Retirement Outlook - Will I Ever Retire?

Hey all,

I’ve been frustrated with the many different retirement calculators out there so I’m coming to the MB to critique our retirement outlook (but open to suggestions on a good calculator to check out). Biggest question I’m looking to get answered is: are we doing enough or not enough to meet our retirement goal? Making some assumptions (biggest one being I’m still married to my wife..), so when I say me and I, I really mean “we”. I understand I probably shouldn’t do this, but go easy on me. I’m also assuming that our 401k and Roth IRA contributions remain the same – I obviously hope that I continue to make more money as I get older, but I’m trying to be conservative. With the job that I have, I’ll never be “rich” so not expecting a significant bump in the future.

Anyway, I’m 30, with a goal retirement age of 63. I currently make $68,000/year. Live in small town MS. Currently putting 21% of my check into a 401k (this includes a 3% company match) and putting $6,000/year into a Roth IRA

My wife is also 30, she works for the schools and will have state retirement – my understanding is that for every year she works, she’ll get 2% of her salary back in retirement – so assuming she works for 30 years then she will make 60% of her salary in retirement. It is also my understanding that she’ll get a cost of living adjustment every year in retirement.

For our retirement accounts (going to use my assumed age 31 values as the baseline to make things easier) --

When I turn 31 we’ll have a combined Roth IRA value of $38,000. My plan is to fund this account at $6,000/year (I understand the max has gone up & and the max changes at 50), by age 63 @ 7% growth this should put this at $992,000.

At age 31 we’ll have a 401k balance of $17,300 and will be funding this at $14,280/year ($68,000*0.21). At age 63 @ 7% growth this puts us at $1,724,700. I worked a state job for a few years, but switched to my current employer within the last 1.5 years, so a little behind with the 401k.

Again, my wife will have a state retirement, I am assuming she’ll retire with a retirement salary of $81,500, if you multiply this by 60% (percentage that she’ll be drawing) and then by 85% (assuming 15% additional taxes being taken out) we’re left with $41,565/year that she’ll receive in benefits. She’ll also receive a cost of living increase every year as well.

Spending in retirement –

So, for our monthly bills if you take out mortgage, day care, etc. etc.(things we shouldn’t have in retirement) our remaining “bills” (think phone, car insurance, etc.) comes out to be $584/month in today’s dollars, but going to round this up to $1000/month to be conservative, or $12,000/year. Assuming 4% inflation, at age 63 this will be $43,800/year. (this sounds insane, maybe math is off?!)

We currently “budget” $78/day, or $28,550/year for misc. spending, think eating out, gas, groceries, car maintenance, etc. If we were retired, this number would likely be lower, but again, trying to be conservative. Anyway, assuming 4% inflation, at age 63, this will be $100,150/year.

So total spending/year comes out (and we’re rounding) to $145,000/year at my age 63.

Breakdown:
At age 63 I’ll have $992,000 in a Roth, $1,724,700 in a 401k (Roth + 401k = 2,716,700) and a pension with $41,565/year (plus 3% cost of living adjustment). Is this enough for my wife and I to both retire on and maintain our current standard of living if our spending at age 63 is $145,000/year?

If you use the 25x expenses – we’ll need $3,625,000, we’re well short just off the Roth + 401k, but with my wife’s pension I believe we’re right on the money. What are y’alls thoughts?

Misc.
Not accounting for Social Security – I know (we’ll have worse problems if not) that we’ll get something, obviously can’t predict how much. For what I’m trying to figure out, would rather any money here be considered “extra” to be used for medical expenses, roof repair, we live to long, or any other misc. event that could occur in retirement.

Also not accounting for any inheritance – in reality we’ll likely get something, but it won’t be enough to live long term off of.

We’re assuming that we don’t have a mortgage, not taking care of grandkids, etc. If either of those are the case (or any other similar situation) we’ll obviously be working passed 63.

Not accounting for any rental income – we purchased a condo a few years ago while we get our ducks in a row to build our home. Our plan is to keep the condo and rent it out. In 30 years it’d be great if we have multiple rentals, but not going to account for this.

Questions

1) If I were to retire today, what percentage of my 401k would be taken out because of taxes? Do I need to look at the 401k value as Account Value*Expected Tax Amount and then that value is my true number? Looking at it in this sense makes me worried that I’ll never retire, or at least definitely not at 63..

2) Does the 25x expenses that you read about assuming that taxes haven’t been taken out, or that they have?

3)I’ve read a lot that we should be putting enough into our 401k to receive the match, maxing Roths, and then going back to 401k. Is this correct?

Anyway, to anyone who has read this far, thank you very much. I appreciate any and all ideas and suggestions. We’re just a guy and a girl who don’t want to be a burden to their kids when they get older (and also don’t want to work until we’re 75!).

[TL/DR] Are we saving enough to retire @ 63 with our current contributions and savings.