I am 49 years old (I will be 50 this year) and my wife is 34. We have two young children under 2 years old and 11 year old twins from my previous marriage. Twins College is fully funded in a 529 plan and I save in 529 plans monthly for my two other children.
I have had a good career in tech and earn around $ 300,000 a year. We maximize all retirement vehicles and have no debt outside of our primary residence. We also have about eight residential rental income properties that earn us about $ 6,000 a month after all mortgages and expenses. Passive income, if you will. Our monthly spending targets are around $ 10,000 to $ 12,000 on the high end.
Together we have $ 1.7 million in IRA and 401 (k) assets and approximately $ 500,000 in cash and after-tax savings in Fidelity and E * TRADE accounts. All of them are in aggressive, high-equity portfolios and I manage my IRA myself with an average return of 12%.
I started a new job in November 2020 after being fired from my previous position due to COVID-19 and the need to cut expenses. At 50 years old, while employed, I am afraid that my job will end again and that going through another job search of 7 months and more will be extremely difficult for me and my family. I lose a lot of sleep worrying about tomorrow.
I want to retire and have my wife retire, probably in Colorado, at 58, if I don’t have to retire sooner. I am obsessed with retirement calculators and trying to see if I can pull it off, but one tells me that everything will be fine while another says that I will run out of money and run out of money. money in 20 years.
I also don’t know how to look at health insurance costs for my family when not employed and how to factor that into a plan where my spouse will survive me for more than 20 years. I want to make sure she’ll be okay and never run out of money. We’re both fit, fit, and have a good longevity on both sides of our family. She worked long enough to qualify for Social Security.
I want to retire because I’m going to be an older dad and love my wife and kids very much, so if I can maximize my time with them without working, but sacrificing expenses too much, I would love to. I just can’t seem to find a plan. I’m not against the idea of working in retirement, either in consulting or maybe an hourly paid job, but none of these options are guaranteed.
Can you help me?
See: ‘Retirement? How? ‘Or’ What?’ I’m 65, I haven’t saved anything and I’m coming out of bankruptcy
Even with $ 1.7 million in retirement accounts, an additional $ 500,000 in savings, and multiple sources of income, I understand why you might be worried about the future. You have a family to rely on and the unexpected twists and turns of a pandemic certainly don’t help.
The good news: Retirement at 58 could very well be within your reach, financial advisers have said. And if you just choose to switch from a full-time job but work to a certain extent, like a consultancy job or a freelance job, you have even more flexibility, said Jen Grant, financial advisor at Perryman. Financial Advisory. “There are dozens of ways to achieve your goal,” she said. “Now he should decide the best way to go, spend eight years working on it and releasing the stress and worry so he can enjoy his young family.”
One of the highest priority tasks you’ll face if you retire at 58 (or anytime before Medicare becomes available at 65) is health insurance. COBRA may be available temporarily after you’ve been separated from your old job, but you must make it to age 65, when you can apply for Medicare.
There are a few options to cover, including saving now regardless of the cost it will cost later in the open market; take a part-time job with health benefits so that you can enjoy health care, earn a little extra income but still have more freedom than a full-time job requires; or ask your wife to take a job that provides family health insurance (if she isn’t already). Since you are in good health, you may also want to turn to a Christian health sharing business, which is based on faith. health savings approach where members help cover the costs of others in need, Grant said.
To get an idea of what health plans currently cost on the market, you can check out Healthcare.gov. Keep in mind that health care spending is increasing every year, with no indication of stopping.
You say your biggest concern right now is losing your job. It makes absolute sense, but try digging a little deeper into why you have these fears. Do you think that you will not be able to adapt to a new job in the future? Or you won’t have the skills to be an attractive recruit? Would your current expenses be too much to manage if you were temporarily out of work? Knowing this answer will help you figure out what to do next.
For example, if you’re worried about needing to brush up on your skills (or develop new ones) to make your job search short, start now. You might not need to do this for applications, but doing one thing every week to brush up on your old skills or learn new ones could keep you as a key asset to your current business and catch you for a job. future recruiting manager. Plus, you might even be able to take advantage of this continuing education (in the form of a course or a YouTube video) for a higher salary later on.
If you are worried about losing your job because you think your current expenses would be too much to handle, even temporarily and knowing that you have that rental income, then look at your cash inflows and outflows right now and ask yourself what. it would look like. if you were to be out of work tomorrow. You obviously know how to save, so is it spending?
“Are they spending in areas that are not meaningful to them as a family? If so, yes, cut expenses, ”said Jeremy Finger, Certified Financial Planner, Founder and CEO of Riverbend Wealth Management.
There are a few other things you can do now to relieve some of the stress. Due to the age difference between you and your wife, Grant recommends life insurance. You are making a lot of money and if something were to happen to you, life insurance could help you replace your income. In addition to life insurance, also look at disability insurance, she said.
Keeping your investments in an aggressively allocated portfolio is fine, but make sure you have about two to three years of living expenses in a more conservative portfolio, Grant said. “This will protect him if the market goes haywire the year he plans to retire,” she said. “He will not be forced to sell stocks at a loss or liquidate real estate.” A larger emergency fund would also provide you with some comfort – the money could be used in an unforeseen situation, or if nothing happened between now and your target retirement date, the money could ease the strain on retirement. transition to retirement.
Plus, even if you don’t worry about your investments, check them regularly to make sure they are being distributed correctly. A balanced portfolio – the keyword here being “balanced” – 80% stocks / 20% bonds, or even a 90% / 10% mix, could work with additional cash, such as $ 200,000, but these portfolios need to be balanced, says Finger.
Check out the MarketWatch column “Retirement tips” for practical advice for your own retirement savings journey
Finger has had a few other thoughts depending on your situation. He suggested consulting a lawyer to place your rental properties in an LLC to protect liability, and would also consider adding umbrella insurance to protect yourself. If you earn $ 6,000 in rental income, you only need around $ 4,000 to $ 6,000 per month in other income and investments (or $ 72,000 per year?), So he recommends having at least that into cash-like assets for safe play. .
I say this in almost all of my letters, but you might want to consider working with a financial planner who could create a financial plan for you. A professional could advise you on your investments – for retirement and funding for children’s college – and explain how to comfortably retire in the future. “He can outsource the worries to someone who does it for a living and then let them monitor the plan and adjust as needed,” Grant said.
If that doesn’t appeal to you, do the work yourself. Create a complete financial plan for yourself and work out what-if scenarios, and keep it nearby so you can refer to it or make adjustments if changes arise in life.
“You can’t completely neutralize everything that might happen, but you can prepare as best you can,” Finger said. “Also be flexible and prioritize your time and expenses. If he can spend more time with his family, missing anything later in life when he thinks about it would be an easy compromise.
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