Soliciting Retirement Advice

In my rational moments I think we are in really good shape, but, I see so many fear-mongering articles that the average American is ill-prepared financially for retirement, that I really need to get this out there.
I am retiring next summer after 30+ years US Federal Service (20 years US Navy, 10+ years Foreign service) ten years in private sector did nothing for me.
I struggled to clear my debt, and saved savagely these past ten years, as well as volunteered for a year somewhere they paid me double.
Now, I will have a lifetime income of about half my current wage, a paid for house in a relatively low-tax -cost country, and about $300K in 401k. We have about $100K in savings.
Should I be nervous? I have plans to work part-time as available in my current skill set as long as I can.
The wife is now undergoing chemo and radiation, but the prognosis is good. I am in good health, and we have a moderately good health plan.
Why do I feel as if I am missing something? Press-induced paranoia?

Comments welcome, PMs accepted.

if you want specific advise, you need to provide specific details.

How old are you and your wife?

Where do you live?


What are your goals?

Planning to die in your current house? What is it worth?

How much is your annual lifetime pay? Any other income?

Any debts? Health insurance? it appears medical bills will be a large part of your future, based on your snippet about your wife.

plus many more questions anyone would need to know to give you advice.
But $400k liquid and a house paid off is a great start. you are doing better than vast majority.

You’re probably going to feel nervous indefinitely, no matter how well you’ve carved out your retirement.

But your better off than most.

How does that match up to your expenses?

Generally, a 4% withdrawal rate on invested money is considered safe for 30 years (3% is considered really safe). So, does 1/2 your current salary + $16k (4% of 400k) + whatever part time work you expect + whatever social security you expect cover your current expenses? How much is left over?

Without knowing much else, I’d say you’re doing pretty well. Just your liquid savings puts you above the 80th percentile for net worth. Add in the house and the present value of your pension, and you’re probably doing quite well.

If your house is paid for, and you are getting about half your current salary, why should you have cause for concern? The near future seems prety good.

Yes, you may have to live a more frugal lifestyle, since that extra bit was probably for fun and games… maybe to some extent the savings can fill in for that.

The part I would be most nervous about, is what you can do nothing about. If in a few years someone gets in power and decides you all look too much like Winsconsin teachers - cuts pensions, or more likely, reduces your health benefit significantly… It sounds like you are relying on that, and it may be necessary in the future (hopefully not).

The other thing to think about - you own your home outright, paid off. Now what? You die with a couple of hundred thou in assets in the estate. What’s the plan - do you have children wh will appreciate this? Remember that one of you could live to 90, meaning Junior sees nothing until after he retires. Hopefully by 50 or 60 your kids also have their own retirement plans in order.

One of you could end up in a home, and the system simply takes your house to pay for the first two years care… Leaving you out of luck and out of house. What are the pension laws where you live? Can they take your pension to pay for your wife in a home? Can she get anytihng to live on outside if you are the one in the home?

All are sad questions, and probably 20 or more years away, but better to ask now…

I’ve seen it estimated that you will save a lot on employment expenses–commuting costs, clothes, lunches and the like. I once saw a figure that your expenses after retirement will be only about 70% of before. I did not find it so. Commuting cost me little (walked one way, took public transit the other), I brown-bagged lunch my entire life, and wore ordinary clothes through most of my career. The point is am trying to make is that depends on your lifestyle before and after.

Dude, go to your bank, ask to speak to a financial planner and show him the exact numbers. Not to threadshit, but this is too important of a question for a message board.

Having said that, congratulations on paying down your debt and saving so much. And best wishes for your wife’s treatment.

I think the part you are missing is that many people will not be receiving any pension and will have to rely solely on their savings and social security during their retirements. If your pension is say $30K, somebody looking to draw down their savings at 4% per year would have to have $750K in the bank to have the equivalent retirement income.

This is the best advice, but…

From this board you should get a lot of different views on what to think about and ask about when you do get professional advice.

OK, your arrangements are probably good for the next 10, maybe 20 years.

You still have to think about the consequences of many life-altering events:
What if one of you gets hit by a beer truck? Does she know where your acounts are how much you have and have planned to use? How to sell the house? (Or do you?)
What if one of you (not to sound too morbid) has a lingering death instead? Are you sure that even with health care and medicare you will not be driven to bankruptcy?
What if it’s ALzheimers? Can one of you cope for 2 and manage everything to do with the money and house maintenance and such as well?
When will you decide the house is too difficult to maintain, when you can’t shovel snow or clean eavestroughs?
What DOES happen if only one of you has to go into a home? What are the financial implications? How will you know when both of you should? Are there children to help look after these details? (DO you trust them? Really and truly?)
Do you have a will? A living will? Some jurisdictions I think the state automatically jumps in (freeze everything, take a management fee) if there’s no written will, no matter how obvious the case that it should go to the other spouse.

Morbid questions but better to think about it now, if you are planning for the next 20 to 40 years or longer… That’s a long time, you maybe want to be ready.

I know people who are nervous with paid-off houses and $2M in the bank. It all depends on what you expect of retirement.

I am going to answer your question directly - no, you should not be nervous. As others have pointed out, you have a pension, and likely you have some medical coverage tied into that. Compared to the majority of people who only have their own savings - by that measure you are in Mitt Romney territory.

Now, again as others have pointed out there are a lot of externals we can’t predict and we don’t really know your expenses. But you are certainly in a position to weather the storms better than most, and this should give you comfort.

Moved from General Questions to IMHO, where you can still get factual answers and all the opinions you can stand.

samclem, Moderator

The big worry, of course, with retirement savings is outliving the savings. So I read an interesting idea here in an earlier thread. Take a portion of your savings, and buy a deferred annuity that will start to pay you an amount that’s sufficient to live on each year. The trick is that it’s a deferred annuity so it won’t start to pay you until ten or twenty years after you retire. Since there’s the possibility of your dying earlier than that, the annuity will be relatively cheap. And in the meantime, you can budget your remaining savings over the ten or twenty years secure in the knowledge that you know exactly how long it needs to last.

One point I read, which has been true for my father and in-laws, is that expenses are not constant over the length of your retirement. If you want to travel, for instance, you may spend more at the beginning. When you hit 90 chances are your expenses will be going way down, assuming good health and no assisted living.

The downside and danger of this - Canadian law, for example, requires that not long after 65 you must take the Canadian equivalent of an IRA or 401K and convert it. They have updated this rule since the problem was that prolonged very low interest rates meant that you would get very little as an annuity if you converted at today’s rates. Better to put off that conversion as long as you can if interest rates are going to stay well below 5%. You can probably make as much without converting.

My wife’s grandmother ended up in a nursing home. Due to her frugal ways and her late husband’s careful planning with a good income, the home grieved when she died. Unlike the rest who were paid for by the government at the lowest rate, she was paying 3 times as much for pretty much the same care. At least this was a not-for-profit care home. If you have serious hobbies or interests, you should have bought most of the “toys” you need to keep your mind busy by the time you are 90.

Yes, you are not likely to be jetting all over the tropics, watching sunrise on Kilimanjaro, or visiting Angor Wat at 90 - assuming you can afford to at 75… Besides, somewhere around that age you should plan to sell the house and use the proceeds to set yourself up in a comfy low-maintenance apartment or condo assuming you dont need a home. Probably won’t be buying that new car that decade either.

A message board is a good starting point to learn, and really understanding your finances is the best way to feel comfortable about them.

And I wouldn’t trust a bank’s financial planner over anybody. A really good financial planner can be great but don’t ever assume some dude the bank trained for a couple hours knows what he’s doing or is going to give objective advice.

I’d be very leery of a financial planner from a bank. The majority of the time, they will sell you something that they make a nice commission on. This happened to my parents, who invested in a mutual fund through a bank. When I was reviewing it (after they bought it, of course) I asked them if they knew the man at the bank took 5% of their money. They had no idea. If you do go this route, make sure you understand all the fees and commissions they are making, and understand that in many cases you can avoid these fees by going elsewhere.

You should go and learn and get ideas of what they can do for you, but there is no rush to do anything right away. Take the time to learn, and understand what you are doing. I told my parents what’s done is done (it wasn’t the end of the world, the funds were actually OK but the sales load was horrendous) but to at least run it by me the next time. Their mistake was trusting the bank.

Or before that, depending on your living arrangements. We have a five bedroom house, and there is no way it makes sense to stay in it forever. We can easily sell it and live in a cheaper but still nice area (practically anywhere) and still have plenty of room.

My father-in-law finally sold his house at 91, waiting way too long, and moved into a senior residence where he has an apartment, and where dinner and services are provided but he can make his own breakfast and lunch. He love it, and he is now 96. He sold just before the crash. :slight_smile:

I debated posting in IMHO. Thanks.
And thank you all for the encouraging words. Many good points to ponder over the next year as we begin the slide into retirement.
I think I am most concerned about not getting up at dawn or earlier, getting dressed and going to work each day.
All my adult life I have been engaged in travel and haved lived and worked all over the Northern hemisphere; from the tropics to desert to the current temperate zone.
The semi desert of Andalucia appeals, but finances aside, I hope that a broadband connection will keep me mentally engaged and part-time work in my current field physically so. In another life I was a technical writer and trainer, so some writing and editing will hopefully come my way.
With the wife’s family spread around Western Europe, I imagine we will travel some, and Spain has a lot to offer (wife hasn’t seen Granada yet). :slight_smile:
Some work to do on the house; the wife wants a splash pool, I want a new kitchen, etc. That will work for a couple of years, I suppose.
Then we will most likely be a vacation destination for family and friends. (That may be an invitation).:wink:

As someone who retired a year ago (37 years of Federal service, including military time) and is currently, sorta, seeking reemployment, I can just say brace yourself!! My husband is still working, but my income fell to 37% of what it was, and that took some getting used to. We did manage to pay off everything but the mortgage and we save a decent amount every month still, but there are always surprises.

Like this spring when our well died. Between getting the new well drilled, the old one abandoned, and the yard repaired after all the heavy equipment damage, we were out over $10K - that was *not *expected. We had plenty in savings to cover it, but it hurts to see our balance down by that much, since it won’t be replenished as quickly as it might have been otherwise.

We also had to deal with my husband’s 5th spinal surgery, and while we got to keep my insurance in retirement, the copays and deductibles still ate up a chunk. And since I’m old and marginally decrepit, I had several preventative tests done, and they cost a few bucks.

We thought we were ready - just 2 years ago, we got a new roof, new windows, new siding, new gutters - and about 5 years ago, we replaced the furnace and the a/c so overall, the house was fine… we thought. When I got our chimney cleaned this spring, the tech said it was in bad shape and we really shouldn’t use it before getting it fixed, to the tune of $3200. Surprise!! Within the next ten years, I fully expect we’ll have to replace some, if not all, of our major appliances (the fridge is making funny noises) and at least one vehicle. You need to be ready for the unexpected.

As for getting used to not going to work every day, that wasn’t too terribly hard for me, despite not really having a break in all my years of working. I got to do things around the house and around the yard, I took a class, I do my errands during the day instead of evenings or weekends like all the other working drones. Sometimes I sleep in, sometimes I’m up at 5 like I used to be when I worked. It’s been fun finding a new rhythm to my life.

But the money thing is an issue for me, especially the mortgage. That’s why I’m thinking of going back to work, throwing everything we can at the mortgage so ultimately we can be more comfortable in retirement. It’d be so much easier if we had a rich uncle leave us a chunk of change, but we’re pretty sure all uncles, rich or otherwise, are accounted for and unlikely to provide a windfall.

Good luck. Expect the unexpected. And enjoy!