Author Topic: Retirement planning with a 15 year age gap between spouses!  (Read 1056 times)

ameyer410

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Would love any opinions on strategy for age gap traditional retirement planning (ages 32 and 47), clumped in with FIRE planning:

Husband and I are just starting our Early Retirement plans, based off a 60K windfall I just received from granny and me finally paying off my student loans. Woo! We're planning on investing the 60K windfall and then 3K per month for 10 years into index funds, and given no major market mishaps in 10 years, we'll start to pull from there for "partial" early retirement (yes, I'm aware of potential bear market issues and we have a plan).

NOW...I'm trying to strategize and figure out how much to invest for each of us in retirement, and how to take advantage of our age gap. Since he can start withdrawing at 59 which is about the same timespan as the FIRE plan.

My problem is I don't know what amounts to put where - I have a SEP IRA with a whopping 5K in it (I had 70K in student loan debt I just finished), hubs just got *legal* citizenship and also has a whopping 5K in his 403b.

His 403b through work is horrible though, required 2% yes TWO PERCENT fees minimum each year through this horrible firm known as AXA. I save about 6K a year towards mine but no more, because I want all that extra cash to build up in the early retirement fund.

I could say a lot more but I think you get my gist. We're making about 100K a year combined, we aren't as frugal as MMM but we can save 3-4K each month. So just trying to figure out how much to put towards traditional retirement plans, if I should open him an account, or if we should just put it all in index funds and ignore the retirement plan (but lose tax benefits).

Bleh. Big hugs if you've made it this far and feel like giving input.

Proud Foot

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Re: Retirement planning with a 15 year age gap between spouses!
« Reply #1 on: July 31, 2019, 02:01:23 PM »
Read through and follow the Investment Order. Because your plan is to retire in 10 years you will only be 2.5 years away from being able to withdraw from his retirement accounts without penalty or using any of the workarounds. This means you do not need as large of an amount in the taxable accounts. At least contribute to his 403b enough to receive the full match, if any, and then fill up his IRA and max out your SEP IRA.  Assuming he stays at the job until you both FIRE it might be beneficial to find out whether you pass the break even point between the tax savings and the account fees.

If you put the full $60k windfall into index funds in a taxable account it should grow to more than enough to cover that 2.5 year period.

mtnrider

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Re: Retirement planning with a 15 year age gap between spouses!
« Reply #2 on: July 31, 2019, 07:18:26 PM »
There's a good chance that the older spouse will die earlier, and may have end-of-life expenses that could deplete the nest egg.  You need a plan for the surviving spouse will be OK for 20 years.  That might mean protecting enough of your money so it could survive bankruptcy.  401ks are one of those instruments.

Edit: the 403bs and IRAs differ in lawsuit protection state by state.
« Last Edit: July 31, 2019, 08:19:53 PM by mtnrider »

Chris Pascale

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Re: Retirement planning with a 15 year age gap between spouses!
« Reply #3 on: July 31, 2019, 07:54:30 PM »
First, saving $3-4k each month is fantastic. Great job.

Sorry about the 403(b) fees.

Will you both want to F.I.R.E. at the same time? Perhaps the younger spouse can launch into retirement to get some footing, and then the next one lands in a cushion with an extra $50,000, which could be very helpful if there's a market slump that comes around.

What do you think?

WhiteTrashCash

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Re: Retirement planning with a 15 year age gap between spouses!
« Reply #4 on: July 31, 2019, 08:40:13 PM »
Retirement planning with that kind of age gap between spouses can be kind of tricky because you like your baby to have nice things. (Sorry, I couldn't resist. LOL!)

ameyer410

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Re: Retirement planning with a 15 year age gap between spouses!
« Reply #5 on: August 12, 2019, 09:01:51 PM »
Read through and follow the Investment Order. Because your plan is to retire in 10 years you will only be 2.5 years away from being able to withdraw from his retirement accounts without penalty or using any of the workarounds. This means you do not need as large of an amount in the taxable accounts. At least contribute to his 403b enough to receive the full match, if any, and then fill up his IRA and max out your SEP IRA.  Assuming he stays at the job until you both FIRE it might be beneficial to find out whether you pass the break even point between the tax savings and the account fees.

If you put the full $60k windfall into index funds in a taxable account it should grow to more than enough to cover that 2.5 year period.

Thank you sir. This actually got me thinking a bit more as hiring spouse as part of my business and using the Solo 401K option.

My question still is though, if you're planning on FIRE which is obviously before the age of being able to withdraw from retirement accounts, where does this money go?

ameyer410

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Re: Retirement planning with a 15 year age gap between spouses!
« Reply #6 on: August 12, 2019, 09:04:32 PM »
First, saving $3-4k each month is fantastic. Great job.

Sorry about the 403(b) fees.

Will you both want to F.I.R.E. at the same time? Perhaps the younger spouse can launch into retirement to get some footing, and then the next one lands in a cushion with an extra $50,000, which could be very helpful if there's a market slump that comes around.

What do you think?

Thanks Chris! 4K isn't always easy, but 3K seems manageable. We don't make a ton either. Yes, the 403b fees are a joke.

He loves to work and his life is work, so part of FIRE for me is that I'll be around 45, hopefully have our FIRE money, and he'll likely still bring in play money. Or at least money that will pay the bills plus a little more. I'll always work a bit or earn as we don't have children and I'll have the time, so I'll continue to contribute to my 401K.

I hear you on the market slump. Thanks for the reminder. It's all fun while you're planning your finances, then reality kicks you in the ass.