Late Start at retirement

[Kate2017]

My husband is 47 and I'm 37 with two young kids.
We have about $250k in 401k and about $15k in Roth.
husband is now maxing out 401 and I'm doing 12 percent.
185k combined income
2kids in private school (20k annually)
We have 275k mortgage and boot her debt.
I want to retire one day but not sure it will be possible if our finances stay the same.


Asking for opinions/suggestions what do we need to be contributing to retirement to get us to a comfortable retirement. (2-3 vacations annually and other than that live modestly)

Thanks

[msomnipotent]

You will be asked for your budget plan, so prepare. You might also want to post what funds your retirement $ is being invested in. A little known and often argued about (in my experience) benefit of Coverdell accounts is that they can be used for elementary school fees, too. You can only deposit $2,000 per person annually, but it helps. Or you can save it up for private high school tuition. You might want to check it out. It looks like you just make the income limit.

http://www.savingforcollege.com/compare_savings_options/?assigned_to%5B%5D=1&hiddenField=vehicles&mode=Submit

[greenskeeper]

not sure of your location, but income doesn't appear to be the problem.

[MooseBucks]

not sure of your location, but income doesn't appear to be the problem.

X2. Need to know other expenses. Need to know income broken out. You contribute 12% of X to 401k.

[Mandy63]

Do you have a financial advisor that can help you develop long and short term goals? It can really help you determine where you are and how to get and stay on the right track with your specific financial information.

[disneysteve]

husband is now maxing out 401 and I'm doing 12 percent.
185k combined income

If he is maxing his and you are doing 12%, I'm not sure why you don't think retirement will be possible.

boot her debt.

What was this supposed to say?

I want to retire one day but not sure it will be possible if our finances stay the same.

As others have said, we need to see you budget to identify any potential problems. Also, do you have savings outside of retirement? An emergency fund? College savings? Any other savings?

You earn a high income and are putting away a good amount for retirement. Your mortgage is reasonable given your income. Everything sounds good based on the limited info you've provided so you need to tell us more so we understand what it is you are concerned about.

[Gailete]

I'm also curious about booting the mortgage?

If you are planning on being able to take 2-3 vacations per year what kind of vacations are you talking about? Camping for a week three times a year, going on week long cruises 2-3 times a year, flying to Europe for 2 weeks or so at a crack? It all depends on what you want to do and where you want to go and for how long. You could spend an averages family's entire years income on one vacation. So simply thinking of taking a vacation needs firmed up as more specific goals for those vacation. You may have them, but you didn't mention it.

To see how you are doing towards retirement we do need to see your expenses. I don't have any idea why you think you won't be able to retire on your income and at your saving pace. Wish I had tucked away what you do and my oldest son is your age! I can tell you this, unless you drop down dead before retirement age, eventually you will have to retire somehow and someway. Many folks by the time they hit their 60's are already slowing down a lot or a little. Some may be willing to keep working part time but not with the same intensity as a regular career job.

[Kate2017]

Late start to retirement savings

If he is maxing his and you are doing 12%, I'm not sure why you don't think retirement will be possible.


What was this supposed to say?
Sorry . We have no other debt except the mortgage.



As others have said, we need to see you budget to identify any potential problems. Also, do you have savings outside of retirement? An emergency fund? College savings? Any other savings?
After taxes/401k/health insurance deductions our take home is $8500 a month
Mortgage $1800 we have 30 years left
Utilities $300
Internet/Netflix $100.00
Food $800
Kids tuition $1800 a month
Car note $355
Car insurance $150 a month
Vacation/Christmas/birthday $350 a month
Life insurance $60 a month
Entertainment
Emergency fund $25,000 and save $250.00 a month
No college fund

We have recently sold our large/expensive home and purchased a more affordable home to increase our savings/retirment. My biggest concern is my husbands age and the amount we have in retirement, also that we are spending a small fortune on private school and our kids are so young. I'm very conservative and just looking to see if you think this budget is doable and able to retire. I don't necessarily want to work until I'm 70. My parents retired at the age of 56.

Also on the vacations I'm not talking about taking a $50k vacation but maybe a total of 15k a year. I know we earn a high income but feel so behind as most of the articles I have read we should have $500-1million in retirement at this age.

Thanks for all of your help!

You earn a high income and are putting away a good amount for retirement. Your mortgage is reasonable given your income. Everything sounds good based on the limited info you've provided so you need to tell us more so we understand what it is you are concerned about.

For some reason it's not letting me post. It says my message is too short��

[Gailete]

You seem to be covering the basics. Is there a real need for your young children to be in private school? It seems like for the early years if might be more cost effective for them to go to public schools and divert the tuition you are paying now into their college fun.

Considering you have no other debt, you are way ahead of the pack when it comes to saving as you aren't flushing all that interest away to pay off loans. I would consider trying to pay extra on your mortgage each month so that it could be paid off by the time your husband hits retirement age.

With the 10 year gap in ages, you may end up with him retired and you working another 10 years, so when looking at retirement you will want to be able to decide if you go on retirement around the same time as he does, otherwise he will be 75 when you hit 65 and he may not be up for doing all the things you had planned to do. I'm in the oposite situation as I robbed the cradle and hubby is 9 years younger. Some of the things I never see people discuss is that large or even larger age gap in a couple. As we have little income, most of the retirement funds are being channeled into my accounts so that we can take the money tax free (for those type of accounts) when it is needed instead of having to pay penalties to access it as I am actually old enough to tap retirment funds already at this point. At least that makes sense to me. I have no real plans to retire, but to keep doing what I can until I can't anymore. I figure for us having that money still in an account in 10 years rather than spending it now it will be much more appreciated and will have grown a lot more hopefully.


As long as you treat your money responsibly and aren't out to impress the Jone's next door, you should have plenty to retire on. If needed you can probably make cuts in food and vacations/gifts/entertainment. Those are all very flexible budget items.

[bigdaddybus]

My suggestion is you figure out the following things, then work the numbers to see if you can or cant make it work.
1. Determine the Year you want to retire. Say 2030 (hubby 60, your 50) gives you 13 years to "make it happen"
2. How much money do you need per month in retirement? Say that is $7500 a month after taxes. Say that requires $1.4M in retirement funds.
3. So if you save $50,000 a year with an 8% rate of return you have a good shot and growing your $265,000 to $1.4M. +/-

^^^Any financial planner worth anything can help you figure this out. And there are quite a few on this site that could come up with a far more accurate estimate than mine.

I think you are in bad shape for an early retirement (in 10 years) and in fine shape for retirement at full retirement age in 20 years (husband aged 67). Where it will be real work is accumulating money quicker so you can retire earlier.

[Kate2017]

You seem to be covering the basics. Is there a real need for your young children to be in private school? It seems like for the early years if might be more cost effective for them to go to public schools and divert the tuition you are paying now into their college fun.

Considering you have no other debt, you are way ahead of the pack when it comes to saving as you aren't flushing all that interest away to pay off loans. I would consider trying to pay extra on your mortgage each month so that it could be paid off by the time your husband hits retirement age.

With the 10 year gap in ages, you may end up with him retired and you working another 10 years, so when looking at retirement you will want to be able to decide if you go on retirement around the same time as he does, otherwise he will be 75 when you hit 65 and he may not be up for doing all the things you had planned to do. I'm in the oposite situation as I robbed the cradle and hubby is 9 years younger. Some of the things I never see people discuss is that large or even larger age gap in a couple. As we have little income, most of the retirement funds are being channeled into my accounts so that we can take the money tax free (for those type of accounts) when it is needed instead of having to pay penalties to access it as I am actually old enough to tap retirment funds already at this point. At least that makes sense to me. I have no real plans to retire, but to keep doing what I can until I can't anymore. I figure for us having that money still in an account in 10 years rather than spending it now it will be much more appreciated and will have grown a lot more hopefully.

Thank you! Your right. I never really thought about our age gap in the later years. I guess that's why I would like to retire a little early so we can do a few things together. Maybe when he's 60-62. Or at least have him retire to part time/do consulting of some sort. Life sneaks up in you! Ha!

As long as you treat your money responsibly and aren't out to impress the Jone's next door, you should have plenty to retire on. If needed you can probably make cuts in food and vacations/gifts/entertainment. Those are all very flexible budget items.

Yes we aren't trying to impress our neighbors! We just left that lifestyle and are focused and living conservatively except the private school. The schools in our area aren't the best and that is why we have chosen private.

As far as gifts/entertainment we have a small budget imo. We do small birthday parties for our two kids and Christmas for our families and kids and a little vacation. Our budget overall is pretty tight after savings.

[Gailete]

As far as gifts/entertainment we have a small budget imo. We do small birthday parties for our two kids and Christmas for our families and kids and a little vacation. Our budget overall is pretty tight after savings.

This is a case where it is everyone's perspective from walking in their own shoes. What you spend on gifts, vacations and Christmas, and in your opinion, is a small budget, is more than two months of income for us. My husband’s income fluctuates incredibly, so last month he made some good money and this month not a penny although working on a long-term project.

But for you with the income you have not bad especially considering you have no other bills aside from your mortgage, you are living within your income and are saving. I see no reason why you should be able to retire and retire well, if needed, cut back on the vacations that you would want to take and in later years depending on your health you might not want to. I was very fortunate in that when I was younger I got to travel a lot considering. Now I can barely get to the grocery store and back. A big day for me is getting to my local Walmart 12 miles away! I'm glad I have the memories.

It is obvious from your budget that vacations are important to you two and so it is good that you budget for them. I was married to man once that thought as long as he had open credit on his credit cards he was good to go, which meant at one point we went on a 'vacation' 900 miles away for a week and left with $100 cash that I had manage to save in loose change. Not what I would consider a real vacation as we were already so far in debt.

Keep doing what you are doing, find more frugal ways for making do with the same amount of money - for instance I paid our mortgage 6 days early this week and saved $81! Those sorts of things help your bottom line and with no hardship on your part. With the size of your mortgage, you could possibly be saving around $200 by paying early or as soon as you have money and by ignoring the actual due date (as long as you pay before). I have been saving $50 a year by not having our IRA send us paperwork each year. Things like that are very simple and you never have to think of them again once you are signed up.

[Petunia 100]

For some reason it's not letting me post. It says my message is too short��

Well, you have $2535 each month not allocated to anything. You also have $0 for gasoline, car maintenance, home maintenance, entertainment, medical co-pays, clothing, and haircuts.

Still, you should easily be able to scrape up 1k per month to fund Roth IRAs for you and your spouse. Roth IRAs are so flexible because your contributions, and conversions 5 years or older (but not growth, or conversions less than 5 years old) are available to you at any time for any reason, no tax or penalty. So they can double as college funds, emergency funds, pay down the mortgage funds, whatever.

In your case, you are not eligible for direct contributions, but can contribute to traditional IRAs and them immediately convert to Roth IRAs. Get started.

[Kate2017]

You seem to be covering the basics. Is there a real need for your young children to be in private school? It seems like for the early years if might be more cost effective for them to go to public schools and divert the tuition you are paying now into their college fun.

Considering you have no other debt, you are way ahead of the pack when it comes to saving as you aren't flushing all that interest away to pay off loans. I would consider trying to pay extra on your mortgage each month so that it could be paid off by the time your husband hits retirement age.

With the 10 year gap in ages, you may end up with him retired and you working another 10 years, so when looking at retirement you will want to be able to decide if you go on retirement around the same time as he does, otherwise he will be 75 when you hit 65 and he may not be up for doing all the things you had planned to do. I'm in the oposite situation as I robbed the cradle and hubby is 9 years younger. Some of the things I never see people discuss is that large or even larger age gap in a couple. As we have little income, most of the retirement funds are being channeled into my accounts so that we can take the money tax free (for those type of accounts) when it is needed instead of having to pay penalties to access it as I am actually old enough to tap retirment funds already at this point. At least that makes sense to me. I have no real plans to retire, but to keep doing what I can until I can't anymore. I figure for us having that money still in an account in 10 years rather than spending it now it will be much more appreciated and will have grown a lot more hopefully.


As long as you treat your money responsibly and aren't out to impress the Jone's next door, you should have plenty to retire on. If needed you can probably make cuts in food and vacations/gifts/entertainment. Those are all very flexible budget items.

This is a case where it is everyone's perspective from walking in their own shoes. What you spend on gifts, vacations and Christmas, and in your opinion, is a small budget, is more than two months of income for us. My husband’s income fluctuates incredibly, so last month he made some good money and this month not a penny although working on a long-term project.

But for you with the income you have not bad especially considering you have no other bills aside from your mortgage, you are living within your income and are saving. I see no reason why you should be able to retire and retire well, if needed, cut back on the vacations that you would want to take and in later years depending on your health you might not want to. I was very fortunate in that when I was younger I got to travel a lot considering. Now I can barely get to the grocery store and back. A big day for me is getting to my local Walmart 12 miles away! I'm glad I have the memories.

It is obvious from your budget that vacations are important to you two and so it is good that you budget for them. I was married to man once that thought as long as he had open credit on his credit cards he was good to go, which meant at one point we went on a 'vacation' 900 miles away for a week and left with $100 cash that I had manage to save in loose change. Not what I would consider a real vacation as we were already so far in debt.

Keep doing what you are doing, find more frugal ways for making do with the same amount of money - for instance I paid our mortgage 6 days early this week and saved $81! Those sorts of things help your bottom line and with no hardship on your part. With the size of your mortgage, you could possibly be saving around $200 by paying early or as soon as you have money and by ignoring the actual due date (as long as you pay before). I have been saving $50 a year by not having our IRA send us paperwork each year. Things like that are very simple and you never have to think of them again once you are signed up.

That's a good idea with the mortgage payments! Thank you!!

[Petunia 100]

Keep doing what you are doing, find more frugal ways for making do with the same amount of money - for instance I paid our mortgage 6 days early this week and saved $81! Those sorts of things help your bottom line and with no hardship on your part. With the size of your mortgage, you could possibly be saving around $200 by paying early or as soon as you have money and by ignoring the actual due date (as long as you pay before). I have been saving $50 a year by not having our IRA send us paperwork each year. Things like that are very simple and you never have to think of them again once you are signed up.

This doesn't make sense to me. Do you have a non-traditional mortgage?