Case Study - 47 years old and finally started saving.

[axxegrinder]

Family- Me 47, Wife 45, Kids 21, 12.  Gross income 140k (123k/17k)

Wife is a contract worker with no benefits or retirement.
I work for a state university and have benefits and a defined pension, 457 and 403b albeit with no match.  I’ve qualified for Social Security by working at jobs before this one, however my current job is exempt.


Pertinent pre-tax deductions taken from my paycheck:
Pension - $820.88
Health Insurance - $345
Dental - $19.90
457 plan - $100

Total NET Income: $9,682
Total Budgeted Expenses: $7,038
Current emergency fund: $20,000

Of the total expenses, I’m paying +1,100 per month to my mortgage to have it paid off when I hit 55, and $1,003 a month for my daughter’s college/car insurance which I will no longer pay after she graduates next spring.

No debts outside of mortgage, but I’d like to plan for my son’s college and perhaps a newer vehicle.

If I’m running the numbers correctly, I think we’ll need ~$4,500 a month NET in retirement.

My state retirement calculator accounts for a 2% yearly raise, but I don’t believe it takes inflation into account.  Here’s what the numbers on it look like, and there is no tax on retirement income in my state.

Age 55 - $5,280 per month
Age 57 - $6,450 per month
Age 60 - $8,820 per month
Age 62 - $10,520 per month


So a couple questions I still have.
1)   Am I delusional to think that my pension (assuming they don’t modify it, rest assured there is an ongoing assault on our pensions) will be enough to see us through our golden years if I go at 55?
2)   Social security… color me confused, I cannot seem to calculate how much I’ll actually get because I think I’ll be subject to both the WEP and the GPO.  What about the wife?
3)   Son’s college; the plan will be community college for 2 years then a state school.  In today’s dollars, that’s ~ $28,000 total assuming he lives at home.
4)   If I am delusional for step 1, would maxing my 457 starting immediately be enough to make it work at 55?


Our budget – Based on a full year of tracking expenses in YNAB, but having cut several categories by a decent chunk.

Groceries - $1,150
Dining out - $200
Mortgage - $2,240.75 includes +$1,100 additional principal
Sewer - $50.09
Garbage - $21/month paid bi-monthly
Electric - $239.74 per month; buying new HVAC in April/May – Expect this to drop.
Water- $62.59
Cell Phones- $160 T-mobile, 5 lines unlimited.
Auto Insurance - $183 3 cars, full coverage.
Auto Maintenance – $150 Includes license fees, oil changes, and tires/other maintenance.
Gas - $315
Internet- $110
Dog Groomer - $26
Kid #1 - $120 per month, car insurance. (Adding tuition/books bumps this an additional $833 average per month, or $1,003 per month total).  They have 2 semesters left @ ~$5,000 per semester. 
School Fees- $20 per month, this covers school registration and fees for the year.
School Lunch - $50 per month
Vaping - $30 – Down from ~$233 a month 2017.
Nails - $69
Hair Cuts – $40
Lawn Care – $50 Includes mowing and lawn service.
Home Maintenance – $200
Medical bills and medicine – $200
Gifts – $100
Playstation subscription- $5
Amazon Prime- $8.25
Amazon Music Unlimited - $7.99
Netflix- $13
Baseball fund $150 Includes fees, hotels, training and gear for the year.
Freedom Fund - $2,100 – Not included in expenses above, this is what we are doing today.

Edited to delete a piece of identifiable info.

[MDM]

So a couple questions I still have.
1)   Am I delusional to think that my pension (assuming they don’t modify it, rest assured there is an ongoing assault on our pensions) will be enough to see us through our golden years if I go at 55?
2)   Social security… color me confused, I cannot seem to calculate how much I’ll actually get because I think I’ll be subject to both the WEP and the GPO.  What about the wife?
3)   Son’s college; the plan will be community college for 2 years then a state school.  In today’s dollars, that’s ~ $28,000 total assuming he lives at home.
4)   If I am delusional for step 1, would maxing my 457 starting immediately be enough to make it work at 55?

1) Looks OK at a quick glance.  Have you put your situation into a couple of the Best and/or Recommended Retirement Calculators - Bogleheads.org?
2) Have you looked at Benefits Planner: Retirement | Government Pension Offset (GPO) Windfall Elimination Provision (WEP) | Social Security Administration?
4) Might be a good thing in any case.

[axxegrinder]

Thank you!  For #3 it just occurred to me that I didn't actually ask the question, he'll be needing the funds in 6 years, so the question there based on some conflicting information I'm hearing about 529's not being a good deal, how to save for that.

If I'm good on #1, I'm not sure I'll pull the trigger then, but I suspect my entire outlook will change once I "Could retire at any time" once I get there.  60 along with maxing 457 sounds like I'll be in great shape.

Checking those links you provided today.  Thank you again.

[SwordGuy]

Fixed rate mortgage?  What's the rate?   If it's like mine, at 2.75%, you're better off investing that $1100 a month.

[axxegrinder]

Fixed rate, 3.25%.  I'm 3 years into it, $131,000 remaining on the note.  I only started the additional +1100 last month.

[marty998]

You may want to remove your children's name from the first post. Can't have the internet tracking you down that easily :)

Glad you've got the vaping habit down. Are you trying to kick it entirely?

[axxegrinder]

Good catch, I took that name out, thank you.  I kicked the smoking habit 430 days ago (I only know because I never deleted an app I downloaded to help me initially).  Went from buying tons of stuff to rebuilding and making my own juice.  I spent more on vaping for the first year, but now it's only pennies a day. 

I will quit vaping, but I don't feel the same urgency as I did to quit smoking and feel I've made a great first step to being there a bit longer for my kids.  As a side note, while I was never obese I was getting the proverbial "dad bod", so I started keto last August and am at a healthy weight after losing 50 lbs.  Small steps to life independence, as it were.

[LittleWanderer]

FYI - you still have a kid's name in there (under school fees/lunches)

[axxegrinder]

Got it, thank you.