Pre-Post retirement Budgeting

[bozeman]

My wife (cougar) will be eligible to retire in 3 years, but plans to work 5 more (school teacher). I still have at least 9.5 more years before I can begin to draw pension @ 55.........so I 'should' work at least 4 years longer than my wife, if not 6 or 7 to get me to 57 (25 years with this company).........but we have already started some convo's about it, been planning/saving for decades, the Lord has definitely blessed us. Our goal is to retire from vocational work and spend that time in ministry.....praying it works out the way we envision it.

 

[Idaboy]

To the OP, budget depends on what you need to do vs want to do (ie still mortgage, family responsibility etc vs travel and hobbies)...how far do you adult kids live from you? You likely will be traveling to see them. Sure financial planner can't "figure it out for you" but they can definitely run scenarios. There are A LOT of assumptions whether it's you or them running the math (ROI, interest rates, expenses, do you have a now unicorn pension vs 401k you need to roll over and self manage?)... It is hard as so any of us have long paid into Soc Sec, and it will probably be here 10-15 yrs from now but I really don't know if 30yrs from now you can assume anything, which is really a big deal for most of us trying to budget/make assumptions.....Most bank and credit card platforms have reasonable budget trackers. My wife and I currently have ability to "soft landing" retirement so we are tracking last few years of expenses and then try that budget for a couple of years to see how it feels. Bottom line is don't go crazy with assumptions, make some realistic budget and run it by financial planner and you will likely be fine.

 

[jzeblaz]

46 here and saving/investing for retirement has been on my radar and part of the financial plan from a young age. Things are humming along well, but I'm not thrilled about work and think of retirement as a phase-out process. Get a less stressful job for the last decade or 15 years of work-life, cover health insurance, have a purpose and enjoy more time off, etc. Question for guys who have navigated this part, how do you plan for health insurance if you haven't yet hit Medicare age? Keep working till you qualify? Set aside an HSA for that until you qualify?

 

[Rich M]

There's nothing wrong with diversification in investments. I don't believe in the all or nothing approach. But I also believe that everyone should own at least some amount of precious metals in their portfolio. I retired quite awhile ago and I'm 58. But I've also been investing since I was 12.

Back in March 2020 I bought a bunch of the SLV silver ETF near the lows just above $11/share. There were guys in that stock market thread saying I was crazy for buying silver. Well, it was up 150% in just 5 months. I use those ETF's for easily buying and selling quickly.

Smart move. I was taught how to save, not how to invest. Will retire at 65, hopefully. Lost a business and about everything in 2008-2010 recession and rebuilding as opposed to adding to. If someone works hard enough and makes enough, they can build a good pile in 20-25 years.

Diversification is the way to do it. Multiple incomes streams are good too.

Have done hard silver and didn't really make much after the fees. Silver ETF woulda been a better way to go.

 

[Ridge Runner]

Since the subject of budgeting is discussed, (I did not want to hijack hunting budget thread) what app/tool would be a good choice leading up to (and in) retirement?

Background. I/we currently do NOT have a budget. Wife is retired (collecting SS), I am 6-8 years from retirement. (Yes she is a cougar!) Kids are out of the house, mortgage will be paid off in 4 years. And one vehicle payment. I have always been the major breadwinner. (And my job adequately compensates me)

My plan is to identify all expenses (and income) for a 2+ year time period. Biggest fear is "running out of money". Our retirement holdings are currently in decent shape. (Per financial "guy") With 6-8 years of additional contributions and growth, I "think" we will be fine. But I would like to KNOW that we are fine. (And only way to do this, IMHO is to start tracking current expenses.

Thoughts?

Don't underestimate insurance costs. My in-laws ending up paying >$2K/month to bridge the gap between retirement and medicare. I've known a few people that put off retirement because of insurance cost. Can't believe we've come to a place where private insurance costs more than most house payments.

 

[EdP]

We were able to keep it pretty simple. We had our cars paid off and finished paying off the house, so zero debt. This was 3 years ahead of retirement. Then we tracked what went in and out of the checking account we used to cover all expenses, and watched the balance. After a year we knew what our regular living expenses were and adjusted for future vehicle purchases plus our health ins premium that was withheld from my salary pre-retirement. That established our absolute minimum retirement income needs without consideration of inflation. From there we established a minimum number for our retirement investments to provide the income we wanted.

One big factor many need to consider is the cost of medical ins, as Ridge Runner points out above. We were lucky in that the company I worked for let retirees and their dependents continue on the company medical ins for just a small increase in contribution up until 65/medicare.

 

[cnelk]

Just remember when you retire....

"Its less money and twice the wife"

 

[thegrouse]

46 here and saving/investing for retirement has been on my radar and part of the financial plan from a young age. Things are humming along well, but I'm not thrilled about work and think of retirement as a phase-out process. Get a less stressful job for the last decade or 15 years of work-life, cover health insurance, have a purpose and enjoy more time off, etc. Question for guys who have navigated this part, how do you plan for health insurance if you haven't yet hit Medicare age? Keep working till you qualify? Set aside an HSA for that until you qualify?

Many keep taxable income low and buy coverage from the ACA on healthcare.gov. If you can keep AGI down supposedly it is pretty cheap and decent. YMMV I have not looked into it

 

[Z Barebow]

Don't underestimate insurance costs. My in-laws ending up paying >$2K/month to bridge the gap between retirement and medicare. I've known a few people that put off retirement because of insurance cost. Can't believe we've come to a place where private insurance costs more than most house payments.

Definitely not in my case. Insurance is THE reason I will be working to 65 min. (IE Medicare) I also know there are costs even when on Medicare (Part C & D?)

 

[Z Barebow]

Just remember when you retire....

"Its less money and twice the wife"

Funny you say that. Since my wife is already retired, she wants to do "retirement stuff" (Travel more) I tell her to knock herself out, but don't book me. I only have so much PTO and I still work. (A point of contention that will need to be resolved, likely over time)

When kids were in the house, hunting trips (IE Me away for extended periods) was always a point of contention. Now, she rather enjoys my absence! (I am sure that is NO reflection upon my demeanor! LOL!)

 

[JBS]

I am hopefully less than 10 years from retirement. OP you are absolutely correct a written budget/accounting of all spending for at least a year is the only way to know how much you need. After that I think the most important step is to make a tax advantageous plan to access your money, this is more important and also more complex if you retire prior to traditional retirement age. Health insurance cost is a huge unknown for me.

 

[Jason Snyder]

We are also >10, although my wife will likely continue to work at least part time. Things to consider:

Life insurance (term and variable)
Long term care insurance
When do you HAVE to start drawing 401k or 403b accounts
Tax implications when one of you dies
Diversifying where your money is (tax deferred, Roth, life insurance, etc)

 

[WhatToHunt]

Just remember when you retire....

"Its less money and twice the wife"

Two wives sounds kinda nice. Do I get to pick the second one?

 

[flathead#2]

58 this Summer and hoping for a new Presidential Administration and
Early Outs offered next year.

 

[cnelk]

Two wives sounds kinda nice. Do I get to pick the second one?

I wouldnt wish 2 wives upon anyone

 

[rayporter]

probably find a side gig after retirement just to pass the time. I watched my dad retire and die at 64 and don't want to be in that boat.

you do need purpose --- more than the Indians wife, who was named three ponies, can give you.

" so why if she named three ponies??"
he replied "nag, nag, nag,"

 

[Billinsd]

Nothing except death is guaranteed......nothing. Most retiree's die with 80% of their wealth still intact and left behind. The "outliving your retirement savings" is largely a myth that rarely happens for most people that worked for 40-45 years.

Taxes are guaranteed too. What's the significance of working 40-45 years? Do you mean, those that start working at 20 and retire at 60 or 65 have saved plenty of money? So, people that work that long don't outlive their retirement savings? 80%? Where did you get that from? Life expectancy in US is 73. Take your dad and his dad's years on earth, add together and divide by 2.

 

[Billinsd]

Don't underestimate insurance costs. My in-laws ending up paying >$2K/month to bridge the gap between retirement and medicare. Can't believe we've come to a place where private insurance costs more than most house payments.

Not in San Diego. Private insurance costs a fraction of mortgage payments.

 

[Billinsd]

58 this Summer and hoping for a new Presidential Administration and
Early Outs offered next year.

That's a REAL LOOOOOOOOOOOONG shot. I hope I'm wrong, and hope it happens too, for my kids sake!!

 

[Maverick1]

Why do you doubt your “financial guy”? Has he not shown you a financial plan? That would show you definitively whether you are fine or not. If you want to “know” and not “think”, that’s exactly what a financial plan can do for you. And if you are not fine, it will identify/quantify exactly what you need to do to get there.

With all due respect, and because you happen to be in that particular field, recognize that just because someone is employed as a “financial guy” does not necessarily mean they are “good” at their job. Like anything else, there are probably low, middle, and high performers in the profession. A nicely presented “plan” from a poor financial planner is not really worth much. @Z Barebow - care to share why you might doubt your financial planner, or the plan he has put together, if one exists?