Author Topic: Case Study - am I oversaving?  (Read 2780 times)

moonpalace

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Case Study - am I oversaving?
« on: December 01, 2017, 02:10:29 PM »
Hi all, hoping to get some input from the wise mustachioed sages...

I work in state government and if I continue to work for the state until I'm 55 my wife and I get health-insurance for life (80-20 cost split between State and us).

So that's a pretty big carrot 13 years from now, almost exactly. That also happens to be roughly when my youngest will turn 21 and we'll pay off our mortgage.

All non-mortgage loans will be gone by 2021, which will free up $1,244 a month.

Current stash is $123k, up from $60k at this time last year, when we found MMM. We're contributing to the stash at a rate of $43k/year currently (401k, 401a, 457). It's all pre-tax, because my wife is self-employed so avoiding taxes now is a complete no-brainer.

We're also paying down debt principal (low-interest student debt and 2.75% mortgage) at a rate of about $35k/year.

Monthly spending estimate at age 55 is about $3,500 (mortgage gone, all other debts gone, empty nest, etc).

If we both stop working at that time and don't take SS until age 67, we'll get a combined ~$3,000/month from that.

Question is how much do we need to be saving? With 2030 as a goal end-point, and not much incentive to fully FIRE before that, are we oversaving at $43k/year?

wordnerd

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Re: Case Study - am I oversaving?
« Reply #1 on: December 01, 2017, 02:19:46 PM »
Are you living a happy and fulfilled life now? Are there things you would spend the money on that would make you happier and more fulfilled?

I'm always a little wary when someone's plan is "I'm sure I'm going to work to X age, so I will spend more" because life changes, and money in the bank rarely hurts. That said, if you feel deprived now, I'd loosen the reins. If you'd be spending the money on things you aren't that excited about anyway, then keep the money in the bank.

ixtap

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Re: Case Study - am I oversaving?
« Reply #2 on: December 01, 2017, 02:25:13 PM »
How can you be oversaving?

Do you currently feel deprived? Do you have ideas of what to spend the money on that would not increase your lifestyle, and thus your spending in retirement?

Are you sure your youngest will magically be independent when she turns 21? How do you plan to treat your grandkids?

CrispKale

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Re: Case Study - am I oversaving?
« Reply #3 on: December 01, 2017, 03:20:01 PM »
Hello just a few questions from someone who handles my grandparents finances (they never saved for old age are squeezed now and do not have enough to keep independence):

-What will your retirement look like? Will you sit at home in the paid off house or travel the world? What will your monthly travel expenses be?

-If you or your spouse were confined to a wheel chair will your paid off home accommodate you?

-As you age and lose the ability to drive or walk long distances how will you fund getting to the store, trips to the doctor, excursions, house repairs, etc?

-As you age your prescriptions cost will rise even with fully funded healthcare, my grandparents spend about $400-500/m on non-covered costs even with medicare and full health ins.

-1 in 3 seniors will die with Alzheimer's or some form of dementia, what are your plans for LTC? Medicare and healthcare plans do not cover memory care where there is no physical disability.

-Sounds as if with your pre-tax assets and SSI you will be over the $32,000 tax free limit, have you estimated out what your projected after tax income will be? Uncle Sam will want his share of your stach  too.

-As someone else mentioned what is your backup plan if one of you cannot make it the full retirement age (car accident, heart attack, stroke, depression, etc.)?

-Do you currently have a sufficient liquid emergency fund?

 

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