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Message
Estimating retirement income at age 60 - this sound like enough?
Posted on 9/24/20 at 11:02 am
Posted on 9/24/20 at 11:02 am
My wife and I are a bit behind on retirement planning but thankfully are in the tier 1 system with RSA (Alabama teachers retirement).
According to the RSA calculator, my wife will receive ~$3060/month for the remainder of her life (age 60 onward) and if she dies before me, I will receive $1530/month for remainder of my life.
I am scheduled to receive ~$2400/month for the remainder of my life and my wife will receive $1200/month upon my death for the remainder of her life.
We are maxing our our Roth IRA contributions and are scheduled - using an online calculator with a return of 6% - to have $970k by age 60.
Hypothetically, we could pull that money out and have ~$3200/month for 25 years.
That puts us at ~$8600/month until age 85 at the least (using the hypothetical idea that we use all of the Roth without letting it continue building interest.
It seems like plenty to me.
I assume our house will be paid off or close to paid off around age 60. Kids will be out of college then. I’m not sure how to adjust for insurance or potential emergencies or taxes or the inevitable need for assistance as we age.
Thoughts?
Edit - this doesn’t even factor in social security.
According to the RSA calculator, my wife will receive ~$3060/month for the remainder of her life (age 60 onward) and if she dies before me, I will receive $1530/month for remainder of my life.
I am scheduled to receive ~$2400/month for the remainder of my life and my wife will receive $1200/month upon my death for the remainder of her life.
We are maxing our our Roth IRA contributions and are scheduled - using an online calculator with a return of 6% - to have $970k by age 60.
Hypothetically, we could pull that money out and have ~$3200/month for 25 years.
That puts us at ~$8600/month until age 85 at the least (using the hypothetical idea that we use all of the Roth without letting it continue building interest.
It seems like plenty to me.
I assume our house will be paid off or close to paid off around age 60. Kids will be out of college then. I’m not sure how to adjust for insurance or potential emergencies or taxes or the inevitable need for assistance as we age.
Thoughts?
Edit - this doesn’t even factor in social security.
This post was edited on 9/24/20 at 11:03 am
8
Posted on 9/24/20 at 11:13 am to StringedInstruments
What is your current monthly expenses?
Posted on 9/24/20 at 11:18 am to StringedInstruments
It sounds like enough and you can always get a hustle (not a side if you don’t have a FT job). But remember it’s always better to have more than not enough.
What is your question you are solving? Should you save more?
What is your question you are solving? Should you save more?
Posted on 9/24/20 at 11:22 am to AUCE05
quote:
What is your current monthly expenses?
About $7100/month including daycare, Roth, savings, car payment.
Posted on 9/24/20 at 11:23 am to baldona
quote:
What is your question you are solving? Should you save more?
Yep.
We’re really just getting started in our mid 30s saving for retirement outside of our pension plans. And I’m just starting into my pension plan as well (wife has been consistent since 23).
We’re behind but I’m wondering if our trajectory is okay.
Posted on 9/24/20 at 11:24 am to StringedInstruments
How many years until retirement? $8600 per month today is a whole lot more valuable than $8600 will likely be in 20 years. It will be worth even less 25 years after retirement at 85 per your projection. Make sure you're account for inflation. Also I'd want to make sure the plan works with reduced income if one of you dies.
Posted on 9/24/20 at 11:39 am to StringedInstruments
quote:
About $7100/month including daycare, Roth, savings, car payment.
Unless you’re like Abraham and have children at 140, I’d say your daycare should be gone.
Nobody can answer your question definitively because we don’t know what your expenses might be at 65, 70 or 80+. But one potentially large expense category that I highly suggest you give some thought to is long term care.
Posted on 9/24/20 at 11:51 am to TorchtheFlyingTiger
Using 2.5% inflation rate, in 25 years $8600 will be like $4600 today. Could you live comfortably on equivalent of $55,000 annual income without mortgage, childcare, investments but with additional medical expenses, travel, hobbies etc? Might be cutting it kinda close.
inflation calculator
inflation calculator
Posted on 9/24/20 at 12:01 pm to StringedInstruments
May have been answered but is that inflation adjusted?
Posted on 9/24/20 at 12:22 pm to StringedInstruments
quote:May want to look into this further. In many states, teachers only pay into their state retirement fund, not SS, and thus can’t get both.
Edit - this doesn’t even factor in social security
Posted on 9/24/20 at 12:31 pm to NaturalBeam
quote:
In many states, teachers only pay into their state retirement fund, not SS, and thus can’t get both.
In Alabama I can get both.
Posted on 9/24/20 at 1:33 pm to StringedInstruments
It all depends on your lifestyle. My wife and I are very frugal and in today's dollars, could live off of $2,000 a month if we had to. Maybe even $1,500.
Posted on 9/24/20 at 1:55 pm to StringedInstruments
quote:
In Alabama I can get both.
Have you paid any SS?
Posted on 9/24/20 at 3:08 pm to StringedInstruments
quote:
to have $970k by age 60.
Hypothetically, we could pull that money out and have ~$3200/month for 25 years.
What earnings rate are you using during your 25 yr. retirement distribution? Because if you were my client, I know you could have @60% annual income increase over the same 25 yr period.
Thinking you may have used a 4% earnings rate and only taken out the interest earnings?
Posted on 9/24/20 at 3:50 pm to BestBanker
I'm pretty sure he just divided $970k by 25 years (age 60-85) with no growth. $970k ÷ 25 ÷ 12= $3233
Which is why I'm also guessing he hasn't taken inflation into account.
Which is why I'm also guessing he hasn't taken inflation into account.
Posted on 9/24/20 at 5:19 pm to ProudLSUMom
quote:
Have you paid any SS?
Tons.
Posted on 9/24/20 at 5:21 pm to BestBanker
quote:
What earnings rate are you using during your 25 yr. retirement distribution?
None. Just looking at the bare minimum I might have at that age. I definitely wouldn’t hit age 60 and throw all of my Roth into a checking account.
Posted on 9/24/20 at 5:25 pm to StringedInstruments
I say this all the time but a hustle job to make $20,000 a year on your own schedule in your 60s is not that hard to come by. My dad is a bee keeper, works when he wants and stays very busy if he wants.
Start working on a "hustle" job in your 50s to build it up so that when you "retire" you only work something you love when you want.
Being a teacher this should be fairly easy with the summer off and other time off during the school year.
Hell you can just teach some if you want at the Juco or whatever that's low stress. When you don't HAVE to work to pay your bills some income options open up you might now have previously considered.
Start working on a "hustle" job in your 50s to build it up so that when you "retire" you only work something you love when you want.
Being a teacher this should be fairly easy with the summer off and other time off during the school year.
Hell you can just teach some if you want at the Juco or whatever that's low stress. When you don't HAVE to work to pay your bills some income options open up you might now have previously considered.
Posted on 9/24/20 at 6:07 pm to baldona
“Coast FIRE”
Posted on 9/25/20 at 9:38 am to baldona
quote:
When you don't HAVE to work to pay your bills some income options open up you might now have previously considered.
I've been preaching this to my wife for the last two years. I am on schedule to pay off my house in another 4 years, mid 40s. I told her when the house is paid off, that opens up a lot of options in terms of saving and disposable income. I don't want her to quit her job as I feel like that I will really begrudge her for it even if I make enough for us to live comfortably. Her job is much more sustainable into her older age than mine (construction versus therapy/501c3) but my income has a much higher ceiling.
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