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!