Student loan balance canceled

**kork13** · 11-09-2021, 07:24 PM

My initial reaction is to say get rid of your debts, then you'll be in great shape.

You're saving/investing roughly 30% of your gross income, your expenses are low, and will all be covered by your STRS retirement.

If you can get your car paid off ASAP (I'd target within 1-2yrs... Maybe even pulling from savings/investments to do it tomorrow), you can start saving cash for the next one (pay yourself a car payment) and never have a car loan again. Likewise, if you can get your condo paid off by the time you retire in 2030, your expenses will be so low that you'll have all kinds of flexibility, while simultaneously having the security of owning your home outright.

That plan would mean redirecting some/most of your savings/investment money toward the debts... That's a tough pill to swallow, but if it were me, that's exactly what I'd be doing. Going into the home stretch for retirement, place value on stability & flexibility. Being debt free is a big step in that direction. And because your STRS retirement will easily covered your expenses, I'm frankly not concerned about trying to beef up your 403b leading up to your quitting date.

**bjl584** · 11-10-2021, 12:40 AM

How old will you be in 2030?
If not at least 59.5, then you may want to direct more into your taxable accounts.
Unless your pension will more than cover expenses

Beyond that, work on getting the condo/car paid off so you can retire debt free

**docstudent** · 11-10-2021, 04:31 AM

I will be 53 in 2030, and that will equate to 30 yrs of employment! I told myself, you have 30 yrs to figure it out and not a year longer. I will be able to access my 403b at 59 1/2, plus I have a supplemental account with STRS and I will be able to draw $650 for 10 years or $300 for life. I have to look at the numbers again, but it’s somewhere within that range. I don’t know if I’ll remain in Southern California or not.

**disneysteve** · 11-10-2021, 08:41 AM

You listed take home of about 85K, spending of 43K, and savings of 36K. That leaves about 6K unaccounted for. Where is that going?

If you can keep your spending at the current level and your retirement plan will pay you 5K/mo, you're in great shape. As mentioned, just make sure you have enough in taxable accounts to cover you until you're old enough to collect the pension and tap your retirement accounts.

**docstudent** · 11-10-2021, 11:12 AM

The rest of the funds are allocated for (travel- domestic and or international, insurance (home, life), and family related matters. I have a pretty active social life and things are pretty much year around in Southern California. Yeah, I’ll get my pension at 53 and access the 403b accounts by 59 1/2. If I find a job that pays over $200,000 in the next 8 years, it can radically impact my retirement take home. If you work 25 yrs or more, you retire on your highest single year salary. I’m just basing the $5000 on my high this year of $130,000 (I worked two weeks at my precious employer and that will be added to my base salary of $125,000).

**disneysteve** · 11-10-2021, 12:12 PM

Originally posted by docstudent View Post

The rest of the funds are allocated for (travel- domestic and or international, insurance (home, life), and family related matters.

The two most important things for retirement planning are knowing your needs and knowing your resources. An accurate account of your spending is critical.

You listed 43K but there's actually another 6K you hadn't included, so that's 49K total assuming that's actually everything.

What happens with health insurance when you retire? Will that be covered through your job or will you be on your own? Make sure to factor that into your expenses.

If your spending is roughly 50K and your STRS will pay you 60K, that's a damn good start (is that money taxable?). Then you've got another 200K in other savings, which will grow more over the next 9 years.

I think you're in good shape. And if your pension is based on your highest salary, the numbers may get even better as your salary grows over the coming years. Keep your expenses in check, keep socking away money, and you'll be fine.

**docstudent** · 11-10-2021, 12:36 PM

Yeah, STRS is considered taxable income. My current job doesn’t pay lifetime health benefits, but I can go back to my previous employer and acquire them if stay with them for ten years, which would push my retirement to 55. I’m in a significant relationship and I could possibly be added on to her health insurance.

I should be able to increase my salary and I see a potential max in the $170,000 to $210,000. If that occurs, then I can see upwards of 7G to 9G per month. In the meantime, I’m going to continue to save, save, and save. I just don’t want to be so extreme that I forget to embrace the right now.

**LivingAlmostLarge** · 11-10-2021, 02:15 PM

I would not pay off the house or car if they are fixed rates right now. Inflation is very high and now is the time to be minimizing paying down fixed rate loans. Using the dollar now will be super cheap in 2030 when you retire since we are just printing money. So I would look at redirecting all savings into the taxable account which will give you flexibility to retire in 2030 before you hit 59.5. Pls you will have a large enough nest egg to cover what isn't cover from the pension if you spend $6k and get $5k and need $1k/year carrying your mortgage it won't be a big deal from a large taxable account deferring your 401k. Also consider you may want to convert it to a roth IRA after you retire and can control living off your taxable accounts with high basis and minimal gains to converting your 401k to Roth during that time.

You don't know where taxes are going. So just max out the 401k and Roth IRA (backdoor) and then direct to taxable.

Student loan balance canceled