Author Topic: 55 y/o Couple w/20- Year Old Twins - Are All Systems Go?  (Read 1528 times)

billsfan1_2000

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55 y/o Couple w/20- Year Old Twins - Are All Systems Go?
« on: April 13, 2019, 09:23:26 AM »
Life Situation: Hello friends.  Thank you for your thoughtful consideration of my situation and validation I am right, and course corrections where wrong.  I am 55 years old, married with a stay at home wife (same age), with 20 year old twins - one a sophomore at a private university (with law school in his plan) and a special needs child who has been approved for SSI, and will continue to live with us indefinitely.

Married filing jointly, 2 dependents age 20, reside all year in upstate NY - but would LOVE to do 1/2 year in a warmer location

Gross Salary/Wages: 234,500 + 60,000 cash + 20,000 company stock bonus = total $314,500

Individual amounts of each Pre-tax deductions 401k - 24,500, HSA - 4,800

Other Ordinary Income: 12,500 tax free muni interest   

Qualified Dividends & Long Term Capital Gains: 12,500 qualified dividends

Adjusted Gross Income: 310,200

Taxes: Federal 54,652 state 19,131 Property 10,800 FICA 7,960, Medicare 5,425

Current expenses:

3,100  Cable, phone and internet
972 Department stores
1,015 Heating
1,786 Cell
1,024 Electric
544 Water
8,300 Travel
855 Sprinkler system/ lawn service
995 Medical
10,550 Dining out
11,113 Country Club
3,000 New furnace (2019 only)
4,221 Home, auto and life insurance
47,475 TOTAL

Additional expense (next 2 years only) - tuition $38,000 p.a. 2020/2021 only

Assets:

Primary residence 412,000 (no mortgage)
2017 GM sedan - 25,000 (no lien)
2017 GM sedan - 25,000 (no lien)
IRA’s - 1,019,000 (robo advised account set @ retirement age 59)
401(k) - 151,000
Taxable accounts - 1,522,000 (robo advised account set @ retirement age 59)
Cash - 171,000
Company stock - 56,800
TOTAL INVESTABLE ASSETS $2,919,800

Retirement Income sources:

Company pension - $25,363 p.a. @ 65
SS (dad) - $36,624 p.a. @ 67
SS (Mom) - $14,400 p.a. @ 67
Total annual retirement income: $76,387 p.a.

Liabilities: Zero

Specific Question(s): I am in a high stress occupation requiring weekly travel (overnight 1-2 nights a week).  In awesome health and ready to enjoy life free of the stress of working at a large public company.  March 1, 2020 is the target date to give notice - collect one more bonus, have most of my shares vest and move on.  Would really appreciate the community’s comments and advice on:

- health insurance - my wife has shown no interest in stepping up and getting a job (with health insurance) after I hang it up.  What are options?
- Kids over 21 - when are parents transitioning their kids who turn 21 over to their own car insurance and cell phone plans?
- Law school - I covered undergrad tuition totaling over $150k.  How should parents think about helping fund law school (if at all??)
- anything else you say have to say or recommend

Thank you for your kind consideration and all the very best…..

RWD

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Re: 55 y/o Couple w/20- Year Old Twins - Are All Systems Go?
« Reply #1 on: April 13, 2019, 09:53:37 AM »
Current expenses:
47,475 TOTAL

TOTAL INVESTABLE ASSETS $2,919,800

You're more than set financially. You could give notice on Monday and you'll have no financial hardships.

You'll have to find health insurance outside of work. I'm sure someone else can give more specific advice here.

Transition kids to their own car insurance / cell phone plans whenever you want. My opinion is that sooner is better. Helps build independence. Though the special needs adult may require different handling.

I am of the opinion that parents shouldn't pay for any college, but you've already done that. Being responsible for my own college tuition made me value it more. But this is a personal choice and you should know your kid best and how financial easy street might mold them. Either way your financial situation will be fine.

Tuskalusa

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Re: 55 y/o Couple w/20- Year Old Twins - Are All Systems Go?
« Reply #2 on: April 13, 2019, 10:29:57 AM »
Agree you are set to retire, but you might want to consider a few things before doing so:

You might want to look into setting up a special needs trust for your son.

If you think your son in college may ask for assistance with law school, have that discussion with him now, so he’s prepared.

Finally, if your plan is to pressure your wife to “step up” and work for your family to continue employer sponsored insurance, you should continue working instead. Looking at your financials here, it appears that your wife has spent her career supporting your high-earning employment and taking care of your sons, one of which is special needs. Implying that she hasn’t been working all these years is disrespectful of her contribution.  It looks like you both have done well as a team.

marble_faun

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Re: 55 y/o Couple w/20- Year Old Twins - Are All Systems Go?
« Reply #3 on: April 13, 2019, 10:41:17 AM »
Regarding law school tuition -- in my opinion, your son should figure it out on his own.  It's a tremendous expense, and if he will be on the hook for it, he will be motivated to do research and figure out if it will really be worthwhile in the end.

In general, the best thing you could do for him is to wean him off of your support soon after college.  Maybe his graduation gift can be something like "a summer's worth of rent plus a year of health insurance if needed," and that's it.  Cutting him off won't feel like a kindness in the moment.  But at a critical life-juncture, he will learn to sink or swim on his own, and this will be an invaluable skill in the long term. 

My parents stopped supporting me after college, and though I did spend some time being broke in my early 20s, in retrospect I'm so glad they forced me to figure out my own life.  I look around at people my age (mid-30s) still relying on hand-outs from their parents, while the parents themselves are trying to retire. It just seems sad.

~

As a side-note, I have a few friends who went to law school, and all of them regretted it. Even the ones who got well-paying "biglaw" jobs found themselves miserable and left the field within a few years. Your son should do some reading about the problems in law school education and the cash cow it has become -- people are graduating with massive debt and nowhere near the job prospects they expected.  My sense is that if you attend a top-5 school (along the lines of Yale/Harvard), you have a decent shot, but otherwise it may not be worth it.

RWD

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Re: 55 y/o Couple w/20- Year Old Twins - Are All Systems Go?
« Reply #4 on: April 13, 2019, 10:50:49 AM »
Regarding law school tuition -- in my opinion, your son should figure it out on his own.  It's a tremendous expense, and if he will be on the hook for it, he will be motivated to do research and figure out if it will really be worthwhile in the end.

This reminds me of a really good video on if law school is worth it. Talks a decent amount about the financials.
https://www.youtube.com/watch?v=D1_KcNvSnmE

Imma

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Re: 55 y/o Couple w/20- Year Old Twins - Are All Systems Go?
« Reply #5 on: April 13, 2019, 11:17:51 AM »
Are you sure your expenses are accurate? If they are you could retire tomorrow and never look back, but I miss vital expenses like groceries. Does the line for travel include fuel and maintenance for the cars? What I'm trying to say is that you really need to make sure your expenses aren't quite a bit higher than you expect them to be. I recommend tracking every single purchase for a while.

From formal retirement age onwards your pension and Social security is almost twice what you need. On top of that from your current stash you can already withdraw twice what you need starting today (about 100k/ year). Your problem is having too much income rather than too little in retirement. You'll likely die with significantly more money than you currently have even if you never work a day again. I would start reading up in estate planning if I were you, especially since you have a disabled child dependent on you.

tralfamadorian

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Re: 55 y/o Couple w/20- Year Old Twins - Are All Systems Go?
« Reply #6 on: April 13, 2019, 03:51:09 PM »
Are you sure your expenses are accurate?

+1

Where's groceries? Hobbies? Health club membership(s)? Personal care? Home maintenance and improvement? Living expenses for the child in college for the next 2.5 years? Gas, oil changes and car maintenance/repairs?

If you're spending $1k/mo each on restaurants and country club minimums/dues, then I presume the $81/mo department store (clothes?) is incomplete for four people. Amazon? Other online shopping?

I would recommend starting again on your spending budget. Set up Mint or Personal Capital with all the bank accounts and credit cards and get a real handle on what your spending is over the next several months.

Next, flesh out this snowbird idea you all are flirting with. Do you want to buy a second home? Where? How big? What's it going to cost to buy and furnish? To maintain? Will you get a mortgage or pay in cash?

With your new complete spending picture and your updated future spending with the increase in ongoing costs and decrease in investable assets due to the second property, then you can know if you have enough to retire with your stash as is, if you need to save more or if you need and/or want to prune your expenses.

Villanelle

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Re: 55 y/o Couple w/20- Year Old Twins - Are All Systems Go?
« Reply #7 on: April 13, 2019, 04:24:32 PM »
Others have said mostly what I was going to say.

Those expenses seem questionable.  How did you come up with/track them?  Are those based on actual tracking (for at least a year), or did you just backfill into them?  It looks like there is very roughly a $150k difference between your take home and your  listed expenses.  Are you actually putting away $150k per year?  If not, then you are missing a lot of expenses.

Also, you mention wanting to snowbird at a second location.  What does that look like, and what expense are associated with it?  Would you buy a second home?   If so, you need to figure out the expenses.  Would you rent out your current home while you are away (and the other when you are in New York) in order to help offset costs?  If so, you need a realistic plan for that so you can figure out numbers.  If not, you need to decide where you might want to live and what all the costs associated with buying or renting there would be.

And I most certainly wouldn't help pay for law school, and I'd make sure that son is really clear about the plan and the finances of it.  I'd likely let him live at home (perhaps for a moderate rent and an agreement to help around the house, but if you are going to rent it half the year, I'm not sure that would work) but beyond that, he'd be on his own. 

Kwill

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Re: 55 y/o Couple w/20- Year Old Twins - Are All Systems Go?
« Reply #8 on: April 13, 2019, 04:47:05 PM »
As a side-note, I have a few friends who went to law school, and all of them regretted it. Even the ones who got well-paying "biglaw" jobs found themselves miserable and left the field within a few years. Your son should do some reading about the problems in law school education and the cash cow it has become -- people are graduating with massive debt and nowhere near the job prospects they expected.  My sense is that if you attend a top-5 school (along the lines of Yale/Harvard), you have a decent shot, but otherwise it may not be worth it.

I would echo the concerns about law school. It's a reason not to pay for it for your son but to let him really figure out if it's worth it to him. If you feel it's necessary in a couple years, you could help him out if things go badly, but there's no reason to offer that at this point when you're already paying for the undergraduate years.

I know a fair number of people who went to either Harvard Law or Yale Law and some who went to law school in other places. Some of them are doing really well and enjoying great careers in something related directly to law, so it's possible. But a lot got disillusioned by about halfway through and went into something else that they could've done without the degree, decided to join a firm for a few years to recover financially from the cost of law school, or struggled for a long time to find something that was a good fit. Maybe doing informational interviews with law school graduates that followed different paths would be helpful.

billsfan1_2000

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Re: 55 y/o Couple w/20- Year Old Twins - Are All Systems Go?
« Reply #9 on: April 13, 2019, 07:10:00 PM »
Agree you are set to retire, but you might want to consider a few things before doing so:

You might want to look into setting up a special needs trust for your son.

If you think your son in college may ask for assistance with law school, have that discussion with him now, so he’s prepared.

Finally, if your plan is to pressure your wife to “step up” and work for your family to continue employer sponsored insurance, you should continue working instead. Looking at your financials here, it appears that your wife has spent her career supporting your high-earning employment and taking care of your sons, one of which is special needs. Implying that she hasn’t been working all these years is disrespectful of her contribution.  It looks like you both have done well as a team.

Hi Tuska - points well made.  We have a special needs trust set up and our wills direct 50% of our assets to the SNT on our leaving this earth.......

MrThatsDifferent

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Re: 55 y/o Couple w/20- Year Old Twins - Are All Systems Go?
« Reply #10 on: April 15, 2019, 04:24:19 AM »
You’ve done really well. You’re very well off. I’d cover your kid’s law school because it won’t cause a dent and you’ll save him that nightmare. Tell him that’s his house or wedding. Or whatever. Enjoy your FIRE.

MoneyizHere

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Re: 55 y/o Couple w/20- Year Old Twins - Are All Systems Go?
« Reply #11 on: April 15, 2019, 06:27:56 AM »
Great job on the planning - you're setup pretty well there.

Regarding tuition - You've already kicked in $150k -that's already good amount of support. Perhaps if your son is interested in Law school - for you to offer a loan 10 years interest free with payback to commence after completion (have everything in writing to establish payback terms)- maybe minimal interest or the going rate of treasury note/CD so as to not affect your retirement.  Your son needs skin in the game - better his than yours.  I know some folks who want to support their kids for all of their education - but graduate school should produce adequate returns for a proper payback.

Regarding cell phone plan - you could obviously keep the cell phones on the family plan I imagine - but should look to have them start paying for it out of their own funds as well.  Making payments to you for that should be at least expected - I made payments on my cell phone whilst I was still in college myself - helped me stay responsible with mins and data.  I paid for my own car insurance once I bought my own car - which was when I finished college. 

Your wife getting a job just for the health insurance sounds like a good plan as any.  Since she's still working - how would that affect your snow-bird plan?  Since you're in a high income tax state - you may actually want to setup residency in a low tax state as you look to convert tIRAs to ROTH. 

ysette9

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Re: 55 y/o Couple w/20- Year Old Twins - Are All Systems Go?
« Reply #12 on: April 15, 2019, 10:23:47 AM »
Have I stumbled onto the Bogleheads forum by accident? No one here has yet pointed out that $23k a year between dining out and country club is a pretty significant extravagance? I realize the OP can likely afford it between significant invested assets and several retirement income streams, but it is definitely worth asking whether he actually gets that much enjoyment out of all that money slipping through their fingers. The whole point here is to raise awareness of where we spend our money and make sure it is going to things that really are meaningful.

I see no reason for OP’s wife to go to paying work just for health insurance. Thank you to the poster who pointed out that the comment about “stepping up” seemed offensive (and maybe it wasn’t intended that way but was just the  way the word choice came across). I’ve got two kids and being st home with them is more work than being st the office all day, and my kids are neurotypical. In any case, for the health insurance thing there is a pretty simple answer: healthcare.gov. Or your state exchange if your state set one up. Thank your lucky stars for the ACA because it means you can quit working whenever you want to and not be shackled to employment merely to make sure you don’t die from treatable conditions or go bankrupt trying to get the care you need.

I’d suggest hay the OP spend some quiet time with himself and with his wife over some wine daydreaming about what they really want to do, and what they see themselves doing in their post-work lives. Maintaining two homes seems like a big waste of money, but traveling for part of the year or AirBnBing or other long-term temporary housing situations to a better area sounds like a ton of fun. I agree also on the estate planning/trust recommendation, especially considering the dependent child and the likelihood of them having significant assets to leave behind.

billsfan1_2000

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Re: 55 y/o Couple w/20- Year Old Twins - Are All Systems Go?
« Reply #13 on: April 15, 2019, 11:03:16 AM »
Hi Ysette and all - thanks for the replies....

I totally get that the Country Club is not in line with the spirit of this blog............however it is a pleasure as important to me and my wife as the very air we breathe.   We have made lifelong friendships there that cannot be valued in terms of money.

As for the stepping up comment - poor choice of words on my part.  No disrespect intended.

Again - grateful to you all for your thoughtful comments.  Especially those relating to law school......really food for thought...

:)






ysette9

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Re: 55 y/o Couple w/20- Year Old Twins - Are All Systems Go?
« Reply #14 on: April 15, 2019, 12:51:49 PM »
Hi Ysette and all - thanks for the replies....

I totally get that the Country Club is not in line with the spirit of this blog............however it is a pleasure as important to me and my wife as the very air we breathe.   We have made lifelong friendships there that cannot be valued in terms of money.

As for the stepping up comment - poor choice of words on my part.  No disrespect intended.

Again - grateful to you all for your thoughtful comments.  Especially those relating to law school......really food for thought...

:)
Well it sounds like you’ve thought about that line item in your budget and it is bringing joy commensurate with the cost, so more power to you. ;) Thanks for the reply.

cloudsail

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Re: 55 y/o Couple w/20- Year Old Twins - Are All Systems Go?
« Reply #15 on: April 15, 2019, 11:06:26 PM »
Hi Ysette and all - thanks for the replies....

I totally get that the Country Club is not in line with the spirit of this blog............however it is a pleasure as important to me and my wife as the very air we breathe.   We have made lifelong friendships there that cannot be valued in terms of money.

As for the stepping up comment - poor choice of words on my part.  No disrespect intended.

Again - grateful to you all for your thoughtful comments.  Especially those relating to law school......really food for thought...

:)

Have you taken a closer look at your expense? I find it hard to believe that you spend no money on groceries, car maintenance, fuel, entertainment beyond the country club, etc. Right now the only shopping item you have is $1000 at department stores. Is that the only place you shop? Does that include all household items? Also, I think property taxes should be put with expenses, since that won't change in retirement, whereas income based taxes will. What about registration for your cars?