Help with game plan

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Topic Author
Coachrhino11
Posts: 226
Joined: Mon Aug 28, 2017 12:02 pm

Help with game plan

Post by Coachrhino11 »

I posted about 4 years ago with the same title and things have changed, mostly all for the better. I'd like to start from scratch because things have changed and want to know where to go from here.

Married, 10 year old child, combined annual income is 130k but hopefully going up another 10-12k at some point. But at this point not counting that.
We had a 2nd lien mortgage at 6.25% owing over 45k. Paid it off way early.
I had a newer vehicle with payment, sold it and bought used Honda cash.
No student loans, no revolving CC debt. No car payments.
We only owe about 180k @ 2.5% on 15 year fixed mortgage. It was 218k when refinanced. We could realistically get over 500k today.
Wife's Roth IRA: Around 100k. Maxing every year. Now VTSX & VWINX
My Roth: Around 45k, now max. T.Rowe Price Capital Appreciation and Healthcare and Blue Chip Fund.
Wife's 403b: Around 75k, $500 month, and employer 300 month, similar funds.
I have a pension or will because I teach. I also started a 403b recently, have around 5k in VTSX, International. Now contributing 13k year.
Adding my pension we have close to 300k in retirement not 3 million like other thread.
We keep 3-6 months cushion in savings. Have a 529 for child, not much, like 4-5k.

We really want to knock out the mortgage even though only 2.5%. I'm assuming most will say max all retirement accounts?

My goal is to retire from teaching in 7-8 years even if I have to wait for pension until 60. Wife wants to keep working, she makes more also. I would probably do something else but not a must. What should we do moving forward?

Thanks in advance
Sam_957
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Location: Sonoran Desert Biome

Re: Help with game plan

Post by Sam_957 »

Max retirement, leave the mortgage, you’re already putting plenty into it I’m sure. What are your expenses in retirement. How old are you? There is a template for asking questions you could use…
Topic Author
Coachrhino11
Posts: 226
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Re: Help with game plan

Post by Coachrhino11 »

Sam_78 wrote: Fri Jun 18, 2021 11:43 pm Max retirement, leave the mortgage, you’re already putting plenty into it I’m sure. What are your expenses in retirement. How old are you? There is a template for asking questions you could use…
Sorry, did not think about that. I'll be 43 this summer, wife will be 45.
Topic Author
Coachrhino11
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Re: Help with game plan

Post by Coachrhino11 »

Was hoping to get some more input here, I understand there’s many other threads.
ShowMeTheER
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Re: Help with game plan

Post by ShowMeTheER »

I would suggest setting a mortgage payment cadence that gets it paid off in 8 years, to correspond with your desired end date. This might be a reasonable middle ground to tackle the mortgage, while not doing it completely at the expense of saving for retirement.
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AllMostThere
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Re: Help with game plan

Post by AllMostThere »

Coachrhino11 wrote: Fri Jun 18, 2021 11:16 pm I posted about 4 years ago with the same title and things have changed, mostly all for the better. I'd like to start from scratch because things have changed and want to know where to go from here.

Married, 10 year old child, combined annual income is 130k but hopefully going up another 10-12k at some point. But at this point not counting that. When available, this extra should be used for priority - max retirement
We had a 2nd lien mortgage at 6.25% owing over 45k. Paid it off way early.
I had a newer vehicle with payment, sold it and bought used Honda cash.
No student loans, no revolving CC debt. No car payments.
We only owe about 180k @ 2.5% on 15 year fixed mortgage. It was 218k when refinanced. We could realistically get over 500k today.
How many years left on this mortgage? 2.5% is great rate, so not a priority to knock out yet as retirement savings should be priority.
Wife's Roth IRA: Around 100k. Maxing every year. Now VTSX & VWINX VWINX is a great product, but for age of DW more equity may be preferable to VTSAX. What is your AA target?
My Roth: Around 45k, now max. T.Rowe Price Capital Appreciation and Healthcare and Blue Chip Fund. Why the Healthcare allocation? What is your AA target? T.Rowe, while okay, is not best fee wise. I suggest Vanguard or Fido 2-3 fund portfolio per your target AA using low cost index funds.
Wife's 403b: Around 75k, $500 month, and employer 300 month, similar funds. Who is the provider and what are the fees?
403b is often riddled with hidden high cost fees.

I have a pension or will because I teach. I also started a 403b recently, have around 5k in VTSX, International. Now contributing 13k year.
Adding my pension we have close to 300k in retirement not 3 million like other thread.
We keep 3-6 months cushion in savings. IMO suggest 9 - 12 months buffer, so slowly increase over next several years Have a 529 for child, not much, like 4-5k.
Do you or DW, have access to HSA? If so, max it out, invest in funds per your AA and let it grow as this will be needed when you FIRE
We really want to knock out the mortgage even though only 2.5%. I'm assuming most will say max all retirement accounts? Yes, max out retirement, then you can add to 529 then additional mortgage payments (2.5% is great rate)

My goal is to retire from teaching in 7-8 years even if I have to wait for pension until 60. Wife wants to keep working, she makes more also. I would probably do something else but not a must. What should we do moving forward?

Thanks in advance Overall, you are doing well, so keep it up. IMO, you just need a little more focus on AA, fees and struture to match your FIRE goal
It is not about how much you make, it is about how much you keep and how well you invest it. - Author Unknown
LittleMaggieMae
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Re: Help with game plan

Post by LittleMaggieMae »

I don't think your Mortgage makes much difference (kind of not seeing the forest for the trees). Perhaps you need to start thinking in terms of "milestones" :

For the next 8 years we will have X expenses and income per year
Once I"m 50 and quit my job - we will have X expenses and income per year.
Once I am 55 we will have X expenses and income per year.
When I am 60 we will have X expenses and income per year.
When I am 65 we will have X expenses and income per year.
When does SS kick in?

Work it from both sides - what your income will be and what you think your expenses will be.

Expenses are tricky - they income healthcare and taxes and then don't forget the lumpy expenses that come around every so often - new appliances? new vehicle? a roof? new HVAC for the house? maintaining the house.

Once you have some of the milestones and some idea of expenses and possible incomes - it gets easier to figure out WHERE the income needs to come from... and then you will see how much you need to have saved/invested to achieve your goal.
delamer
Posts: 11880
Joined: Tue Feb 08, 2011 6:13 pm

Re: Help with game plan

Post by delamer »

LittleMaggieMae wrote: Sat Jun 19, 2021 12:50 pm I don't think your Mortgage makes much difference (kind of not seeing the forest for the trees). Perhaps you need to start thinking in terms of "milestones" :

For the next 8 years we will have X expenses and income per year
Once I"m 50 and quit my job - we will have X expenses and income per year.
Once I am 55 we will have X expenses and income per year.
When I am 60 we will have X expenses and income per year.
When I am 65 we will have X expenses and income per year.
When does SS kick in?

Work it from both sides - what your income will be and what you think your expenses will be.

Expenses are tricky - they income healthcare and taxes and then don't forget the lumpy expenses that come around every so often - new appliances? new vehicle? a roof? new HVAC for the house? maintaining the house.

Once you have some of the milestones and some idea of expenses and possible incomes - it gets easier to figure out WHERE the income needs to come from... and then you will see how much you need to have saved/invested to achieve your goal.
This is very good advice.

People can get hung up solely on the income side of retirement finances, but you need to know your expected expenses to get a full picture.

For instance, in your case, your mortgage will go away in 12 years if you stay on your current path (and in your current house). That will be a big reduction in your expenses.

You’re right that most here will say not to prepay a 2.5% mortgage, especially one that will be paid off anyway in your mid-50’s.

We refied to a 10-year loan abput 5 years before retirement. It gave us the psychological freedom to know that mortgage would be gone fairly soon and that we could direct any extra money to savings rather than the mortgage. In your case with your home equity making up half of your net worth, there’s even more reason to focus on liquid assets.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
Topic Author
Coachrhino11
Posts: 226
Joined: Mon Aug 28, 2017 12:02 pm

Re: Help with game plan

Post by Coachrhino11 »

ShowMeTheER wrote: Sat Jun 19, 2021 12:17 pm I would suggest setting a mortgage payment cadence that gets it paid off in 8 years, to correspond with your desired end date. This might be a reasonable middle ground to tackle the mortgage, while not doing it completely at the expense of saving for retirement.
I like this, not a bad idea. Nice balance.
Topic Author
Coachrhino11
Posts: 226
Joined: Mon Aug 28, 2017 12:02 pm

Re: Help with game plan

Post by Coachrhino11 »

AllMostThere wrote: Sat Jun 19, 2021 12:46 pm
Coachrhino11 wrote: Fri Jun 18, 2021 11:16 pm I posted about 4 years ago with the same title and things have changed, mostly all for the better. I'd like to start from scratch because things have changed and want to know where to go from here.

Married, 10 year old child, combined annual income is 130k but hopefully going up another 10-12k at some point. But at this point not counting that. When available, this extra should be used for priority - max retirement
We had a 2nd lien mortgage at 6.25% owing over 45k. Paid it off way early.
I had a newer vehicle with payment, sold it and bought used Honda cash.
No student loans, no revolving CC debt. No car payments.
We only owe about 180k @ 2.5% on 15 year fixed mortgage. It was 218k when refinanced. We could realistically get over 500k today.
How many years left on this mortgage? 2.5% is great rate, so not a priority to knock out yet as retirement savings should be priority.
Wife's Roth IRA: Around 100k. Maxing every year. Now VTSX & VWINX VWINX is a great product, but for age of DW more equity may be preferable to VTSAX. What is your AA target?
My Roth: Around 45k, now max. T.Rowe Price Capital Appreciation and Healthcare and Blue Chip Fund. Why the Healthcare allocation? What is your AA target? T.Rowe, while okay, is not best fee wise. I suggest Vanguard or Fido 2-3 fund portfolio per your target AA using low cost index funds.
Wife's 403b: Around 75k, $500 month, and employer 300 month, similar funds. Who is the provider and what are the fees?
403b is often riddled with hidden high cost fees.

I have a pension or will because I teach. I also started a 403b recently, have around 5k in VTSX, International. Now contributing 13k year.
Adding my pension we have close to 300k in retirement not 3 million like other thread.
We keep 3-6 months cushion in savings. IMO suggest 9 - 12 months buffer, so slowly increase over next several years Have a 529 for child, not much, like 4-5k.
Do you or DW, have access to HSA? If so, max it out, invest in funds per your AA and let it grow as this will be needed when you FIRE
We really want to knock out the mortgage even though only 2.5%. I'm assuming most will say max all retirement accounts? Yes, max out retirement, then you can add to 529 then additional mortgage payments (2.5% is great rate)

My goal is to retire from teaching in 7-8 years even if I have to wait for pension until 60. Wife wants to keep working, she makes more also. I would probably do something else but not a must. What should we do moving forward?

Thanks in advance Overall, you are doing well, so keep it up. IMO, you just need a little more focus on AA, fees and struture to match your FIRE goal
We just refinanced last year or so but have already paid almost 40k off, mainly because I sold new vehicle I had a lot of equity in and bought used car. Plus we have added much more of our income along the way.

My wife's VWINX portion of her Roth IRA is about 30%, the other 65-70% is in VTSMX now that I looked. Never really had a set AA to be honest, she has had most in Wellington for years until I made the change.

I personally don't have a set AA. Capital Appreciation is a 70/30 or 65/35 balanced fund and I have 70% of my Roth in that and 15% each in the other 2. I bought Healthcare Fund because I believe in the fund and am willing to bet it continues to do very well long term. I agree with you regarding the fees with T.Rowe but the funds have treated me very well and the returns thus far have absolutely offset the fees. I understand that's not a traditional boglehead way of thinking and I'm not 100% opposed to moving my Roth to Vanguard in the future as it continues to grow larger and fees matter more.

9-12 months? Both of our careers are very stable compared to the private sector, but I understand we live in a very unpredictable world. I hate to have that much liquid earning zero or near zero.

My wife does have an HSA which I forgot to mention and I have access to it as well. We do use it though. Daughter will need braces in next year or so. Wife contributes the amount they match which is around 150+150, so 300 per month overall. We have not been investing, just saving. But we can.

Thank you for helping, I appreciate it.
Topic Author
Coachrhino11
Posts: 226
Joined: Mon Aug 28, 2017 12:02 pm

Re: Help with game plan

Post by Coachrhino11 »

LittleMaggieMae wrote: Sat Jun 19, 2021 12:50 pm I don't think your Mortgage makes much difference (kind of not seeing the forest for the trees). Perhaps you need to start thinking in terms of "milestones" :

For the next 8 years we will have X expenses and income per year
Once I"m 50 and quit my job - we will have X expenses and income per year.
Once I am 55 we will have X expenses and income per year.
When I am 60 we will have X expenses and income per year.
When I am 65 we will have X expenses and income per year.
When does SS kick in?

Work it from both sides - what your income will be and what you think your expenses will be.

Expenses are tricky - they income healthcare and taxes and then don't forget the lumpy expenses that come around every so often - new appliances? new vehicle? a roof? new HVAC for the house? maintaining the house.

Once you have some of the milestones and some idea of expenses and possible incomes - it gets easier to figure out WHERE the income needs to come from... and then you will see how much you need to have saved/invested to achieve your goal.
I appreciate your thoughts but respectfully disagree regarding the mortgage statement. Eliminating the mortgage not only gives piece of mind for us at least, but also reduces our largest expense allowing us to earn less if we choose or invest more, options are nice.

I like what you said above about milestones but predicting and forecasting the future expenses are darn near impossible, we don't even know if we want to stay here in retirement, put everything in storage and RV, who knows? But we do want to have the freedom to choose. My wife will get SS but I will not since I teach and don't pay into it unfortunately. She's eligible to take early at 62, 67 is full age. I won't be touching my pension regardless of when I stop teaching until 60 most likely to avoid penalties and possibly be eligible for healthcare but of course that could change!

Expenses are tricky and houses are a PIA. As of right now, we are getting roof looked at and probably replacing windows.
delamer
Posts: 11880
Joined: Tue Feb 08, 2011 6:13 pm

Re: Help with game plan

Post by delamer »

Coachrhino11 wrote: Sat Jun 19, 2021 4:10 pm
LittleMaggieMae wrote: Sat Jun 19, 2021 12:50 pm I don't think your Mortgage makes much difference (kind of not seeing the forest for the trees). Perhaps you need to start thinking in terms of "milestones" :

For the next 8 years we will have X expenses and income per year
Once I"m 50 and quit my job - we will have X expenses and income per year.
Once I am 55 we will have X expenses and income per year.
When I am 60 we will have X expenses and income per year.
When I am 65 we will have X expenses and income per year.
When does SS kick in?

Work it from both sides - what your income will be and what you think your expenses will be.

Expenses are tricky - they income healthcare and taxes and then don't forget the lumpy expenses that come around every so often - new appliances? new vehicle? a roof? new HVAC for the house? maintaining the house.

Once you have some of the milestones and some idea of expenses and possible incomes - it gets easier to figure out WHERE the income needs to come from... and then you will see how much you need to have saved/invested to achieve your goal.
I appreciate your thoughts but respectfully disagree regarding the mortgage statement. Eliminating the mortgage not only gives piece of mind for us at least, but also reduces our largest expense allowing us to earn less if we choose or invest more, options are nice.

I like what you said above about milestones but predicting and forecasting the future expenses are darn near impossible, we don't even know if we want to stay here in retirement, put everything in storage and RV, who knows? But we do want to have the freedom to choose. My wife will get SS but I will not since I teach and don't pay into it unfortunately. She's eligible to take early at 62, 67 is full age. I won't be touching my pension regardless of when I stop teaching until 60 most likely to avoid penalties and possibly be eligible for healthcare but of course that could change!

Expenses are tricky and houses are a PIA. As of right now, we are getting roof looked at and probably replacing windows.
The freedom to choose comes from more liquidity in the form of investing your money rather than tying it up in a house.

I’m not unsympathetic to wanting to get the mortgage done with, but that isn’t the way to maximize your options (especially at 2.5%).
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
Topic Author
Coachrhino11
Posts: 226
Joined: Mon Aug 28, 2017 12:02 pm

Re: Help with game plan

Post by Coachrhino11 »

delamer wrote: Sat Jun 19, 2021 5:04 pm
Coachrhino11 wrote: Sat Jun 19, 2021 4:10 pm
LittleMaggieMae wrote: Sat Jun 19, 2021 12:50 pm I don't think your Mortgage makes much difference (kind of not seeing the forest for the trees). Perhaps you need to start thinking in terms of "milestones" :

For the next 8 years we will have X expenses and income per year
Once I"m 50 and quit my job - we will have X expenses and income per year.
Once I am 55 we will have X expenses and income per year.
When I am 60 we will have X expenses and income per year.
When I am 65 we will have X expenses and income per year.
When does SS kick in?

Work it from both sides - what your income will be and what you think your expenses will be.

Expenses are tricky - they income healthcare and taxes and then don't forget the lumpy expenses that come around every so often - new appliances? new vehicle? a roof? new HVAC for the house? maintaining the house.

Once you have some of the milestones and some idea of expenses and possible incomes - it gets easier to figure out WHERE the income needs to come from... and then you will see how much you need to have saved/invested to achieve your goal.
I appreciate your thoughts but respectfully disagree regarding the mortgage statement. Eliminating the mortgage not only gives piece of mind for us at least, but also reduces our largest expense allowing us to earn less if we choose or invest more, options are nice.

I like what you said above about milestones but predicting and forecasting the future expenses are darn near impossible, we don't even know if we want to stay here in retirement, put everything in storage and RV, who knows? But we do want to have the freedom to choose. My wife will get SS but I will not since I teach and don't pay into it unfortunately. She's eligible to take early at 62, 67 is full age. I won't be touching my pension regardless of when I stop teaching until 60 most likely to avoid penalties and possibly be eligible for healthcare but of course that could change!

Expenses are tricky and houses are a PIA. As of right now, we are getting roof looked at and probably replacing windows.
The freedom to choose comes from more liquidity in the form of investing your money rather than tying it up in a house.

I’m not unsympathetic to wanting to get the mortgage done with, but that isn’t the way to maximize your options (especially at 2.5%).
Makes sense. I guess I hate the thought of us investing way more in market and market drops big and thinking that $$ could have gone to pay off house.
delamer
Posts: 11880
Joined: Tue Feb 08, 2011 6:13 pm

Re: Help with game plan

Post by delamer »

Coachrhino11 wrote: Sat Jun 19, 2021 5:11 pm
delamer wrote: Sat Jun 19, 2021 5:04 pm
Coachrhino11 wrote: Sat Jun 19, 2021 4:10 pm
LittleMaggieMae wrote: Sat Jun 19, 2021 12:50 pm I don't think your Mortgage makes much difference (kind of not seeing the forest for the trees). Perhaps you need to start thinking in terms of "milestones" :

For the next 8 years we will have X expenses and income per year
Once I"m 50 and quit my job - we will have X expenses and income per year.
Once I am 55 we will have X expenses and income per year.
When I am 60 we will have X expenses and income per year.
When I am 65 we will have X expenses and income per year.
When does SS kick in?

Work it from both sides - what your income will be and what you think your expenses will be.

Expenses are tricky - they income healthcare and taxes and then don't forget the lumpy expenses that come around every so often - new appliances? new vehicle? a roof? new HVAC for the house? maintaining the house.

Once you have some of the milestones and some idea of expenses and possible incomes - it gets easier to figure out WHERE the income needs to come from... and then you will see how much you need to have saved/invested to achieve your goal.
I appreciate your thoughts but respectfully disagree regarding the mortgage statement. Eliminating the mortgage not only gives piece of mind for us at least, but also reduces our largest expense allowing us to earn less if we choose or invest more, options are nice.

I like what you said above about milestones but predicting and forecasting the future expenses are darn near impossible, we don't even know if we want to stay here in retirement, put everything in storage and RV, who knows? But we do want to have the freedom to choose. My wife will get SS but I will not since I teach and don't pay into it unfortunately. She's eligible to take early at 62, 67 is full age. I won't be touching my pension regardless of when I stop teaching until 60 most likely to avoid penalties and possibly be eligible for healthcare but of course that could change!

Expenses are tricky and houses are a PIA. As of right now, we are getting roof looked at and probably replacing windows.
The freedom to choose comes from more liquidity in the form of investing your money rather than tying it up in a house.

I’m not unsympathetic to wanting to get the mortgage done with, but that isn’t the way to maximize your options (especially at 2.5%).
Makes sense. I guess I hate the thought of us investing way more in market and market drops big and thinking that $$ could have gone to pay off house.
The flip side is how you’d feel if you paid off the mortgage and then your house value dropped by 1/3?
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
livesoft
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Joined: Thu Mar 01, 2007 8:00 pm

Re: Help with game plan

Post by livesoft »

I searched this thread for the word "college" which is often found in "game plan" threads where a family with child[ren] is asking financial questions. I didn't find the word.
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delamer
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Joined: Tue Feb 08, 2011 6:13 pm

Re: Help with game plan

Post by delamer »

livesoft wrote: Sat Jun 19, 2021 6:24 pm I searched this thread for the word "college" which is often found in "game plan" threads where a family with child[ren] is asking financial questions. I didn't find the word.
Try “529” instead.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
livesoft
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Joined: Thu Mar 01, 2007 8:00 pm

Re: Help with game plan

Post by livesoft »

delamer wrote: Sat Jun 19, 2021 6:25 pm
livesoft wrote: Sat Jun 19, 2021 6:24 pm I searched this thread for the word "college" which is often found in "game plan" threads where a family with child[ren] is asking financial questions. I didn't find the word.
Try “529” instead.
And there is it. Thanks.
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Topic Author
Coachrhino11
Posts: 226
Joined: Mon Aug 28, 2017 12:02 pm

Re: Help with game plan

Post by Coachrhino11 »

delamer wrote: Sat Jun 19, 2021 5:04 pm
Coachrhino11 wrote: Sat Jun 19, 2021 4:10 pm
LittleMaggieMae wrote: Sat Jun 19, 2021 12:50 pm I don't think your Mortgage makes much difference (kind of not seeing the forest for the trees). Perhaps you need to start thinking in terms of "milestones" :

For the next 8 years we will have X expenses and income per year
Once I"m 50 and quit my job - we will have X expenses and income per year.
Once I am 55 we will have X expenses and income per year.
When I am 60 we will have X expenses and income per year.
When I am 65 we will have X expenses and income per year.
When does SS kick in?

Work it from both sides - what your income will be and what you think your expenses will be.

Expenses are tricky - they income healthcare and taxes and then don't forget the lumpy expenses that come around every so often - new appliances? new vehicle? a roof? new HVAC for the house? maintaining the house.

Once you have some of the milestones and some idea of expenses and possible incomes - it gets easier to figure out WHERE the income needs to come from... and then you will see how much you need to have saved/invested to achieve your goal.
I appreciate your thoughts but respectfully disagree regarding the mortgage statement. Eliminating the mortgage not only gives piece of mind for us at least, but also reduces our largest expense allowing us to earn less if we choose or invest more, options are nice.

I like what you said above about milestones but predicting and forecasting the future expenses are darn near impossible, we don't even know if we want to stay here in retirement, put everything in storage and RV, who knows? But we do want to have the freedom to choose. My wife will get SS but I will not since I teach and don't pay into it unfortunately. She's eligible to take early at 62, 67 is full age. I won't be touching my pension regardless of when I stop teaching until 60 most likely to avoid penalties and possibly be eligible for healthcare but of course that could change!

Expenses are tricky and houses are a PIA. As of right now, we are getting roof looked at and probably replacing windows.
The freedom to choose comes from more liquidity in the form of investing your money rather than tying it up in a house.

I’m not unsympathetic to wanting to get the mortgage done with, but that isn’t the way to maximize your options (especially at 2.5%).
I agree with you regarding more liquidity, but everyone likes to talk about that but very few mention you can’t touch that “liquidity” when it’s all stuffed in 403, IRA’s until 59.5 without being penalized.
Topic Author
Coachrhino11
Posts: 226
Joined: Mon Aug 28, 2017 12:02 pm

Re: Help with game plan

Post by Coachrhino11 »

delamer wrote: Sat Jun 19, 2021 6:01 pm
Coachrhino11 wrote: Sat Jun 19, 2021 5:11 pm
delamer wrote: Sat Jun 19, 2021 5:04 pm
Coachrhino11 wrote: Sat Jun 19, 2021 4:10 pm
LittleMaggieMae wrote: Sat Jun 19, 2021 12:50 pm I don't think your Mortgage makes much difference (kind of not seeing the forest for the trees). Perhaps you need to start thinking in terms of "milestones" :

For the next 8 years we will have X expenses and income per year
Once I"m 50 and quit my job - we will have X expenses and income per year.
Once I am 55 we will have X expenses and income per year.
When I am 60 we will have X expenses and income per year.
When I am 65 we will have X expenses and income per year.
When does SS kick in?

Work it from both sides - what your income will be and what you think your expenses will be.

Expenses are tricky - they income healthcare and taxes and then don't forget the lumpy expenses that come around every so often - new appliances? new vehicle? a roof? new HVAC for the house? maintaining the house.

Once you have some of the milestones and some idea of expenses and possible incomes - it gets easier to figure out WHERE the income needs to come from... and then you will see how much you need to have saved/invested to achieve your goal.
I appreciate your thoughts but respectfully disagree regarding the mortgage statement. Eliminating the mortgage not only gives piece of mind for us at least, but also reduces our largest expense allowing us to earn less if we choose or invest more, options are nice.

I like what you said above about milestones but predicting and forecasting the future expenses are darn near impossible, we don't even know if we want to stay here in retirement, put everything in storage and RV, who knows? But we do want to have the freedom to choose. My wife will get SS but I will not since I teach and don't pay into it unfortunately. She's eligible to take early at 62, 67 is full age. I won't be touching my pension regardless of when I stop teaching until 60 most likely to avoid penalties and possibly be eligible for healthcare but of course that could change!

Expenses are tricky and houses are a PIA. As of right now, we are getting roof looked at and probably replacing windows.
The freedom to choose comes from more liquidity in the form of investing your money rather than tying it up in a house.

I’m not unsympathetic to wanting to get the mortgage done with, but that isn’t the way to maximize your options (especially at 2.5%).
Makes sense. I guess I hate the thought of us investing way more in market and market drops big and thinking that $$ could have gone to pay off house.
The flip side is how you’d feel if you paid off the mortgage and then your house value dropped by 1/3?
Way less stressed than losing a ton of money in investments. Why? I live here and the monthly payment is gone which automatically reduces your X amount expenses per year to retire sooner. Especially if wife is still working. Would it be nice if neither dropped in perfect world? Sure, but I fully understand that’s highly unlikely.
Topic Author
Coachrhino11
Posts: 226
Joined: Mon Aug 28, 2017 12:02 pm

Re: Help with game plan

Post by Coachrhino11 »

livesoft wrote: Sat Jun 19, 2021 6:24 pm I searched this thread for the word "college" which is often found in "game plan" threads where a family with child[ren] is asking financial questions. I didn't find the word.
I wasn’t aware everyone’s game plan had to include college. I’m seeing tons of the younger generation doing just fine without the burden of student loan debt and realizing there’s many ways to earn money without going the traditional route. What exactly does college teach you? To work for others, which there’s nothing wrong with. But many people in my own family, especially on my Dad’s side owned or currently own business and have little or no formal degree and earn far more than most with advanced degrees.

With that said, yes I did mention we have a small 529 and our child has already had it ingrained that college is just something we do, although I support her if she chooses to take a different path.

However, what gets me on this board is I’m supposed to max all retirement accounts, save for college, invest in HSA, save for 529, save more in emergency fund?? We make 130k, not 250k. You can only spread the dollars so many ways.
HomeStretch
Posts: 6548
Joined: Thu Dec 27, 2018 3:06 pm

Re: Help with game plan

Post by HomeStretch »

Coachrhino11 wrote: Fri Jun 18, 2021 11:16 pm … We really want to knock out the mortgage even though only 2.5%. I'm assuming most will say max all retirement accounts? …
… but very few mention you can’t touch that “liquidity” when it’s all stuffed in 403, IRA’s until 59.5 without being penalized.
I am a proponent of paying off a mortgage early. But in your case, consider not accelerating your mortgage payoff due to the low 2.5% rate. Your portfolio is $225k (I excluded your ~$75k pension balance as I wasn’t sure if you are currently vested). You are likely to get a much better return contributing as much as possible to your retirement accounts/Roth IRAs than paying off your mortgage. With a pension (when vested) and SS, re-evaluate your tax deferred balances every couple years to see if you have accumulated ‘enough’ in tax deferred and perhaps should switch to Roth deferrals (or a mix of Traditional and Roth).

As far as liquidity, 2/3 of your portfolio is in Roth IRAs. You are able to withdraw any time your Roth IRA contributions tax- and penalty-free. There are ways to access employer plans (search on ‘Rule of 55’) and IRAs (search on ‘SEPP/rule 72(t)’) penalty free before age 59-1/2. You can also set up a HELOC just before you retire for additional liquidity in early retirement to help manage income/cash flow, as/if needed.

If you post a future portfolio update, for best feedback use the format found here in “Asking Portfolio Questions”:
https://www.bogleheads.org/wiki/Asking_ ... _questions
Last edited by HomeStretch on Sun Jun 20, 2021 11:57 am, edited 1 time in total.
delamer
Posts: 11880
Joined: Tue Feb 08, 2011 6:13 pm

Re: Help with game plan

Post by delamer »

Coachrhino11 wrote: Sun Jun 20, 2021 8:07 am
livesoft wrote: Sat Jun 19, 2021 6:24 pm I searched this thread for the word "college" which is often found in "game plan" threads where a family with child[ren] is asking financial questions. I didn't find the word.
I wasn’t aware everyone’s game plan had to include college. I’m seeing tons of the younger generation doing just fine without the burden of student loan debt and realizing there’s many ways to earn money without going the traditional route. What exactly does college teach you? To work for others, which there’s nothing wrong with. But many people in my own family, especially on my Dad’s side owned or currently own business and have little or no formal degree and earn far more than most with advanced degrees.

With that said, yes I did mention we have a small 529 and our child has already had it ingrained that college is just something we do, although I support her if she chooses to take a different path.

However, what gets me on this board is I’m supposed to max all retirement accounts, save for college, invest in HSA, save for 529, save more in emergency fund?? We make 130k, not 250k. You can only spread the dollars so many ways.
College isn’t the best path for everyone, but the notion that all it teaches you is “to work for others” is just wrong. And there’s a very high correlation between level of education and income, regardless of whatever outliers you want to point to.

To reiterate what HomeStretch said, getting access to tax-deferred retirement accounts through the Rule of 55 or Rule 72(t) is an option if you retire before 59.5.
Last edited by delamer on Sun Jun 20, 2021 11:24 am, edited 1 time in total.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
livesoft
Posts: 76917
Joined: Thu Mar 01, 2007 8:00 pm

Re: Help with game plan

Post by livesoft »

Coachrhino11 wrote: Sun Jun 20, 2021 8:07 am
livesoft wrote: Sat Jun 19, 2021 6:24 pm I searched this thread for the word "college" which is often found in "game plan" threads where a family with child[ren] is asking financial questions. I didn't find the word.
I wasn’t aware everyone’s game plan had to include college. ....
[...]
However, what gets me on this board is I’m supposed to max all retirement accounts, save for college, invest in HSA, save for 529, save more in emergency fund?? We make 130k, not 250k. You can only spread the dollars so many ways.
"often found" does not translate to "everyone's"

Also, congratulations, your family has higher income than my family has had for the past 7 or so years.
Wiki This signature message sponsored by sscritic: Learn to fish.
KlangFool
Posts: 21587
Joined: Sat Oct 11, 2008 12:35 pm

Re: Help with game plan

Post by KlangFool »

OP,

1) Your gross income is 130K.

2) Your mortgage interest rate is 2.5%

3) You choose not to max up your tax-deferred accounts.

4) You choose to pay 20+% taxes in order to save 2.5% mortgage interest.

5) How does this makes any senses? 20+% is greater than 2.5%.

6) Even if you contribute to the tax-deferred account and keep it in CASH, you still save a lot of taxes.

KlangFool
Last edited by KlangFool on Sun Jun 20, 2021 12:00 pm, edited 1 time in total.
40% VWENX | 12.5% VFWAX/VTIAX | 11.5% VTSAX | 16% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 40% Wellington 40% 3-funds 20% Mini-Larry
bradpevans
Posts: 676
Joined: Sun Apr 08, 2018 1:09 pm

Re: Help with game plan

Post by bradpevans »

Coachrhino11 wrote: Sat Jun 19, 2021 5:11 pm
delamer wrote: Sat Jun 19, 2021 5:04 pm
Coachrhino11 wrote: Sat Jun 19, 2021 4:10 pm
LittleMaggieMae wrote: Sat Jun 19, 2021 12:50 pm I don't think your Mortgage makes much difference (kind of not seeing the forest for the trees). Perhaps you need to start thinking in terms of "milestones" :

For the next 8 years we will have X expenses and income per year
Once I"m 50 and quit my job - we will have X expenses and income per year.
Once I am 55 we will have X expenses and income per year.
When I am 60 we will have X expenses and income per year.
When I am 65 we will have X expenses and income per year.
When does SS kick in?

Work it from both sides - what your income will be and what you think your expenses will be.

Expenses are tricky - they income healthcare and taxes and then don't forget the lumpy expenses that come around every so often - new appliances? new vehicle? a roof? new HVAC for the house? maintaining the house.

Once you have some of the milestones and some idea of expenses and possible incomes - it gets easier to figure out WHERE the income needs to come from... and then you will see how much you need to have saved/invested to achieve your goal.
I appreciate your thoughts but respectfully disagree regarding the mortgage statement. Eliminating the mortgage not only gives piece of mind for us at least, but also reduces our largest expense allowing us to earn less if we choose or invest more, options are nice.

I like what you said above about milestones but predicting and forecasting the future expenses are darn near impossible, we don't even know if we want to stay here in retirement, put everything in storage and RV, who knows? But we do want to have the freedom to choose. My wife will get SS but I will not since I teach and don't pay into it unfortunately. She's eligible to take early at 62, 67 is full age. I won't be touching my pension regardless of when I stop teaching until 60 most likely to avoid penalties and possibly be eligible for healthcare but of course that could change!

Expenses are tricky and houses are a PIA. As of right now, we are getting roof looked at and probably replacing windows.
The freedom to choose comes from more liquidity in the form of investing your money rather than tying it up in a house.

I’m not unsympathetic to wanting to get the mortgage done with, but that isn’t the way to maximize your options (especially at 2.5%).
Makes sense. I guess I hate the thought of us investing way more in market and market drops big and thinking that $$ could have gone to pay off house.
But when will you draw OUT that retirement money? That’s the yardstick. Not the end of the mortgage (IMO)

If you could get 2.5% return guaranteed would you put your entire retirement into it?

I would not - most of my retirement dollars will be in the market for decades before I ever touch them. And the portfolio size (already) swamps the impact of new money

Given no other assumptions the sooner your money is in the market the sooner it will double

In the long run the market beats the (2.5%) mortgage is my viewpoint
Topic Author
Coachrhino11
Posts: 226
Joined: Mon Aug 28, 2017 12:02 pm

Re: Help with game plan

Post by Coachrhino11 »

KlangFool wrote: Sun Jun 20, 2021 11:30 am OP,

1) Your gross income is 130K.

2) Your mortgage interest rate is 2.5%

3) You choose not to max up your tax-deferred accounts.

4) You choose to pay 20+% taxes in order to save 2.5% mortgage interest.

5) How does this makes any senses? 20+% is greater than 2.5%.

6) Even if you contribute to the tax-deferred account and keep it in CASH, you still save a lot of taxes.

KlangFool
I always enjoy reading your posts and I am going to print out this post and stick it to my forehead. Although after breaking down the numbers, we are most likely already down to the 12% not 22% bracket due to 403b contributions, pension contribution, health insurance and hsa. So, sure I can continue contributing more but we will still be in the 12% at the lowest.
Topic Author
Coachrhino11
Posts: 226
Joined: Mon Aug 28, 2017 12:02 pm

Re: Help with game plan

Post by Coachrhino11 »

HomeStretch wrote: Sun Jun 20, 2021 8:55 am
Coachrhino11 wrote: Fri Jun 18, 2021 11:16 pm … We really want to knock out the mortgage even though only 2.5%. I'm assuming most will say max all retirement accounts? …
… but very few mention you can’t touch that “liquidity” when it’s all stuffed in 403, IRA’s until 59.5 without being penalized.
I am a proponent of paying off a mortgage early. But in your case, consider not accelerating your mortgage payoff due to the low 2.5% rate. Your portfolio is $225k (I excluded your ~$75k pension balance as I wasn’t sure if you are currently vested). You are likely to get a much better return contributing as much as possible to your retirement accounts/Roth IRAs than paying off your mortgage. With a pension (when vested) and SS, re-evaluate your tax deferred balances every couple years to see if you have accumulated ‘enough’ in tax deferred and perhaps should switch to Roth deferrals (or a mix of Traditional and Roth).

As far as liquidity, 2/3 of your portfolio is in Roth IRAs. You are able to withdraw any time your Roth IRA contributions tax- and penalty-free. There are ways to access employer plans (search on ‘Rule of 55’) and IRAs (search on ‘SEPP/rule 72(t)’) penalty free before age 59-1/2. You can also set up a HELOC just before you retire for additional liquidity in early retirement to help manage income/cash flow, as/if needed.

If you post a future portfolio update, for best feedback use the format found here in “Asking Portfolio Questions”:
https://www.bogleheads.org/wiki/Asking_ ... _questions
Yes, I am fully vested. Thanks. Thank you for the info regarding Rule of 55 and 72(t).
Topic Author
Coachrhino11
Posts: 226
Joined: Mon Aug 28, 2017 12:02 pm

Re: Help with game plan

Post by Coachrhino11 »

bradpevans wrote: Sun Jun 20, 2021 11:48 am
Coachrhino11 wrote: Sat Jun 19, 2021 5:11 pm
delamer wrote: Sat Jun 19, 2021 5:04 pm
Coachrhino11 wrote: Sat Jun 19, 2021 4:10 pm
LittleMaggieMae wrote: Sat Jun 19, 2021 12:50 pm I don't think your Mortgage makes much difference (kind of not seeing the forest for the trees). Perhaps you need to start thinking in terms of "milestones" :

For the next 8 years we will have X expenses and income per year
Once I"m 50 and quit my job - we will have X expenses and income per year.
Once I am 55 we will have X expenses and income per year.
When I am 60 we will have X expenses and income per year.
When I am 65 we will have X expenses and income per year.
When does SS kick in?

Work it from both sides - what your income will be and what you think your expenses will be.

Expenses are tricky - they income healthcare and taxes and then don't forget the lumpy expenses that come around every so often - new appliances? new vehicle? a roof? new HVAC for the house? maintaining the house.

Once you have some of the milestones and some idea of expenses and possible incomes - it gets easier to figure out WHERE the income needs to come from... and then you will see how much you need to have saved/invested to achieve your goal.
I appreciate your thoughts but respectfully disagree regarding the mortgage statement. Eliminating the mortgage not only gives piece of mind for us at least, but also reduces our largest expense allowing us to earn less if we choose or invest more, options are nice.

I like what you said above about milestones but predicting and forecasting the future expenses are darn near impossible, we don't even know if we want to stay here in retirement, put everything in storage and RV, who knows? But we do want to have the freedom to choose. My wife will get SS but I will not since I teach and don't pay into it unfortunately. She's eligible to take early at 62, 67 is full age. I won't be touching my pension regardless of when I stop teaching until 60 most likely to avoid penalties and possibly be eligible for healthcare but of course that could change!

Expenses are tricky and houses are a PIA. As of right now, we are getting roof looked at and probably replacing windows.
The freedom to choose comes from more liquidity in the form of investing your money rather than tying it up in a house.

I’m not unsympathetic to wanting to get the mortgage done with, but that isn’t the way to maximize your options (especially at 2.5%).
Makes sense. I guess I hate the thought of us investing way more in market and market drops big and thinking that $$ could have gone to pay off house.
But when will you draw OUT that retirement money? That’s the yardstick. Not the end of the mortgage (IMO)

If you could get 2.5% return guaranteed would you put your entire retirement into it?

I would not - most of my retirement dollars will be in the market for decades before I ever touch them. And the portfolio size (already) swamps the impact of new money

Given no other assumptions the sooner your money is in the market the sooner it will double

In the long run the market beats the (2.5%) mortgage is my viewpoint
Agree
Topic Author
Coachrhino11
Posts: 226
Joined: Mon Aug 28, 2017 12:02 pm

Re: Help with game plan

Post by Coachrhino11 »

livesoft wrote: Sun Jun 20, 2021 10:45 am
Coachrhino11 wrote: Sun Jun 20, 2021 8:07 am
livesoft wrote: Sat Jun 19, 2021 6:24 pm I searched this thread for the word "college" which is often found in "game plan" threads where a family with child[ren] is asking financial questions. I didn't find the word.
I wasn’t aware everyone’s game plan had to include college. ....
[...]
However, what gets me on this board is I’m supposed to max all retirement accounts, save for college, invest in HSA, save for 529, save more in emergency fund?? We make 130k, not 250k. You can only spread the dollars so many ways.
"often found" does not translate to "everyone's"

Also, congratulations, your family has higher income than my family has had for the past 7 or so years.
Thanks, I'm guessing by the amount of posts you have you are most likely retired although I could be wrong. Guessing no mortgage, guessing lower cost of living city than me but I could be wrong. All of these factor in. Also guessing you live off certain percentage of investments you choose to live off, again I could be wrong.
KlangFool
Posts: 21587
Joined: Sat Oct 11, 2008 12:35 pm

Re: Help with game plan

Post by KlangFool »

Coachrhino11 wrote: Sun Jun 20, 2021 6:25 pm
KlangFool wrote: Sun Jun 20, 2021 11:30 am OP,

1) Your gross income is 130K.

2) Your mortgage interest rate is 2.5%

3) You choose not to max up your tax-deferred accounts.

4) You choose to pay 20+% taxes in order to save 2.5% mortgage interest.

5) How does this makes any senses? 20+% is greater than 2.5%.

6) Even if you contribute to the tax-deferred account and keep it in CASH, you still save a lot of taxes.

KlangFool
I always enjoy reading your posts and I am going to print out this post and stick it to my forehead. Although after breaking down the numbers, we are most likely already down to the 12% not 22% bracket due to 403b contributions, pension contribution, health insurance and hsa. So, sure I can continue contributing more but we will still be in the 12% at the lowest.
Coachrhino11,

1) 12% is still bigger than 2.5%.

2) Do you pay state income tax? That may be additional tax savings.

3) The following URL is probably useful for you.

https://www.madfientist.com/how-to-acce ... nds-early/

KlangFool
40% VWENX | 12.5% VFWAX/VTIAX | 11.5% VTSAX | 16% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 40% Wellington 40% 3-funds 20% Mini-Larry
Topic Author
Coachrhino11
Posts: 226
Joined: Mon Aug 28, 2017 12:02 pm

Re: Help with game plan

Post by Coachrhino11 »

KlangFool wrote: Sun Jun 20, 2021 7:10 pm
Coachrhino11 wrote: Sun Jun 20, 2021 6:25 pm
KlangFool wrote: Sun Jun 20, 2021 11:30 am OP,

1) Your gross income is 130K.

2) Your mortgage interest rate is 2.5%

3) You choose not to max up your tax-deferred accounts.

4) You choose to pay 20+% taxes in order to save 2.5% mortgage interest.

5) How does this makes any senses? 20+% is greater than 2.5%.

6) Even if you contribute to the tax-deferred account and keep it in CASH, you still save a lot of taxes.

KlangFool
I always enjoy reading your posts and I am going to print out this post and stick it to my forehead. Although after breaking down the numbers, we are most likely already down to the 12% not 22% bracket due to 403b contributions, pension contribution, health insurance and hsa. So, sure I can continue contributing more but we will still be in the 12% at the lowest.
Coachrhino11,

1) 12% is still bigger than 2.5%.

2) Do you pay state income tax? That may be additional tax savings.

3) The following URL is probably useful for you.

https://www.madfientist.com/how-to-acce ... nds-early/

KlangFool
I do not pay state income tax. But you are right about 12% vs. 2.5%. Thanks for the link.
Ron Ronnerson
Posts: 2262
Joined: Sat Oct 26, 2013 6:53 pm
Location: Bay Area

Re: Help with game plan

Post by Ron Ronnerson »

I read through the details you provided but it seems like there are some gaps in the information. If you fill those in, I think you would receive really specific feedback that is tailored to your circumstances. The “Asking Portfolio Questions” link that HomeStretch posted is very good to use for this purpose.

Nevertheless, I’ll try to see if I can frame your post a bit. You’re 43 and your wife is 45. You plan to work until age 50 or so and then collect a pension at age 60. Your spouse will continue to work. You don’t know what your expenses will be in retirement.

I’ll cut to the chase: You can’t retire until you figure out your expenses. It’s as simple as that. Otherwise, just assume they will be more than your income and that your game plan won’t work. To put it plainly, you don’t want to quit a tenured position where you have worked your way up on the salary scale to find yourself unable to meet expenses and unable to return to the same position you previously had. By the way, build in some cushion and assume expenses will be a little bit higher than you think just to be on the safe side.

I do think that you need to get a good idea about where your money is currently going too. Great job paying off the 2nd mortgage that was at 6.25% and not having a car payment any longer. Since you’re out of debt now except for the mortgage, where are you directing your money now? It’s not clear if you’re saving sufficiently to meet your goals or if you are spending more than you should given your desire to stop working in 7-8 years.

You also need to know what your income will be once you retire but before you collect the pension. Will your spouse’s income alone be sufficient to meet the expenses you have calculated? When do you plan to begin to draw from your retirement accounts?

I’m generally a proponent of keeping low-interest debt but you seem very interested in paying it off by the time you retire. Personally, I can understand that. Even if it isn’t necessarily the optimal thing to do, if it brings you peace of mind and lowers your expenses in the future, you could at least say there are far worse things that you could do with your money.

By the way, how much will your pension be once you start collecting it? If it will be sizeable, you may want to continue focusing on Roth accounts. Also, since you plan to retire for 10 years or so before collecting the pension and will be relatively young, you should see if your employer offers a 457b. You can withdraw from it at any age without penalty so long as you have separated from the employer. This makes it an excellent option for those who are considering retiring early. I prioritize my 457b above a 403b for this reason.

Last but not least, expenses matter when it comes to investing, particularly over the long-term. I did a search on the T. Rowe funds you mentioned. The expense ratios are around 0.7%. That’s too high. Try to get something that costs under 0.1%. Vanguard, Fidelity, and Schwab offer good fund choices. This being Bogleheads, most of us tend to gravitate toward Vanguard. Past performance/returns are irrelevant. You can’t control much when it comes to returns but you can control how much you pay in fees. The way that compounding works, the impact of fees becomes bigger and bigger as time goes on. So keep the expenses as low as possible. That can’t be emphasized enough.

It sounds like you’re moving in the right direction. You need to bring things into greater focus by running the numbers carefully. There is just no way around that.
Topic Author
Coachrhino11
Posts: 226
Joined: Mon Aug 28, 2017 12:02 pm

Re: Help with game plan

Post by Coachrhino11 »

Ron Ronnerson wrote: Mon Jun 21, 2021 10:50 am I read through the details you provided but it seems like there are some gaps in the information. If you fill those in, I think you would receive really specific feedback that is tailored to your circumstances. The “Asking Portfolio Questions” link that HomeStretch posted is very good to use for this purpose.

Nevertheless, I’ll try to see if I can frame your post a bit. You’re 43 and your wife is 45. You plan to work until age 50 or so and then collect a pension at age 60. Your spouse will continue to work. You don’t know what your expenses will be in retirement.

I’ll cut to the chase: You can’t retire until you figure out your expenses. It’s as simple as that. Otherwise, just assume they will be more than your income and that your game plan won’t work. To put it plainly, you don’t want to quit a tenured position where you have worked your way up on the salary scale to find yourself unable to meet expenses and unable to return to the same position you previously had. By the way, build in some cushion and assume expenses will be a little bit higher than you think just to be on the safe side.

I do think that you need to get a good idea about where your money is currently going too. Great job paying off the 2nd mortgage that was at 6.25% and not having a car payment any longer. Since you’re out of debt now except for the mortgage, where are you directing your money now? It’s not clear if you’re saving sufficiently to meet your goals or if you are spending more than you should given your desire to stop working in 7-8 years.

You also need to know what your income will be once you retire but before you collect the pension. Will your spouse’s income alone be sufficient to meet the expenses you have calculated? When do you plan to begin to draw from your retirement accounts?

I’m generally a proponent of keeping low-interest debt but you seem very interested in paying it off by the time you retire. Personally, I can understand that. Even if it isn’t necessarily the optimal thing to do, if it brings you peace of mind and lowers your expenses in the future, you could at least say there are far worse things that you could do with your money.

By the way, how much will your pension be once you start collecting it? If it will be sizeable, you may want to continue focusing on Roth accounts. Also, since you plan to retire for 10 years or so before collecting the pension and will be relatively young, you should see if your employer offers a 457b. You can withdraw from it at any age without penalty so long as you have separated from the employer. This makes it an excellent option for those who are considering retiring early. I prioritize my 457b above a 403b for this reason.

Last but not least, expenses matter when it comes to investing, particularly over the long-term. I did a search on the T. Rowe funds you mentioned. The expense ratios are around 0.7%. That’s too high. Try to get something that costs under 0.1%. Vanguard, Fidelity, and Schwab offer good fund choices. This being Bogleheads, most of us tend to gravitate toward Vanguard. Past performance/returns are irrelevant. You can’t control much when it comes to returns but you can control how much you pay in fees. The way that compounding works, the impact of fees becomes bigger and bigger as time goes on. So keep the expenses as low as possible. That can’t be emphasized enough.

It sounds like you’re moving in the right direction. You need to bring things into greater focus by running the numbers carefully. There is just no way around that.
Ron, thank you very much for your detailed input. I value your opinion as I have read previous threads by you, all being great reads early in the morning with my coffee before work. Ok, technically I'm 42 but will be 43 in a couple months. Same with wife, she's 44 and will be 45 in a few months if that matters.

Regarding my expenses in retirement or when I retire and wife still working is tough to know for sure. Big reason we both want to retire mortgage by then or before. So, as of today just calculating our usual monthly expenses subtracting the mortgage but including property tax, HOA, insurance, food, utilities, gas, auto insurance, life insurance, etc.... NOT including investment contributions we are around 25k a year. We keep a spreadsheet with monthly expenses.

Assuming my wife continues in same field when i retire which she wants to, she already easily makes more than enough after taxes to pay everything without my income not counting Roth contributions. So, this year she'll possibly be around 90k per year, currently she's at 80k. So, even planning tiny raises we should be good. We are already maxing out Roth's, so that is a huge priority and will continue to be moving forward. Regarding my future pension, it will not be that large at all if I stop teaching at 50 but we are ok with that. I'm looking at around 2,000 per month give or take but could be more if I decide to stay in field longer but we want to plan for me not to be.

I will look into transfering my T.Rowe Roth to Vanguard even though I really like my funds and I've had a good experience with T.Rowe but you right about what you said. Yes, I am eligible to contribute to a 457b and 403b. So, I will look into that ASAP and look to max 457b. We do have Vanguard like our 403b.

Lastly, you asked what have we been doing lately with excess money? Has been combination of extra mortgage money, we are finally taking a nice vacation this summer, and having to get some things done to the house.
Topic Author
Coachrhino11
Posts: 226
Joined: Mon Aug 28, 2017 12:02 pm

Re: Help with game plan

Post by Coachrhino11 »

I would like to add, just because I want to stop teaching at 50 does not mean I 100% don't want to work ever again. I very well might want to do something totally different for 5-7 years, who knows. But I want that to be on my terms and not forced. So we want to plan for 50 being it.
Ron Ronnerson
Posts: 2262
Joined: Sat Oct 26, 2013 6:53 pm
Location: Bay Area

Re: Help with game plan

Post by Ron Ronnerson »

Coachrhino11 wrote: Mon Jun 21, 2021 2:10 pm
Ron Ronnerson wrote: Mon Jun 21, 2021 10:50 am I read through the details you provided but it seems like there are some gaps in the information. If you fill those in, I think you would receive really specific feedback that is tailored to your circumstances. The “Asking Portfolio Questions” link that HomeStretch posted is very good to use for this purpose.

Nevertheless, I’ll try to see if I can frame your post a bit. You’re 43 and your wife is 45. You plan to work until age 50 or so and then collect a pension at age 60. Your spouse will continue to work. You don’t know what your expenses will be in retirement.

I’ll cut to the chase: You can’t retire until you figure out your expenses. It’s as simple as that. Otherwise, just assume they will be more than your income and that your game plan won’t work. To put it plainly, you don’t want to quit a tenured position where you have worked your way up on the salary scale to find yourself unable to meet expenses and unable to return to the same position you previously had. By the way, build in some cushion and assume expenses will be a little bit higher than you think just to be on the safe side.

I do think that you need to get a good idea about where your money is currently going too. Great job paying off the 2nd mortgage that was at 6.25% and not having a car payment any longer. Since you’re out of debt now except for the mortgage, where are you directing your money now? It’s not clear if you’re saving sufficiently to meet your goals or if you are spending more than you should given your desire to stop working in 7-8 years.

You also need to know what your income will be once you retire but before you collect the pension. Will your spouse’s income alone be sufficient to meet the expenses you have calculated? When do you plan to begin to draw from your retirement accounts?

I’m generally a proponent of keeping low-interest debt but you seem very interested in paying it off by the time you retire. Personally, I can understand that. Even if it isn’t necessarily the optimal thing to do, if it brings you peace of mind and lowers your expenses in the future, you could at least say there are far worse things that you could do with your money.

By the way, how much will your pension be once you start collecting it? If it will be sizeable, you may want to continue focusing on Roth accounts. Also, since you plan to retire for 10 years or so before collecting the pension and will be relatively young, you should see if your employer offers a 457b. You can withdraw from it at any age without penalty so long as you have separated from the employer. This makes it an excellent option for those who are considering retiring early. I prioritize my 457b above a 403b for this reason.

Last but not least, expenses matter when it comes to investing, particularly over the long-term. I did a search on the T. Rowe funds you mentioned. The expense ratios are around 0.7%. That’s too high. Try to get something that costs under 0.1%. Vanguard, Fidelity, and Schwab offer good fund choices. This being Bogleheads, most of us tend to gravitate toward Vanguard. Past performance/returns are irrelevant. You can’t control much when it comes to returns but you can control how much you pay in fees. The way that compounding works, the impact of fees becomes bigger and bigger as time goes on. So keep the expenses as low as possible. That can’t be emphasized enough.

It sounds like you’re moving in the right direction. You need to bring things into greater focus by running the numbers carefully. There is just no way around that.
Ron, thank you very much for your detailed input. I value your opinion as I have read previous threads by you, all being great reads early in the morning with my coffee before work. Ok, technically I'm 42 but will be 43 in a couple months. Same with wife, she's 44 and will be 45 in a few months if that matters.

Regarding my expenses in retirement or when I retire and wife still working is tough to know for sure. Big reason we both want to retire mortgage by then or before. So, as of today just calculating our usual monthly expenses subtracting the mortgage but including property tax, HOA, insurance, food, utilities, gas, auto insurance, life insurance, etc.... NOT including investment contributions we are around 25k a year. We keep a spreadsheet with monthly expenses.

Assuming my wife continues in same field when i retire which she wants to, she already easily makes more than enough after taxes to pay everything without my income not counting Roth contributions. So, this year she'll possibly be around 90k per year, currently she's at 80k. So, even planning tiny raises we should be good. We are already maxing out Roth's, so that is a huge priority and will continue to be moving forward. Regarding my future pension, it will not be that large at all if I stop teaching at 50 but we are ok with that. I'm looking at around 2,000 per month give or take but could be more if I decide to stay in field longer but we want to plan for me not to be.

I will look into transfering my T.Rowe Roth to Vanguard even though I really like my funds and I've had a good experience with T.Rowe but you right about what you said. Yes, I am eligible to contribute to a 457b and 403b. So, I will look into that ASAP and look to max 457b. We do have Vanguard like our 403b.

Lastly, you asked what have we been doing lately with excess money? Has been combination of extra mortgage money, we are finally taking a nice vacation this summer, and having to get some things done to the house.
Thanks for the kind words. If your house will be paid off by the time you retire and your other expenses are just $25k or so per year and your wife intends to continue working at a job paying far more than that, it sounds like you shouldn't have any difficulty reaching your goal of retiring at 50.

I think a 457b makes a lot of sense in your case so it's good you're looking into that. Whatever accounts you use, keep the fees you're paying in mind. They definitely do matter.

You mentioned that your pension will be around $2k/month if you stop teaching at 50. Have you looked at how your pension is affected if you work longer? For example, if your pension increases substantially enough by working an extra year or two, it would be worth considering. However, if it won't change the benefit much, perhaps 50 is the way to go after all. Sometimes an additional couple of years worked can make a big difference while in other cases it hardly moves the needle. It's worth going through the exercise of plugging in different numbers for the age of retirement to see how it affects the benefit.

Enjoy your summer vacation and the upgrades on the house!
Topic Author
Coachrhino11
Posts: 226
Joined: Mon Aug 28, 2017 12:02 pm

Re: Help with game plan

Post by Coachrhino11 »

Ron Ronnerson wrote: Mon Jun 21, 2021 3:13 pm
Coachrhino11 wrote: Mon Jun 21, 2021 2:10 pm
Ron Ronnerson wrote: Mon Jun 21, 2021 10:50 am I read through the details you provided but it seems like there are some gaps in the information. If you fill those in, I think you would receive really specific feedback that is tailored to your circumstances. The “Asking Portfolio Questions” link that HomeStretch posted is very good to use for this purpose.

Nevertheless, I’ll try to see if I can frame your post a bit. You’re 43 and your wife is 45. You plan to work until age 50 or so and then collect a pension at age 60. Your spouse will continue to work. You don’t know what your expenses will be in retirement.

I’ll cut to the chase: You can’t retire until you figure out your expenses. It’s as simple as that. Otherwise, just assume they will be more than your income and that your game plan won’t work. To put it plainly, you don’t want to quit a tenured position where you have worked your way up on the salary scale to find yourself unable to meet expenses and unable to return to the same position you previously had. By the way, build in some cushion and assume expenses will be a little bit higher than you think just to be on the safe side.

I do think that you need to get a good idea about where your money is currently going too. Great job paying off the 2nd mortgage that was at 6.25% and not having a car payment any longer. Since you’re out of debt now except for the mortgage, where are you directing your money now? It’s not clear if you’re saving sufficiently to meet your goals or if you are spending more than you should given your desire to stop working in 7-8 years.

You also need to know what your income will be once you retire but before you collect the pension. Will your spouse’s income alone be sufficient to meet the expenses you have calculated? When do you plan to begin to draw from your retirement accounts?

I’m generally a proponent of keeping low-interest debt but you seem very interested in paying it off by the time you retire. Personally, I can understand that. Even if it isn’t necessarily the optimal thing to do, if it brings you peace of mind and lowers your expenses in the future, you could at least say there are far worse things that you could do with your money.

By the way, how much will your pension be once you start collecting it? If it will be sizeable, you may want to continue focusing on Roth accounts. Also, since you plan to retire for 10 years or so before collecting the pension and will be relatively young, you should see if your employer offers a 457b. You can withdraw from it at any age without penalty so long as you have separated from the employer. This makes it an excellent option for those who are considering retiring early. I prioritize my 457b above a 403b for this reason.

Last but not least, expenses matter when it comes to investing, particularly over the long-term. I did a search on the T. Rowe funds you mentioned. The expense ratios are around 0.7%. That’s too high. Try to get something that costs under 0.1%. Vanguard, Fidelity, and Schwab offer good fund choices. This being Bogleheads, most of us tend to gravitate toward Vanguard. Past performance/returns are irrelevant. You can’t control much when it comes to returns but you can control how much you pay in fees. The way that compounding works, the impact of fees becomes bigger and bigger as time goes on. So keep the expenses as low as possible. That can’t be emphasized enough.

It sounds like you’re moving in the right direction. You need to bring things into greater focus by running the numbers carefully. There is just no way around that.
Ron, thank you very much for your detailed input. I value your opinion as I have read previous threads by you, all being great reads early in the morning with my coffee before work. Ok, technically I'm 42 but will be 43 in a couple months. Same with wife, she's 44 and will be 45 in a few months if that matters.

Regarding my expenses in retirement or when I retire and wife still working is tough to know for sure. Big reason we both want to retire mortgage by then or before. So, as of today just calculating our usual monthly expenses subtracting the mortgage but including property tax, HOA, insurance, food, utilities, gas, auto insurance, life insurance, etc.... NOT including investment contributions we are around 25k a year. We keep a spreadsheet with monthly expenses.

Assuming my wife continues in same field when i retire which she wants to, she already easily makes more than enough after taxes to pay everything without my income not counting Roth contributions. So, this year she'll possibly be around 90k per year, currently she's at 80k. So, even planning tiny raises we should be good. We are already maxing out Roth's, so that is a huge priority and will continue to be moving forward. Regarding my future pension, it will not be that large at all if I stop teaching at 50 but we are ok with that. I'm looking at around 2,000 per month give or take but could be more if I decide to stay in field longer but we want to plan for me not to be.

I will look into transfering my T.Rowe Roth to Vanguard even though I really like my funds and I've had a good experience with T.Rowe but you right about what you said. Yes, I am eligible to contribute to a 457b and 403b. So, I will look into that ASAP and look to max 457b. We do have Vanguard like our 403b.

Lastly, you asked what have we been doing lately with excess money? Has been combination of extra mortgage money, we are finally taking a nice vacation this summer, and having to get some things done to the house.
Thanks for the kind words. If your house will be paid off by the time you retire and your other expenses are just $25k or so per year and your wife intends to continue working at a job paying far more than that, it sounds like you shouldn't have any difficulty reaching your goal of retiring at 50.

I think a 457b makes a lot of sense in your case so it's good you're looking into that. Whatever accounts you use, keep the fees you're paying in mind. They definitely do matter.

You mentioned that your pension will be around $2k/month if you stop teaching at 50. Have you looked at how your pension is affected if you work longer? For example, if your pension increases substantially enough by working an extra year or two, it would be worth considering. However, if it won't change the benefit much, perhaps 50 is the way to go after all. Sometimes an additional couple of years worked can make a big difference while in other cases it hardly moves the needle. It's worth going through the exercise of plugging in different numbers for the age of retirement to see how it affects the benefit.

Enjoy your summer vacation and the upgrades on the house!
Thanks again Ron. I'm going to look into starting the 457b and continue my 403b as well. Just have to look at what we can do overall. My goal is to not touch the 457b even if I can until around 60 just to let it compound longer. Especially if my wife continues working. But having the option to touch it penalty free would be nice. My wife would most likely add me on her medical insurance as well. I did look at the pension calculation. So it's around 2100+change at 50 but possibly a little more due to salary increases between now and then. It looks like it increases about 1600-2000 per year for each additional year after 50. Not earth shattering, but obviously that's also another year of salary as well. But this is the problem I see with most teachers. "One more year" never ends.

Another thing I never see anyone mention is Social Security spousal benefits. Being as I don't pay into SS, my spousal or gosh forbid widower benefits would be reduced 2/3 due to the Government Pension Offset. After calculating this on the SS website, it's crazy that my SS spousal benefits would be higher if my pension is less. Just something to consider that no one talks about.
Ron Ronnerson
Posts: 2262
Joined: Sat Oct 26, 2013 6:53 pm
Location: Bay Area

Re: Help with game plan

Post by Ron Ronnerson »

Coachrhino11 wrote: Mon Jun 21, 2021 5:27 pm
Ron Ronnerson wrote: Mon Jun 21, 2021 3:13 pm
Coachrhino11 wrote: Mon Jun 21, 2021 2:10 pm
Ron Ronnerson wrote: Mon Jun 21, 2021 10:50 am I read through the details you provided but it seems like there are some gaps in the information. If you fill those in, I think you would receive really specific feedback that is tailored to your circumstances. The “Asking Portfolio Questions” link that HomeStretch posted is very good to use for this purpose.

Nevertheless, I’ll try to see if I can frame your post a bit. You’re 43 and your wife is 45. You plan to work until age 50 or so and then collect a pension at age 60. Your spouse will continue to work. You don’t know what your expenses will be in retirement.

I’ll cut to the chase: You can’t retire until you figure out your expenses. It’s as simple as that. Otherwise, just assume they will be more than your income and that your game plan won’t work. To put it plainly, you don’t want to quit a tenured position where you have worked your way up on the salary scale to find yourself unable to meet expenses and unable to return to the same position you previously had. By the way, build in some cushion and assume expenses will be a little bit higher than you think just to be on the safe side.

I do think that you need to get a good idea about where your money is currently going too. Great job paying off the 2nd mortgage that was at 6.25% and not having a car payment any longer. Since you’re out of debt now except for the mortgage, where are you directing your money now? It’s not clear if you’re saving sufficiently to meet your goals or if you are spending more than you should given your desire to stop working in 7-8 years.

You also need to know what your income will be once you retire but before you collect the pension. Will your spouse’s income alone be sufficient to meet the expenses you have calculated? When do you plan to begin to draw from your retirement accounts?

I’m generally a proponent of keeping low-interest debt but you seem very interested in paying it off by the time you retire. Personally, I can understand that. Even if it isn’t necessarily the optimal thing to do, if it brings you peace of mind and lowers your expenses in the future, you could at least say there are far worse things that you could do with your money.

By the way, how much will your pension be once you start collecting it? If it will be sizeable, you may want to continue focusing on Roth accounts. Also, since you plan to retire for 10 years or so before collecting the pension and will be relatively young, you should see if your employer offers a 457b. You can withdraw from it at any age without penalty so long as you have separated from the employer. This makes it an excellent option for those who are considering retiring early. I prioritize my 457b above a 403b for this reason.

Last but not least, expenses matter when it comes to investing, particularly over the long-term. I did a search on the T. Rowe funds you mentioned. The expense ratios are around 0.7%. That’s too high. Try to get something that costs under 0.1%. Vanguard, Fidelity, and Schwab offer good fund choices. This being Bogleheads, most of us tend to gravitate toward Vanguard. Past performance/returns are irrelevant. You can’t control much when it comes to returns but you can control how much you pay in fees. The way that compounding works, the impact of fees becomes bigger and bigger as time goes on. So keep the expenses as low as possible. That can’t be emphasized enough.

It sounds like you’re moving in the right direction. You need to bring things into greater focus by running the numbers carefully. There is just no way around that.
Ron, thank you very much for your detailed input. I value your opinion as I have read previous threads by you, all being great reads early in the morning with my coffee before work. Ok, technically I'm 42 but will be 43 in a couple months. Same with wife, she's 44 and will be 45 in a few months if that matters.

Regarding my expenses in retirement or when I retire and wife still working is tough to know for sure. Big reason we both want to retire mortgage by then or before. So, as of today just calculating our usual monthly expenses subtracting the mortgage but including property tax, HOA, insurance, food, utilities, gas, auto insurance, life insurance, etc.... NOT including investment contributions we are around 25k a year. We keep a spreadsheet with monthly expenses.

Assuming my wife continues in same field when i retire which she wants to, she already easily makes more than enough after taxes to pay everything without my income not counting Roth contributions. So, this year she'll possibly be around 90k per year, currently she's at 80k. So, even planning tiny raises we should be good. We are already maxing out Roth's, so that is a huge priority and will continue to be moving forward. Regarding my future pension, it will not be that large at all if I stop teaching at 50 but we are ok with that. I'm looking at around 2,000 per month give or take but could be more if I decide to stay in field longer but we want to plan for me not to be.

I will look into transfering my T.Rowe Roth to Vanguard even though I really like my funds and I've had a good experience with T.Rowe but you right about what you said. Yes, I am eligible to contribute to a 457b and 403b. So, I will look into that ASAP and look to max 457b. We do have Vanguard like our 403b.

Lastly, you asked what have we been doing lately with excess money? Has been combination of extra mortgage money, we are finally taking a nice vacation this summer, and having to get some things done to the house.
Thanks for the kind words. If your house will be paid off by the time you retire and your other expenses are just $25k or so per year and your wife intends to continue working at a job paying far more than that, it sounds like you shouldn't have any difficulty reaching your goal of retiring at 50.

I think a 457b makes a lot of sense in your case so it's good you're looking into that. Whatever accounts you use, keep the fees you're paying in mind. They definitely do matter.

You mentioned that your pension will be around $2k/month if you stop teaching at 50. Have you looked at how your pension is affected if you work longer? For example, if your pension increases substantially enough by working an extra year or two, it would be worth considering. However, if it won't change the benefit much, perhaps 50 is the way to go after all. Sometimes an additional couple of years worked can make a big difference while in other cases it hardly moves the needle. It's worth going through the exercise of plugging in different numbers for the age of retirement to see how it affects the benefit.

Enjoy your summer vacation and the upgrades on the house!
Thanks again Ron. I'm going to look into starting the 457b and continue my 403b as well. Just have to look at what we can do overall. My goal is to not touch the 457b even if I can until around 60 just to let it compound longer. Especially if my wife continues working. But having the option to touch it penalty free would be nice. My wife would most likely add me on her medical insurance as well. I did look at the pension calculation. So it's around 2100+change at 50 but possibly a little more due to salary increases between now and then. It looks like it increases about 1600-2000 per year for each additional year after 50. Not earth shattering, but obviously that's also another year of salary as well. But this is the problem I see with most teachers. "One more year" never ends.

Another thing I never see anyone mention is Social Security spousal benefits. Being as I don't pay into SS, my spousal or gosh forbid widower benefits would be reduced 2/3 due to the Government Pension Offset. After calculating this on the SS website, it's crazy that my SS spousal benefits would be higher if my pension is less. Just something to consider that no one talks about.
Yes, it's important to be aware of the Windfall Elimination Provision and Government Pension Offset and take the effect on social security into account. I have over 40 credits from before I became a teacher but don't expect to get much social security at all. However, my pension should be pretty nice so the lower social security benefits likely won't make a big difference in my case.

Interestingly (at least to me), my California teacher's pension seems to have a different slope than yours in terms of the benefit received by age. I'm eligible to retire at age 55 but the pension benefit increases substantially enough for each year between age 55 and 61 that I intend to wait until somewhere around 59-61 to stop working. After age 61, my pension benefit goes up only a little for each extra year worked. In our system, we can work part time (considered 50% or more of full time work) once we reach age 55 and still earn a full year of retirement credit toward the pension. I'm aiming to possibly go part time at 55.

I'm 46 now and in order to be in a position to potentially go part time by 55, I'm trying to save as much as I can in the meantime. Our gross income is around $120k and I'm currently maxing a 457b, 403b, 2 Roth IRAs, and contributing 10% of salary toward a pension. My spouse is a stay-at-home parent. The key for us to be able to save as much as we are while living quite comfortably in the Bay Area has been to focus on the expense side of the equation. I've found ways to minimize expense categories that tend to be pretty large for many people. If your expenses other than housing are just $2k a month, I certainly don't need to give you any pointers on that front. In fact, you should probably be giving them to the rest of us.
Topic Author
Coachrhino11
Posts: 226
Joined: Mon Aug 28, 2017 12:02 pm

Re: Help with game plan

Post by Coachrhino11 »

Ron Ronnerson wrote: Mon Jun 21, 2021 6:14 pm
Coachrhino11 wrote: Mon Jun 21, 2021 5:27 pm
Ron Ronnerson wrote: Mon Jun 21, 2021 3:13 pm
Coachrhino11 wrote: Mon Jun 21, 2021 2:10 pm
Ron Ronnerson wrote: Mon Jun 21, 2021 10:50 am I read through the details you provided but it seems like there are some gaps in the information. If you fill those in, I think you would receive really specific feedback that is tailored to your circumstances. The “Asking Portfolio Questions” link that HomeStretch posted is very good to use for this purpose.

Nevertheless, I’ll try to see if I can frame your post a bit. You’re 43 and your wife is 45. You plan to work until age 50 or so and then collect a pension at age 60. Your spouse will continue to work. You don’t know what your expenses will be in retirement.

I’ll cut to the chase: You can’t retire until you figure out your expenses. It’s as simple as that. Otherwise, just assume they will be more than your income and that your game plan won’t work. To put it plainly, you don’t want to quit a tenured position where you have worked your way up on the salary scale to find yourself unable to meet expenses and unable to return to the same position you previously had. By the way, build in some cushion and assume expenses will be a little bit higher than you think just to be on the safe side.

I do think that you need to get a good idea about where your money is currently going too. Great job paying off the 2nd mortgage that was at 6.25% and not having a car payment any longer. Since you’re out of debt now except for the mortgage, where are you directing your money now? It’s not clear if you’re saving sufficiently to meet your goals or if you are spending more than you should given your desire to stop working in 7-8 years.

You also need to know what your income will be once you retire but before you collect the pension. Will your spouse’s income alone be sufficient to meet the expenses you have calculated? When do you plan to begin to draw from your retirement accounts?

I’m generally a proponent of keeping low-interest debt but you seem very interested in paying it off by the time you retire. Personally, I can understand that. Even if it isn’t necessarily the optimal thing to do, if it brings you peace of mind and lowers your expenses in the future, you could at least say there are far worse things that you could do with your money.

By the way, how much will your pension be once you start collecting it? If it will be sizeable, you may want to continue focusing on Roth accounts. Also, since you plan to retire for 10 years or so before collecting the pension and will be relatively young, you should see if your employer offers a 457b. You can withdraw from it at any age without penalty so long as you have separated from the employer. This makes it an excellent option for those who are considering retiring early. I prioritize my 457b above a 403b for this reason.

Last but not least, expenses matter when it comes to investing, particularly over the long-term. I did a search on the T. Rowe funds you mentioned. The expense ratios are around 0.7%. That’s too high. Try to get something that costs under 0.1%. Vanguard, Fidelity, and Schwab offer good fund choices. This being Bogleheads, most of us tend to gravitate toward Vanguard. Past performance/returns are irrelevant. You can’t control much when it comes to returns but you can control how much you pay in fees. The way that compounding works, the impact of fees becomes bigger and bigger as time goes on. So keep the expenses as low as possible. That can’t be emphasized enough.

It sounds like you’re moving in the right direction. You need to bring things into greater focus by running the numbers carefully. There is just no way around that.
Ron, thank you very much for your detailed input. I value your opinion as I have read previous threads by you, all being great reads early in the morning with my coffee before work. Ok, technically I'm 42 but will be 43 in a couple months. Same with wife, she's 44 and will be 45 in a few months if that matters.

Regarding my expenses in retirement or when I retire and wife still working is tough to know for sure. Big reason we both want to retire mortgage by then or before. So, as of today just calculating our usual monthly expenses subtracting the mortgage but including property tax, HOA, insurance, food, utilities, gas, auto insurance, life insurance, etc.... NOT including investment contributions we are around 25k a year. We keep a spreadsheet with monthly expenses.

Assuming my wife continues in same field when i retire which she wants to, she already easily makes more than enough after taxes to pay everything without my income not counting Roth contributions. So, this year she'll possibly be around 90k per year, currently she's at 80k. So, even planning tiny raises we should be good. We are already maxing out Roth's, so that is a huge priority and will continue to be moving forward. Regarding my future pension, it will not be that large at all if I stop teaching at 50 but we are ok with that. I'm looking at around 2,000 per month give or take but could be more if I decide to stay in field longer but we want to plan for me not to be.

I will look into transfering my T.Rowe Roth to Vanguard even though I really like my funds and I've had a good experience with T.Rowe but you right about what you said. Yes, I am eligible to contribute to a 457b and 403b. So, I will look into that ASAP and look to max 457b. We do have Vanguard like our 403b.

Lastly, you asked what have we been doing lately with excess money? Has been combination of extra mortgage money, we are finally taking a nice vacation this summer, and having to get some things done to the house.
Thanks for the kind words. If your house will be paid off by the time you retire and your other expenses are just $25k or so per year and your wife intends to continue working at a job paying far more than that, it sounds like you shouldn't have any difficulty reaching your goal of retiring at 50.

I think a 457b makes a lot of sense in your case so it's good you're looking into that. Whatever accounts you use, keep the fees you're paying in mind. They definitely do matter.

You mentioned that your pension will be around $2k/month if you stop teaching at 50. Have you looked at how your pension is affected if you work longer? For example, if your pension increases substantially enough by working an extra year or two, it would be worth considering. However, if it won't change the benefit much, perhaps 50 is the way to go after all. Sometimes an additional couple of years worked can make a big difference while in other cases it hardly moves the needle. It's worth going through the exercise of plugging in different numbers for the age of retirement to see how it affects the benefit.

Enjoy your summer vacation and the upgrades on the house!
Thanks again Ron. I'm going to look into starting the 457b and continue my 403b as well. Just have to look at what we can do overall. My goal is to not touch the 457b even if I can until around 60 just to let it compound longer. Especially if my wife continues working. But having the option to touch it penalty free would be nice. My wife would most likely add me on her medical insurance as well. I did look at the pension calculation. So it's around 2100+change at 50 but possibly a little more due to salary increases between now and then. It looks like it increases about 1600-2000 per year for each additional year after 50. Not earth shattering, but obviously that's also another year of salary as well. But this is the problem I see with most teachers. "One more year" never ends.

Another thing I never see anyone mention is Social Security spousal benefits. Being as I don't pay into SS, my spousal or gosh forbid widower benefits would be reduced 2/3 due to the Government Pension Offset. After calculating this on the SS website, it's crazy that my SS spousal benefits would be higher if my pension is less. Just something to consider that no one talks about.
Yes, it's important to be aware of the Windfall Elimination Provision and Government Pension Offset and take the effect on social security into account. I have over 40 credits from before I became a teacher but don't expect to get much social security at all. However, my pension should be pretty nice so the lower social security benefits likely won't make a big difference in my case.

Interestingly (at least to me), my California teacher's pension seems to have a different slope than yours in terms of the benefit received by age. I'm eligible to retire at age 55 but the pension benefit increases substantially enough for each year between age 55 and 61 that I intend to wait until somewhere around 59-61 to stop working. After age 61, my pension benefit goes up only a little for each extra year worked. In our system, we can work part time (considered 50% or more of full time work) once we reach age 55 and still earn a full year of retirement credit toward the pension. I'm aiming to possibly go part time at 55.

I'm 46 now and in order to be in a position to potentially go part time by 55, I'm trying to save as much as I can in the meantime. Our gross income is around $120k and I'm currently maxing a 457b, 403b, 2 Roth IRAs, and contributing 10% of salary toward a pension. My spouse is a stay-at-home parent. The key for us to be able to save as much as we are while living quite comfortably in the Bay Area has been to focus on the expense side of the equation. I've found ways to minimize expense categories that tend to be pretty large for many people. If your expenses other than housing are just $2k a month, I certainly don't need to give you any pointers on that front. In fact, you should probably be giving them to the rest of us.
Lol, I've read about your system out there in the Bay and am very envious but happy for you. Best weather in the country, beautiful to boot. I too have earned 40 credits although low wages before teaching years ago. My situation is much different. Since my wife earns quite a bit more than me and will probably continue earning more for years, her social security will be pretty good. According to the SSA.gov site on the GPO calculator, I will receive double or more spousal or widower benefits with me retiring sooner and having a smaller pension. Had I started teaching one year sooner, i would have been grandfathered in to a higher tier pension plan to retire and could have collected full benefits at 55 instead of 60. Oh well. Such is life. Remember, due to where you live, they pay teachers much higher there than here so that's a big reason for difference in pension. I believe I pay around 7.5-7.75% but will go up to 8.25 in time.

Regarding us living on 2k other than housing, those are our fixed or living variable expenses. We are working hard on reeling in our discretionary expenses. I'm maing the right steps by what I've already done with 403b contributions and will continue with 457.
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