rich nor is it to scrape by on pennies to afford to retire early, but basically live the same as we do now, but with much more flexibility to our days, health willing. I feel l need to reiterate this is our plan and no one else should compare theirs to ours. We all have different priorities and goals. While I'm happy to have comments and shared journey's and experiences, I'll likely take any advice with a grain of salt, so please don't be on the offensive or offended! Welcome to my retirement goals! 

April Financial Update

The April Piggy Bank has been fed. Well, actually, it went on a crash diet, but all good as we fully funded our Roth at $13,0000. We had to dip into savings to do so because our 2017 savings hadn't met this milestone yet by April 17. I did say 2017 would be a series of ups and downs due to inconsistent income from DH and the timing of when we made the various expenditures. I added a new section called Financial Goals Achieved and it feels good to have this one met. 

With the Roth funded, the new savings goal balance is $29,251 with eight months left, an average of $3,656. Since we already made the decision to fund the Roth, and it seems unlikely based on our monthly average of $2,771 that we will hit the target, we'll have to decide if we are OK with saving less towards DD2's college this year, or tighten decrease the savings targets in other areas.Still, I am staying centered as to the important things for my family to put money towards. May will be tight as the VISA charges for April for Easter, yearbook, bridal shower costs, Go Fund Me donations for my friends and niece,and my weekend at my daughters added up and will be on the bill due the end of May. Still, I've already paid for our hotel for nieces wedding, her gift, and a wedding gift for a May 6th wedding.

April Wrap Up

Annual Savings Goal          $40,417
January Deposits                $ 2,200
February Deposits               $1,283
March Deposit                     $4,901
April Withdrawal (Roth)     $13,000
April Deposit                        $ 2,700
Perks to Cash                     $      72 
Savings Goal Balance          $42,241

Financial Goals Achieved
Fully Fund Roth                  $13,000

Revised Savings Goal
Balance  May 1, 2017        $29,251

December Fun Money        $     480
January set aside               $       70
February Set Aside             $         0
March Set Aside                 $         0
April Set Aside                    $         5

Savings Goal Balance         $     405

2017 Goals-Recapped
 DH full 401K and Roth        $19,000
*Home Repair/Enhance       $ 5,800
*Travel                                  $ 7,500
College Savings                    $ 8,117
                                             $40,117
*Left these budget categories in tact even though we have made decisions to reduce travel costs and household maintenance/enhancement categories. I need the challenge. If you are tracking, how was April for you?

2017 Savings Update-Quarter One is on the Books

Hello, Piggy. Our March savings numbers were greatly aided by a third paycheck for me and a bonus payment for DH. It's hard knowing exactly when his bonus payments come, and how much they will be, but this was a little higher than he anticipated. We always have to plan though that some needs to be set aside immediately, as potential tax bill next year.  We completed our 2016 taxes in March and even with the untaxed bonus payments, we almost broke even, paying in $350+ to state, receiving $800+ federal in return, but paying our accountant $200+, netting when all is done,a bit above $200, enough to cover one of our two nights up north for our nieces wedding. I know many of you do your own taxes, but this is an expense that gives us both tremendous peace of mind as ours are a bit complex (to us at least) with both taxed and untaxed income, and business deductions.

I didn't put any extra cash  into our December account, but $20 Kohl's cash at the beginning of March from DH's shoe purchases went towards DD2's spring clothes haul, and from that I earned another $20, which I used towards some Christmas and birthday gifts, bought early and set aside. I stretched those $20 into a set of four etched wine glasses on 70% clearance, which I will give for extended family gift giving, and two of an item for my girls, plus a birthday gift for DD1's October birthday. All are high quality brands and items, that even if bought on Kohl's sale's plus the usual 30% discounts I get through my card, the amount would have been well over $40. When we bought DD2's clothes, I didn't even realize we would earn Kohl's cash, so a bonus. I spent a grand total of $0.61 on these items. I converted the $40 in Kohl's cash to real cash, as they reduced cash outlay on clothing and gifts. This is part of treating gift cards and bonuses like cash-not as mad money.

March Wrap Up

Annual Savings Goal          $40,417
January Deposits                $ 2,200
February Deposits               $1,283
March Deposit                     $4,901
Perks to Cash                     $      72 
Savings Goal Balance          $31,961



December Fun Money        $     480
January set aside               $       70 
February Set Aside             $         0
March Set Aside                 $        0
Savings Goal Balance         $     410

Granted, without the extra pay checks, our savings would have been in the $1500 area, but these are real parts of our compensation, and we banked, rather than splurged. Because the Roth has to be paid by April 15, I'll have to report a negative dip into savings for April. We decided we are still going to put the max of $13,000 in the fund. I knew this was the reality when I set this target, as we wouldn't have the full $13,000 in new savings by the last date to put funds in the account. One thing is for sure, seeing a $13 grand dip is going to fuel our motivation for the rest of the year. 

If we maintain the same savings/earning rate, we will be a bit over $10,000 short of my target savings. We had already made some spending decisions that would have reduced the goal, but I chose not to commit those reductions on paper. This was a mind game to keep the focus.Two areas we decided will be reduced will be increasing the home items/upgrade budget  and travel, since we eliminated Yellow Stone in exchange for  an anniversary weekend and more cabin time, and DD2 not going to Ireland. I'm not taking a 2018 family trip off the table though. I'm also not giving up meeting the goal yet. Many of you shared ideas to increase money coming in and I'll continue to look for ways to reduce spending without impacting our quality of life. We are still putting 30% into our 401K's, plus a $325 per month into a fungible account for unexpected car and home issues (think the stupid clog and the vacuum purchase last month). How are you tackling your financial goals thus far in 2017?

Living for Now, Planning for Future

I've developed friendships or minimally friendly relations with many coworkers that I keep in touch with over the 29 years of being in the adult workforce. Some have been younger, particularly as the years moved on, but many are a decade to two older. Many of the latter have either retired in recent years,or would like to very soon. Some have had to push back retirement by 3 or more years, pushing what they thought would be 65 to now closer to 70. The recession really sucked, didn't it, and I wonder if we really ever will be completely out.

I'm completely rubbish at understanding how the market works, and understanding where to hedge your bets and move assets around. I can understand simple compound interest, and have set my goals based on average rates of return that lean to the conservative side. I put as much in tax deferred options and after tax accounts that will be tax free in retirement that we can. My husband wants to get into investment property, but I know how we operate life, and with his job, that doesn't seem to be a realistic option.  His parents did it, but his mom did not work a regular job outside of the home and handled showings, collecting checks, bookkeeping, and coordinating work. In the real estate area, keeping our housing expenses low, and eventually downsizing will be our only real estate strategy. However, when we do downsize, it will be to something below market that we invest elbow grease in, as we did our first house, in order to bank a substantial amount of what we sell this place for.

Where was I going with both of these ramblings? A sad series of real life anecdotes about so many of my older friends has me thinking hard on DH and my retirement strategy. I shared last year about a recently retired colleague that had a stroke and died at 67, within a year of retirement. A colleague from my last job has been on  family medical leave for over a month out of state after his younger wife, had a debilitating stroke while on vacation. They are getting ready to move her back here, and outfitting their house for all the modifications required, rather than adding more travel to their schedule. He was getting ready to retire next year at at 68, but who knows if this changes their plans. I hear what happens to so many people who have worked so hard, and in some cases longer than they wanted, only to have another sucker punch push plans yet further away. I have so many plans for my future post work life, I want to do everything I can do to preserve my dreams, but am a little wigged out that it seems a little luck of the draw sometimes, and I don't want to look back, or have my kids look back, and wish i had done more in my younger years.

First, I don't think all travel, hobbies, entertainment, and relaxation should be put off until retirement. However, I have insurance to carry for my family through my work, a child at home and to put through college,  so neither DH or I are in a positions to reduce work, so need to fit in things when we can. Second, as much as financial needs are critical, as much and maybe even more so for that future is to have healthy body's in retirement. DH had a TIA shortly after his 50th birthday four years ago. That knocked us into reality that if something didn't change in his diet and exercise, he might not see his kids graduate college let alone see retirement. When my health issues surfaced, I was so good for so long following the regimen of physical therapy and diet, but  have become undisciplined. This will not do, and part of the blog is to help me keep focused on leading an active and healthy life through diet, exercise, and  mental health breaks.So while I can save money buying really cheap groceries that fill up bodies to save money, I need to ensure optimal nutrition is purchased with those grocery dollars, hence my move towards more economical and meatless. yet delicious and healthy meals. On the flip side, investing in a gym membership for me would be a waste of money when walking and light weights and resistance is really the only exercise I do (when I do exercise), and I have a free wellness center at my office and can buy a $14 annual walking pass for the indoor track at the high school. 

No one's ever accused me of not putting deep thought into a subject. Some days I am confident in our retirement plans, and other days, I think I will be like my friends that have pushed retirement out later. So many readers are also bloggers I follow so I have a good range of different plans, or different experiences for retirement, and learning more keeps me grounded but not naive. While you can't control for the totally unexpected, even the investment ignorant can do things to hedge our bets. I just need to make sure it is in both the financial and health areas.