I think we’re in pretty good shape financially, but it never hurts to have another set of eyes look over things:
- Husband and wife, age 46 and 48
- Both working in professional jobs, which we like 90% of the time. We are looking forward to retiring, but aren’t quite ready at this moment.
- Earn roughly $110,000/year between the two of us. Low cost of living area = low salary area.
- Own a large-but-old-enough-to-give-trouble-constantly house in an ideal location for our current working lives – house is inefficient and over-sized, but we can’t see leaving ‘til the youngest child graduates from high school in only two years. We can’t live anywhere as cheaply as this place – no mortgage
- Own a nice piece of country land (in a less expensive area) upon which we plan to build a retirement home – no mortgage
- Own three cars (2 good cars, 1 old clunker for the two teen drivers) – no debt
- No credit card debt, no student loans, no debt of any type
- Savings and investments: A little over $800,000
- Pension that’ll pay me not-quite $2000/month . . . but I have to work another 9 years to “max it out” and to get paid medical
- We’ve lived frugally all our married lives, but at this point we’re pretty much spending everything we earn. Why? College and a new family member. We’ve managed our first child’s first year of college without dipping into savings, and we’re satisfied with living this way for the next six years as we see the children through college. Helping them graduate from a 4-year university without debt is a huge priority for us. Also, we've taken in an elderly family member who can no longer live alone; this is about family, not finances. Having saved aggressively in our earlier years, we’re not upset about slowing our savings now.
Goals: - Retire 9 years from now.
- Why 9 years? I’ll be able to collect a full pension with medical at that point.
- We’re both working on part-time employment plans that’ll see us through a few years between leaving full-time employment and 100% retirement.
- Build a small-but-designed-just-for-us-house. We already own the land, and we anticipate that this’ll cost our current house’s sale price +/- $50,000.
Concerns: - Health care costs in retirement. My husband has a chronic disease that requires daily medication. I’ll have no-cost basic health insurance for myself and can cover him for a reasonable cost; however, we’re concerned about co-pays and the rising cost of health care – especially for him. I don’t think anyone has any good advice on this topic.
- I have live-forever genes, so I will need my retirement money to stretch – this is one of my reasons for wanting to finish out my years for my pension. The realistic picture is that I’ll be available to take care of him in his old age, but I need to be sure I’m prepared financially in my last years. I expect my children will be around to help me with physical needs, but I don’t want to have to rely upon them financially, and I want to be prepared – if necessary – to pay a caregiver. I am currently a caregiver to an elderly relative, and I’d rather not put my children through the task of helping me bathe on a daily basis.
- How much should we spend on our retirement house? We’re looking at something in the neighborhood of 1800 sf, designed for elderly years – easy-access shower, hallways wide enough for a walker, low maintenance, lots of storage. Realistically, this is going to be far less than we can afford to spend, but how do we draw the lines? That is, how do we decide how much we can afford to spend? I read another board about house-building, and it’s all about “you’ve gotta have at least a three-car garage”, “granite countertops are so out – it’s marble these days”. We’re not looking to hang in those circles, but I also don’t want to recreate the starter house we lived in years ago with its fake butcher block countertops.
- When to take social security? Of course, it’s anyone’s guess whether it’ll be available or not. From what we’ve read thusfar, we’re thinking that he should take his around 65 and I should wait ‘til the maximum age.
- We have term life insurance, but we’re wondering if it’s time to drop it. At this point, if either of us died, the other would be able to raise the kids and see them through college without financial help.
- Our investments are mostly in moderate-risk options at this point. At what point do we need to move to super-safe-but-lower-performing options? We’re very confused about this.
- Once the kids are out of college, we anticipate working 2-4 more years and building our retirement house during this time. In those years taxes are going to eat us alive. Suggestions for avoiding this problem?
- Our house’ll be an all-cash build. Any hints on how to manage this effectively? Do we sell our current house before we build? We’ve kicked around the idea of building a detached garage first and living in that temporarily (we could live happily with a grill and a dorm fridge for six months, but not much more), but we wouldn’t want to build a bathroom in the garage . . . so that’d be a sticking point. Similarly, we’ve talked about buying a teardrop camper for our retirement years, but – again – the sticking point is having a bathroom. I could see joining a gym temporarily for showering privledges; we also both have showers at work.
- Similarly, at what point do we sell our current house? It’s a good neighborhood right now, but – looking at the age of the average homeowner – I anticipate that in 10-15 years a good number of the residents are going to go to nursing homes or to live with their children, and at that point this neighborhood will probably turn into a rental neighborhood. The houses are large but are not “in style”, whereas we are surrounded by numerous younger, less expensive neighborhoods. I think we should sell before everything “goes rental”, but how do we know when?
So, with a fresh set of eyes, do we appear to be on the right path? Do you see any glaring mistakes?