"Ten Year's To Go!"

[cameorose]

Hey Ya'll!
Need some advice, I am 52, I am going to retire at 62. I have just paid off my house, and both son's have just graduated!! Now it's OUR time!! me and hubby. We have ten years to build some kind of retirement. I know it's late but, kid's come first. We both make around 40,000. Not a lot of room to play with.
Need advice from people who know what they're doing. How to's and such. We want to live content, able to pay the bills and buy med's. without shopping in the dog food isle! Educate and enlighten me!!

[LivingAlmostLarge]

Congrats on paying off the house, the kids graduating everything. Wow. I guess the only question now is how much do you already have saved? What are your options? 401k? IRA? What are you doing currently?

[disneysteve]

Welcome. Can you tell us more about where you are now? How much do you have saved at this point? Do you both have 401Ks available?

Being over 50, you are eligible for catch-up contributions both to a 401K and a Roth, so take advantage of that.

You plan to retire at 62. How about your husband? How old is he and what are his plans?

Finally, my apologies but I can't help but point out the big teaching point in your post. KIDS DON'T COME FIRST!! RETIREMENT COMES FIRST!!

[aurielle]

Finally, my apologies but I can't help but point out the big teaching point in your post. KIDS DON'T COME FIRST!! RETIREMENT COMES FIRST!!

Yep, you can get loans to finance education but you can't get loans to finance your retirement.

[cameorose]

"Ten Years To Go!

To answer all questions! We are not rich by any means. We have about 20,000. In a 401. I just set up a roth it only has 600. in it. Nothing else. As I said we are playing catch up. I never heard of late retirement thing. whats that about? Our cars are paid off as well. I drive a 98 honda accord I just had overhauled, its good for another 150,000 miles. There was a time when I had to have a new car every few years. But now, as long as it moves, I don't give a flying flip what I drive. I'm Tried of playing keeping up with the Jones. That comes with age I guess. Tell me what I need to do. Thanks all! CameoRose

[disneysteve]

We have about 20,000. In a 401. I just set up a roth it only has 600. in it. Nothing else.

When you say "nothing else" do you mean nothing else in dedicated retirement accounts or nothing else saved at all? For example, I've got a lot of money invested in taxable accounts, much of which I plan to use for retirement even though it isn't dedicated specifically for that purpose.

Have you run any numbers to figure out how much you will need in retirement? Will either of you be collecting a pension? If you retire at 62, how do you plan to cover medical costs until you are eligible for Medicare at 65?

You currently earn 80K. If you want a retirement income of 80% of that, or 64K, you need to work backwards. Check the SS statements you get each year for your estimated benefits. Subtract that from the 64K. Also subtract any anticipated pension payments and see how much you would need to generate on your own. You need a nest egg of about 20-25 times that amount when you enter retirement to allow a 4-5% annual withdrawal rate and minimize the chances of outliving your money.

With only $20,600 saved at this point, I think you've got a tough challenge. You may find that retiring early isn't feasible. Every extra year of work has a 3-fold benefit: 1. Your savings have more time to grow; 2. You continue to add to your savings for another year; and 3. Your savings need to support you for less time.

My advice is to tighten your belts as far as you possibly can and direct every spare penny to the retirement accounts. Without knowing anything about your lifestyle or expenses, I'd suggest shooting for at least 30% of income going to retirement savings at this point.

Here are some sample numbers:

$20,600 now. Add 30%, or $2,000/month at 7% return for 10 years. Retire at 62 with $388,000. First year draw of 15-19K.

$20,600 now. Add 30%, or $2,000/month at 7% return for 13 years. Retire at 65 with $558,000. First year draw of 22-28K.

[jIM_Ohio]

Hey Ya'll!
Need some advice, I am 52, I am going to retire at 62. I have just paid off my house, and both son's have just graduated!! Now it's OUR time!! me and hubby. We have ten years to build some kind of retirement. I know it's late but, kid's come first. We both make around 40,000. Not a lot of room to play with.
Need advice from people who know what they're doing. How to's and such. We want to live content, able to pay the bills and buy med's. without shopping in the dog food isle! Educate and enlighten me!!

40k+40k=80k.

4% withdraw rate

80k/.04=$2M ($2,000,000)

4% withdraw rate lasts 30-35 years (age 62-92). Suggest a starting amount of $2 M.

... insert sticker shock statement here....

If you know how much you spend, you can lower the $2 M goal with assumptions. Here goes a few, tweak as needed.

You can afford to set aside 20k to save for retirement.

80k is now 60k

you will have lower vehicle expenses in retirement- less gas, maybe only one car. savings of 2k

60k is now 58k

assume SS at age 67 (check me on this). SS replaced 12k of income.

58k is now 46k

46k
4% withdraw rate

46k/.04= $1,150,000= $1.1.5M. With this assumption, I am suggesting you work another 5 years until you can collect SS.
----------------

further reading suggests you have 20k at age 52. Invest this in large cap stocks, expected return of 9%. At age 67, this 20k could grow to around 73k. Deposits of 20k into retirement accounts from age 52-72 suggest you would have the $1.15 M calcuated above AT AGE 72.

I think you need to set expectations- do you want to downsize your house, travel, etc in retirement. If you want to maintain current lifestyle, you need to consider changing expectations for when you retire.

[Coleroo]

How much are your current payments to anything? For most people housing, cars, and daycare are the biggest expenses in life. You have none of them so you both have 80k a year going to what? I would say put as much as possible in your 401k first (since you'd want the tax break now as its not likely your income in retirement will be any higher than you are now)... then max your ROTH and the rest then to a high interest savings account. You would not want to sink much, if any, into individual stock since you have such a short time horizon and may lose to much money.

Even if you put 60% in savings you still have 32000 to live off of. Thats a pretty nice amount for someone with no car payments, no house payments, and no child care. Granted Im not sure where you live though (high cost of living or low?).

What all can you cut back on? Can you get a cheaper cable service? or go to the dishtv family plan? (19.95 in many areas, 29.95 for direct tv). Can you go lower on the phone bills (basic no frills plan, 1 cell phone instead of 2, tracfone if you dont use the cell a lot)?. If not willing to give up a cell phone, go over your statements and see what services you can cut out. I went over my parents statement 2 months ago and discovered over 15$ (per month) of uneccessary fees and services they didnt utilize or even need.

Do you budget? Do you pay close attention to uneccessary fees (bank account "maintenance", late fees, interest, convenience)? fees can cost a BUNDLE without you realizing it! Do you bank online and utilize online bill payments (saves on stamps and checks)? Do you have any credit card debt? if so, whats the interest rate? can that be lowered? if you have credit card debt, do you have a plan on paying it off soon? what are your purchasing & spending habits? do you have a plan when you go shopping or you an impulse buyer? what are your entertainment costs and what can be cut out? (go to the movies every week? use netflix instead) ...look for free entertainment where you can... or pick up an "entertainment book" (half off coupons for your area for dining, shopping, and travel). what are your eating out expenses and can that be changed?

I would also suggest you start a new car fund, because its pretty much a given that sometime during the next 10 years your little honda is going to give out. If you have the money saved, you can purchase a nice used car without the headaches of *unexpected* financing or having payments going on during your retirement years! Lets say you JUST saved $200 a month.. and your honda gave out in 6 years - youd have $14,400 to put on a good quality used car that could last you another 10 years or more.

Without knowing your full situation its a little hard to give better advice, but maybe some of this will help. You've definately come to the right place.. i love it here on these boards!

[Saving in So Cal]

I can't top any of the above comments, but would recommend you focus on maximizing 401(k) contributions before making further contributions to your Roth. You can put far more away in 401(k) and you will get some immediate tax advantages. Since you don't have a mortgage payment, these tax advantages could prove beneficial.

[Ima saver]

You have got to real start saving aggressively. Read this advice board about all the ways to cut back on your spending.

[Scanner]

I would second the suggestion you max out your 401(k) over your Roth because if your company matches it let's say 25%, that's an immediate 25% no risk return, which you never get in the market.

With you being 10 years away from retirement, I'd pick aggressive funds but I would probably start switching them to a more balanced portfolio in 2-3 years (some bonds). You just can't afford to take too many risks at this point.

[Fern]

hey, i am really proud of all of our SA 'regulars' who have given such great advice.

I hope we didn't scare them away!

[cschin4]

Are either of you getting a pension or some retirement plan from work?

[cameorose]

10 years to go!

It all sounds good.
No house payments
No car payments
No credit card payments
No pensions

lights
phone
cell phone
illegal satalite shh! don't tell no one!ha.
meds
grocerys
car insurance
fire insurance

can't think of anything else.

Hubby works in furniture
Me textiles
We live in North Carolina, low wage country. We bring home around 600. a week TOGETHER!! Not a whole lot of coin there.
What's the plan??? Eager to Learn!! Thanks CameoRose

[Ima saver]

Wow, I know about the low wages, we live in North Carolina. I think a lot of people on here took it that you made $40,000 a year EACH!
At $600 a week, it will be hard to save very much, but you need to start socking away the maximun in a roth ira for each of you. You can put in a total of $5000 each, each year.
Actually, we don't really live in North Carolina, but only 10 miles away in North Georgia! And wages are low here, especially for any one not in construction.