Advice for an old dad: Raising teens into early 60’s

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mortfree
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Advice for an old dad: Raising teens into early 60’s

Post by mortfree »

Looking to get some feedback to help me plan and understand what the (retirement) future might look like after starting a family (what feels like) later in life.

Married 44 (110k salary) and 41 yrs old (25k salary, part time)
Kid 1: 8 years old
Kid 2: 1 year old

Kid1 graduates high school when I’m 54
Kid 2 graduates high school when I’m 61

After seeing threads, losing your job in 50’s and a post about the empty nest years for catch up savings, I don’t see that happening that way for us.

Instead am I going to need my retirement savings to pay for basic kid expenses and possibly college?

Current retirement savings for me
690k in 401k (still maxing out)
150k in Roth (maxing)

Taxable for me
200k invested

Same employer for 20 years. I get some kind of pension but not sure what that will look like.

Mortgage debt 170k on 400k home (conservative estimate) 19 years left at 3.125%. PI is $1000/month. Refi in 2020 from 30 to 20-year loan

Spouse has about 75k saved in IRA and 401k.

Thanks
Last edited by mortfree on Sun Aug 01, 2021 9:03 am, edited 2 times in total.
Mid-40’s
Normchad
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Re: Advice for an old dad: Raising teens into early 60’s

Post by Normchad »

I can’t give you specific advice.

For me, I think it’s a huge accomplishment to reach a net worth of $1M around age 40. The power of compounding growth is staggeringly amazing, and hitting $1M at 40, gives you decades for that to grow on its own.

You have accomplished that! A lot of people will never get there.

And of course you’ll add some more contributions of your own along the way.

Do you’re doing really well so far. Keep it up!
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StevieG72
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Re: Advice for an old dad: Raising teens into early 60’s

Post by StevieG72 »

Don’t have any more kids, and take care of your spouse / stay married.
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MathWizard
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Re: Advice for an old dad: Raising teens into early 60’s

Post by MathWizard »

Let me out your mind at ease.

If you stay employed, I don't think you will have a problem.

I was 41, just bought a house, and had about $80K in retirement funds, and $24K in savings after paying the down payment, and I owned a fixer upper with a furnace and roof that needed repair.

The kids were 12 and 7, so college was coming up fast .

I started saving in Roth IRAs, since contributions could be used for college, and since the limits were only $2K then, also in a taxable account .

I kept maxing the Roths, assuming that I would need to pull the money out in 6 years. By the time college rolled around, I pulled the funds out of the taxable account, and then just stopped funding the IRAs when the oldest started college.

I found that I could cash flow the tuition books fees and food.
The kids could stay at home if they wanted ( we live in the same town as the Eng. Univ for the state.), or they could take out loans and stay on their own. Any scholarships they got were theirs, and didn't count against what we provided.
I kept putting 15% into tax deferred during this, and could even start contributing to Roths when the younger child went to college.

Until after the kids were out, our cars were bought at least 4 years old and kept for a decade.

Also, remember that the Amer Opportunity Tax Credit will provide you with $2500 / yr for 4 years provided you supply at least $4K of the qualified college expenses.

At age 63 , I have over $2 million in retirement accounts, and a paid off home, no debt.
Mysterious
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Re: Advice for an old dad: Raising teens into early 60’s

Post by Mysterious »

You actually are in good shape. Your kids will keep you from year long cruises that could be $150-200k plus.

Work on getting something into 529's to give you flex.

$1M with at least 10 years to go is not something to be worried about. Continue on the path. Keep preparing for the future.

Use the CTC for their 529 funding?
Ron Ronnerson
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Re: Advice for an old dad: Raising teens into early 60’s

Post by Ron Ronnerson »

It’s not clear exactly what your question is but including your income(s) may be useful as well. Here are some thoughts:

Contributing to a workplace retirement plan and/or IRA may be worth exploring for your spouse as well.

I would look into refinancing to a 15-year fixed rate mortgage to potentially get a better interest rate on your mortgage debt.

Find out the specifics about your pension. Those details are important for planning purposes. Factor in social security as well.

Your expenses will determine whether or not you’re on track to retire by a desired date. Without that information, it’s hard to say if you’re on track. I get the impression that you’re fine but it’s just an impression.

By the way, my wife and I are in our mid-40s currently and our daughter will graduate from high school when we are almost 60. Since we will be old enough to access retirement accounts without penalty when our kid goes to college, we save for college in retirement accounts rather than use a 529. That is a route you might consider for your younger child.
kelvan80
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Re: Advice for an old dad: Raising teens into early 60’s

Post by kelvan80 »

Maybe a 529 for the one year old. You could front load it or just stick $250/ month or some nice round number away for college. Then help out more if you can later. Hopefully you'll be able to take advantage of the AOTC.
yules
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Re: Advice for an old dad: Raising teens into early 60’s

Post by yules »

mortfree wrote: Sat Jul 31, 2021 9:55 pm Looking to get some feedback to help me plan and understand what the (retirement) future might look like after starting a family (what feels like) later in life.

Married 44 and 41 yrs old
Kid 1: 8 years old
Kid 2: 1 year old

Kid1 graduates high school when I’m 54
Kid 2 graduates high school when I’m 61

After seeing threads, losing your job in 50’s and a post about the empty nest years for catch up savings, I don’t see that happening that way for us.

Instead am I going to need my retirement savings to pay for basic kid expenses and possibly college?

Current retirement savings for me
690k in 401k (still maxing out)
150k in Roth (maxing)

Taxable for me
200k invested

Same employer for 20 years. I get some kind of pension but not sure what that will look like.

Mortgage debt 170k on 400k home (conservative estimate) 19 years left at 3.125%

Spouse has about 75k saved.

Thanks
We don’t know what the state of education will be in a decade and more...but I would say not to forget the **financial** Benefits of raising your kids right and instilling good values. Scholarships for academic acumen, athletic excellence, and even areas of need (e.g., women in science) would relieve a lot of the financial burden of college, get them into some AP classes also in order to get college credits at high school prices.

In short, you are asking about how to prepare financially for college, there are non-financial ways to prepare that can help your finances as long as you lay the groundwork now.

Good luck! Please update this thread in 10 and 17 years to let us know how it goes! :happy

Yules
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Watty
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Re: Advice for an old dad: Raising teens into early 60’s

Post by Watty »

You are doing fine. If you had kids in your 20's and they were finishing up college now then you would not have nearly the savings that you have today.

Even without counting your home equity you have over a million dollars in investments. Even if you did not save another dime that will likely grow to be around two million dollars by the time you are 65.
mortfree wrote: Sat Jul 31, 2021 9:55 pm Kid 1: 8 years old
.....
Instead am I going to need my retirement savings to pay for basic kid expenses and possibly college?
.....
Taxable for me
200k invested
.....
Mortgage debt 170k on 400k home (conservative estimate) 19 years left at 3.125%
I would take a hard look at getting the mortgage paid off at least by the time your eight year old starts college. That way you can just use your freed up cash flow to help pay for college costs.

As I recall home equity and retirement accounts is not counted in the college financial aid calculations at least at some colleges so paying off the house could conceivably help you get financial aid.

There are all sorts of opinions and endless posts about the "Should I pay off the mortgage?" question and there is no pat answer but if I was in your situation I would take a hard look at just using the money in the taxable account to pay the mortgage off now, but that is just me. You could then save the freed up mortgage payment each month.
LittleMaggieMae
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Re: Advice for an old dad: Raising teens into early 60’s

Post by LittleMaggieMae »

Same employer for 20 years. I get some kind of pension but not sure what that will look like.
My hindsight advice would be to pay attention to/find out more about your pension. Yes, I know pensions come and go or may not really be there in 20 years (when you are 65). Maybe your pension is good at 55?? You don't know unless you find out. I "discovered" what my pension meant to my retirement at 47yo and it was a game changer. It's not a spectacular pension plan (no cola, no healthcare) - but it makes a very big difference in how much I need to save and it means that I can FIre well before 65 (thanks to my 40's when I was panic saving for retirement and trying to "front load" my retirement accounts with as much as possible. :) )

Depending on the pension - you may not have to save as much as you think you need to. Hence my advice to look into it (especially since it appears you have "front loaded" your retirement accounts).
Zeno
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Re: Advice for an old dad: Raising teens into early 60’s

Post by Zeno »

You and your spouse also of course should go online and claim your respective SS accounts.

You already have flagged what I believe to be a risk in your scenario: job loss in one’s 50’s. I was born when my parents were 40. My dad was forced into retirement in his 50’s. This story is anecdotal and wholly irrelevant to you. It was a jarring event for me, however, and led me to make different decisions in my life.

Still, I do think it is prudent to run some financial scenarios where your income largely ends at age 55 or so. Maybe you don’t pay for your children’s college. Can you accelerate savings and reduce expenses going forward? Cut down on vacations? Maybe put off buying the next car if you can. And stay hyper-focused on keeping your job, as your best asset is your ability to maintain it. It may sound selfish but you need to take care of your financial well being first.

The thing I wouldn’t do is rely solely upon a financial plan that assumes wage income to ages 62, 65 or later.

You are doing exceedingly well. Best of luck.
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Re: Advice for an old dad: Raising teens into early 60’s

Post by Jack FFR1846 »

I think you're more afraid of the "What ifs" than of what will absolutely happen. Adopted our first when I was 39, second, 43. We simply lived below our means, paid off all debts including mortgage consistently and oversaved for college outside of 529 as our state didn't have any tax benefit. I don't think we had much more than you at your age. Your spending level will, of course be important. As with you, not only do we have no empty nest period, our parents on both sides are becoming more needy of our help (not financial, but time), so the period of rest and low cost won't come for us....probably before I die. While both my kids are working, one will likely never leave home because of his disability and the other is in minimum wage jobs, although starting a welding program tomorrow. Community college was a disaster and above his ability.

Welcome to life in the 21st century. Enjoy being a sandwich.
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basspond
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Re: Advice for an old dad: Raising teens into early 60’s

Post by basspond »

No you will not. Don’t know if your spouse’s $75k is in a taxable account or not. But the way your post is written make sure you are on the same page with your better half. If you can save a couple of hundred bucks a month for college and get your house paid off at least 2 years before the youngest goes to college y’all will be A’Ok. We had savings set aside for 2 children, but our house was paid for several years before they went and ended up cash flowing their higher learning expenses.
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winterfan
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Re: Advice for an old dad: Raising teens into early 60’s

Post by winterfan »

I think you're in pretty good shape too for your age. I worry sometimes too. My child is 12. I will be 55 and my spouse will be 66 when our child graduates high school. Like the previous poster said, we won't have much of an empty nest it seems. We are going to try to do a bit more traveling while we are all in good shape, but that means we will be dragging a teenager along, if her schedule allows once she gets to high school.

In general, I am counting on college staying relatively the same. It seems like people have been saying education will change a lot in the future, but it hasn't happened yet. There may be more options, but I enjoyed living on a campus in a residence hall and would like the same for my kid. We have money tucked away in a 529 plan. I think it will be enough for a state school, but I do worry about the costs of privates. I went to a private school and liked it. I don't think we would pay full price for some, but I would like my kid to have the same opportunity if it's a good fit. I do worry about elder care, college costs and health issues occurring at the same time. It's a lot of big expensive items and maybe we won't be able to jump back into the workforce if needed.
dcabler
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Re: Advice for an old dad: Raising teens into early 60’s

Post by dcabler »

mortfree wrote: Sat Jul 31, 2021 9:55 pm Looking to get some feedback to help me plan and understand what the (retirement) future might look like after starting a family (what feels like) later in life.

Married 44 and 41 yrs old
Kid 1: 8 years old
Kid 2: 1 year old

Kid1 graduates high school when I’m 54
Kid 2 graduates high school when I’m 61

After seeing threads, losing your job in 50’s and a post about the empty nest years for catch up savings, I don’t see that happening that way for us.

Instead am I going to need my retirement savings to pay for basic kid expenses and possibly college?

Current retirement savings for me
690k in 401k (still maxing out)
150k in Roth (maxing)

Taxable for me
200k invested

Same employer for 20 years. I get some kind of pension but not sure what that will look like.

Mortgage debt 170k on 400k home (conservative estimate) 19 years left at 3.125%

Spouse has about 75k saved.

Thanks
Overall, you look to be in decent shape, but you should spend a little time understanding the details of your pension to have a complete picture.

We have only one kid but we had her pretty late in the game (late 30's). At the time, our friends joked that her high school dates would have to come pick her up at the assisted living facility. :D

Your post prompted me to go back into my tracker to see where we were at your age and you're about 30% ahead of where we were and we have no pension. Yes, it's 1 kid vs 2 kids and we've had a pretty good stock market run over that time, though we hit 2008 when we were about 2 years or so older than you are now.

It's really hard to compare apples to apples, but I've also had some good fortune including company bonuses, RSU's and stock options (back when they existed), along with a lemons-to-lemonade situation where I was layed off from a company but received a severance in excess of a full year's salary. But we also did some real planning along the way which included saving like crazy and buying a contract in the original TX tomorrow fund when our daughter was a year old - and that pays 100% of any tuition for any in state public university. We bought a 5 year contract in case she changed her major or needed extra for grad school. She's now a junior in college and also has a pretty decent scholarship, so she's costing us very little out of our pockets for college.

BTW I'm 60 and DW is 61 and the plug will be pulled anywhere between tomorrow and June of 2022.

Cheers.
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Re: Advice for an old dad: Raising teens into early 60’s

Post by Sandtrap »

yules wrote: Sat Jul 31, 2021 10:52 pm
mortfree wrote: Sat Jul 31, 2021 9:55 pm Looking to get some feedback to help me plan and understand what the (retirement) future might look like after starting a family (what feels like) later in life.

Married 44 and 41 yrs old
Kid 1: 8 years old
Kid 2: 1 year old

Kid1 graduates high school when I’m 54
Kid 2 graduates high school when I’m 61

After seeing threads, losing your job in 50’s and a post about the empty nest years for catch up savings, I don’t see that happening that way for us.

Instead am I going to need my retirement savings to pay for basic kid expenses and possibly college?

Current retirement savings for me
690k in 401k (still maxing out)
150k in Roth (maxing)

Taxable for me
200k invested

Same employer for 20 years. I get some kind of pension but not sure what that will look like.

Mortgage debt 170k on 400k home (conservative estimate) 19 years left at 3.125%

Spouse has about 75k saved.

Thanks
We don’t know what the state of education will be in a decade and more...but I would say not to forget the **financial** Benefits of raising your kids right and instilling good values. Scholarships for academic acumen, athletic excellence, and even areas of need (e.g., women in science) would relieve a lot of the financial burden of college, get them into some AP classes also in order to get college credits at high school prices.

In short, you are asking about how to prepare financially for college, there are non-financial ways to prepare that can help your finances as long as you lay the groundwork now.

Good luck! Please update this thread in 10 and 17 years to let us know how it goes! :happy

Yules
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mortfree
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Re: Advice for an old dad: Raising teens into early 60’s

Post by mortfree »

Thanks for the thoughts, ideas and encouragement thus far.

I did update the first post with a few more details.

I wasn’t quite sure what my exact question should be but so far the suggestions are great.

I am building a sinking fund in a taxable account that is around half of the taxable amount invested. That could be to payoff the mortgage later or for kids’ school or to survive should I be underemployed or retired in my 50’s.

I have stayed away from 529’s - whether it is stubbornness and/or avoiding something that is not as simple as taxable investing. I am in PA so I would get a deduction. I figured my Roth could be tapped for those expenses too.

Between Roth and 401k I am saving 25,500 per year out of my salary. The sinking fund mentioned above is at 80k and I started that maybe 4 years ago (VTI and Wellington).
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CyclingDuo
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Re: Advice for an old dad: Raising teens into early 60’s

Post by CyclingDuo »

mortfree wrote: Sat Jul 31, 2021 9:55 pm Looking to get some feedback to help me plan and understand what the (retirement) future might look like after starting a family (what feels like) later in life.

Married 44 (110k salary) and 41 yrs old (25k salary, part time)
Kid 1: 8 years old
Kid 2: 1 year old

Kid1 graduates high school when I’m 54
Kid 2 graduates high school when I’m 61

After seeing threads, losing your job in 50’s and a post about the empty nest years for catch up savings, I don’t see that happening that way for us.

Instead am I going to need my retirement savings to pay for basic kid expenses and possibly college?

Current retirement savings for me
690k in 401k (still maxing out)
150k in Roth (maxing)

Taxable for me
200k invested

Same employer for 20 years. I get some kind of pension but not sure what that will look like.

Mortgage debt 170k on 400k home (conservative estimate) 19 years left at 3.125%. PI is $1000/month. Refi in 2020 from 30 to 20-year loan

Spouse has about 75k saved in IRA and 401k.

Thanks
Since I am the one who posted about Losing a Job in your 50's and the graphic from Michael Kitces with the link to his blog post about the red zone empty nest years for playing catch up, allow me to calm your nerves. Although your timing of when your parenting years will end are a tad later than some others, you have also enjoyed more of the before parenting years to build up your nest egg than others. So you are in excellent shape as it balances out! I would also agree with others that you should find out more about your pension and include that in your plans. :beer

Depending on your cost of living area and your expenses, your current dual income of $135K provides an excellent base to work with for funding retirement, college education funds, and should be enough to cover your household expenses. I would also assume that as your children age, your spouse may have more time to increase the hours worked - even up to full-time to boost the income.

Although the daunting issue of losing a job in your 50's is real for many, I was not one to let it keep me from bringing in an income - even though it has led to me working in an entirely different field than my prior career. This month marks the beginning of my 4th year of working after the job loss back in 2018 and I approach age 60. My wife retires in 2 years with a pension and I'll call an audible at that time regarding my own work. Even if you lost your job and were relegated to some part-time income during the latter end of the red zone catch up years as the parenting years are winding down while your kids are in college, at least there would be some cash flow coming in that keeps your fingers out of the retirement fund pies. You also are a dual income household, so with a younger spouse - some income could continue from the spouse's side if you lose your ability to work. Reminder: check up on that pension of yours!

There is also no written rule that you must pay for your children's college educations. Our household had a rule that we would attempt to pay for our children's educations - and it was a fast and firm rule under our roof to give it a go as best we could. The benefit of the investment growth during the 90's as well as the timing of our children not entering college until after the Global Financial Crisis worked out in our favor and markets were rising once again certainly could have been different. It could very well have been that the result was us not being able to pay for their educations, or all of it. However, the timing and planning worked out as it did. There is a lot of water to flow under the bridge between now and when your children enter college, so the best advice is to simply stay on track with your saving and investing to reach your goals - or get as close to them as you can. Plenty of options will emerge at the time as well including lower cost university options, 2 years of general education at a CC before the final two years at the state schools, etc... .

Don't forget to enjoy the journey along the way and the time with your children. You've heard it a thousand times, but it goes fast. So embrace it and enjoy it.

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel | "Pick a bushel, save a peck!" - Grandpa
delamer
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Re: Advice for an old dad: Raising teens into early 60’s

Post by delamer »

mortfree wrote: Sun Aug 01, 2021 9:58 am Thanks for the thoughts, ideas and encouragement thus far.

I did update the first post with a few more details.

I wasn’t quite sure what my exact question should be but so far the suggestions are great.

I am building a sinking fund in a taxable account that is around half of the taxable amount invested. That could be to payoff the mortgage later or for kids’ school or to survive should I be underemployed or retired in my 50’s.

I have stayed away from 529’s - whether it is stubbornness and/or avoiding something that is not as simple as taxable investing. I am in PA so I would get a deduction. I figured my Roth could be tapped for those expenses too.

Between Roth and 401k I am saving 25,500 per year out of my salary. The sinking fund mentioned above is at 80k and I started that maybe 4 years ago (VTI and Wellington).
Particularly with 2 kids, I’d start up the 529s. In addition to the initial deduction, you get all that untaxed earnings (on an annual basis) that can be withdrawn untaxed too. You don’t need to put every penny of college savings there, but I doubt that you’ll regret using it for some. And the investing isn’t complicated. Higher in equities when the kids are young, moving over to bonds/fxed income as they age.

I agree with others that you need to get more details about your pension. Even if you decide to discount it to some degree in your planning, it still will be significant if you already have 20 years in.

You have a substantial nest egg, plus are savings $25,000 a year. Maybe take a look at where you’d be financially if you lost your job at 55? You might be pleasantly surprised.

Ours kids graduated from high school when I was 55 and 59, respectively. The 2nd was still in undergrad when I retired and we also paid for the 1st’s grad school. We were fortunate to not have any bouts of unemployment/early retirement though. You are doing the right thing by planning ahead.
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RoadagentMN
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Re: Advice for an old dad: Raising teens into early 60’s

Post by RoadagentMN »

#1, stay fit and healthy. This should be your top priority, additionally trust but verify your STD/LTD insurance. Further make sure your term insurance covers the ages of the children till they’re done with school. Have, wife go though the same steps.
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mortfree
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Re: Advice for an old dad: Raising teens into early 60’s

Post by mortfree »

RoadagentMN wrote: Sun Aug 01, 2021 12:28 pm #1, stay fit and healthy. This should be your top priority, additionally trust but verify your STD/LTD insurance. Further make sure your term insurance covers the ages of the children till they’re done with school. Have, wife go though the same steps.
Yeah. You nailed it with trying to stay fit. Dad life is Starting to catch up to me as far as physical fitness.

Term I have 250k on a 20-year plan, started 2014 or so. I think I get 2 or 3 times salary through work. Obviously tied to employment.
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mortfree
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Re: Advice for an old dad: Raising teens into early 60’s

Post by mortfree »

delamer wrote: Sun Aug 01, 2021 10:38 am
mortfree wrote: Sun Aug 01, 2021 9:58 am Thanks for the thoughts, ideas and encouragement thus far.

I did update the first post with a few more details.

I wasn’t quite sure what my exact question should be but so far the suggestions are great.

I am building a sinking fund in a taxable account that is around half of the taxable amount invested. That could be to payoff the mortgage later or for kids’ school or to survive should I be underemployed or retired in my 50’s.

I have stayed away from 529’s - whether it is stubbornness and/or avoiding something that is not as simple as taxable investing. I am in PA so I would get a deduction. I figured my Roth could be tapped for those expenses too.

Between Roth and 401k I am saving 25,500 per year out of my salary. The sinking fund mentioned above is at 80k and I started that maybe 4 years ago (VTI and Wellington).
Particularly with 2 kids, I’d start up the 529s. In addition to the initial deduction, you get all that untaxed earnings (on an annual basis) that can be withdrawn untaxed too. You don’t need to put every penny of college savings there, but I doubt that you’ll regret using it for some. And the investing isn’t complicated. Higher in equities when the kids are young, moving over to bonds/fxed income as they age.

I agree with others that you need to get more details about your pension. Even if you decide to discount it to some degree in your planning, it still will be significant if you already have 20 years in.

You have a substantial nest egg, plus are savings $25,000 a year. Maybe take a look at where you’d be financially if you lost your job at 55? You might be pleasantly surprised.

Ours kids graduated from high school when I was 55 and 59, respectively. The 2nd was still in undergrad when I retired and we also paid for the 1st’s grad school. We were fortunate to not have any bouts of unemployment/early retirement though. You are doing the right thing by planning ahead.
Any suggestions on how to name the 529 accounts?

I recall there might be a strategy as to naming the beneficiary of the accounts.

One account per kid in their names or one account titled differently?

Thanks
Mid-40’s
delamer
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Re: Advice for an old dad: Raising teens into early 60’s

Post by delamer »

mortfree wrote: Sun Aug 01, 2021 2:44 pm
delamer wrote: Sun Aug 01, 2021 10:38 am
mortfree wrote: Sun Aug 01, 2021 9:58 am Thanks for the thoughts, ideas and encouragement thus far.

I did update the first post with a few more details.

I wasn’t quite sure what my exact question should be but so far the suggestions are great.

I am building a sinking fund in a taxable account that is around half of the taxable amount invested. That could be to payoff the mortgage later or for kids’ school or to survive should I be underemployed or retired in my 50’s.

I have stayed away from 529’s - whether it is stubbornness and/or avoiding something that is not as simple as taxable investing. I am in PA so I would get a deduction. I figured my Roth could be tapped for those expenses too.

Between Roth and 401k I am saving 25,500 per year out of my salary. The sinking fund mentioned above is at 80k and I started that maybe 4 years ago (VTI and Wellington).
Particularly with 2 kids, I’d start up the 529s. In addition to the initial deduction, you get all that untaxed earnings (on an annual basis) that can be withdrawn untaxed too. You don’t need to put every penny of college savings there, but I doubt that you’ll regret using it for some. And the investing isn’t complicated. Higher in equities when the kids are young, moving over to bonds/fxed income as they age.

I agree with others that you need to get more details about your pension. Even if you decide to discount it to some degree in your planning, it still will be significant if you already have 20 years in.

You have a substantial nest egg, plus are savings $25,000 a year. Maybe take a look at where you’d be financially if you lost your job at 55? You might be pleasantly surprised.

Ours kids graduated from high school when I was 55 and 59, respectively. The 2nd was still in undergrad when I retired and we also paid for the 1st’s grad school. We were fortunate to not have any bouts of unemployment/early retirement though. You are doing the right thing by planning ahead.
Any suggestions on how to name the 529 accounts?

I recall there might be a strategy as to naming the beneficiary of the accounts.

One account per kid in their names or one account titled differently?

Thanks
Not my area of expertise. :happy

We had one account for each kid. I was the account holder and the kid was the beneficiary.

My understanding is that you can easily transfer the money from one kid’s account to the other’s, but I didn’t end up doing that. Or maybe it’s change the beneficiary rather than doing a transfer?
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
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Vulcan
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Re: Advice for an old dad: Raising teens into early 60’s

Post by Vulcan »

Watty wrote: Sat Jul 31, 2021 11:30 pm As I recall home equity and retirement accounts is not counted in the college financial aid calculations at least at some colleges so paying off the house could conceivably help you get financial aid.
Yes.
Retirement accounts & home equity - good.
Taxable & 529s - bad.
If you torture the data long enough, it will confess to anything. ~Ronald Coase
delamer
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Re: Advice for an old dad: Raising teens into early 60’s

Post by delamer »

Vulcan wrote: Sun Aug 01, 2021 3:21 pm
Watty wrote: Sat Jul 31, 2021 11:30 pm As I recall home equity and retirement accounts is not counted in the college financial aid calculations at least at some colleges so paying off the house could conceivably help you get financial aid.
Yes.
Retirement accounts & home equity - good.
Taxable & 529s - bad.
There are important differences between FAFSA and CSS (frequently used by private schools): https://www.nerdwallet.com/article/loan ... plications
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
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Vulcan
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Re: Advice for an old dad: Raising teens into early 60’s

Post by Vulcan »

delamer wrote: Sun Aug 01, 2021 3:31 pm
Vulcan wrote: Sun Aug 01, 2021 3:21 pm
Watty wrote: Sat Jul 31, 2021 11:30 pm As I recall home equity and retirement accounts is not counted in the college financial aid calculations at least at some colleges so paying off the house could conceivably help you get financial aid.
Yes.
Retirement accounts & home equity - good.
Taxable & 529s - bad.
There are important differences between FAFSA and CSS (frequently used by private schools): https://www.nerdwallet.com/article/loan ... plications
I am talking about CSS, both from research and personal experience.

Most schools worth their price tag use CSS and ignore home equity.

https://www.thecollegesolution.com/home ... ncial-aid/

FAFSA also excludes home equity, but it's sorta irrelevant to this conversation, because schools that rely on FAFSA do not give any institutional gift aid to upper middle class students.
If you torture the data long enough, it will confess to anything. ~Ronald Coase
getthatmarshmallow
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Re: Advice for an old dad: Raising teens into early 60’s

Post by getthatmarshmallow »

FWIW, I'm in a similar position (44/42, 8/5), but with significantly less in assets due to a late start (academic.) In the past three years we've been able to hammer savings; my goal is to be mostly FI by the time the oldest finishes high school so we can handle college expenses. I'm not worried. Were I in your position, I'd be even less worried.
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Re: Advice for an old dad: Raising teens into early 60’s

Post by valleyrock »

Rick Ferri's recent interview with Ron Lieber on paying for college may be helpful. Bogleheads on Investing podcast.
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Re: Advice for an old dad: Raising teens into early 60’s

Post by valleyrock »

Rick Ferri's recent interview with Ron Lieber on paying for college may be helpful. Bogleheads on Investing podcast.
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mortfree
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Re: Advice for an old dad: Raising teens into early 60’s

Post by mortfree »

Pension details

Vested balance is 70,800

Benefit earned as of today: $2240 per month starting age 65

Normal retirement at 65: 3960 per month

Earliest unreduced at 62: 3630 per month

Earliest commencement at 55: 2450 per month

There is also lump sum and other options to choose
Mid-40’s
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mortfree
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Re: Advice for an old dad: Raising teens into early 60’s

Post by mortfree »

CyclingDuo wrote: Sun Aug 01, 2021 10:17 am

Since I am the one who posted about Losing a Job in your 50's and the graphic from Michael Kitces with the link to his blog post about the red zone empty nest years for playing catch up, allow me to calm your nerves. Although your timing of when your parenting years will end are a tad later than some others, you have also enjoyed more of the before parenting years to build up your nest egg than others. So you are in excellent shape as it balances out! I would also agree with others that you should find out more about your pension and include that in your plans. :beer

Depending on your cost of living area and your expenses, your current dual income of $135K provides an excellent base to work with for funding retirement, college education funds, and should be enough to cover your household expenses. I would also assume that as your children age, your spouse may have more time to increase the hours worked - even up to full-time to boost the income.

Although the daunting issue of losing a job in your 50's is real for many, I was not one to let it keep me from bringing in an income - even though it has led to me working in an entirely different field than my prior career. This month marks the beginning of my 4th year of working after the job loss back in 2018 and I approach age 60. My wife retires in 2 years with a pension and I'll call an audible at that time regarding my own work. Even if you lost your job and were relegated to some part-time income during the latter end of the red zone catch up years as the parenting years are winding down while your kids are in college, at least there would be some cash flow coming in that keeps your fingers out of the retirement fund pies. You also are a dual income household, so with a younger spouse - some income could continue from the spouse's side if you lose your ability to work. Reminder: check up on that pension of yours!

There is also no written rule that you must pay for your children's college educations. Our household had a rule that we would attempt to pay for our children's educations - and it was a fast and firm rule under our roof to give it a go as best we could. The benefit of the investment growth during the 90's as well as the timing of our children not entering college until after the Global Financial Crisis worked out in our favor and markets were rising once again certainly could have been different. It could very well have been that the result was us not being able to pay for their educations, or all of it. However, the timing and planning worked out as it did. There is a lot of water to flow under the bridge between now and when your children enter college, so the best advice is to simply stay on track with your saving and investing to reach your goals - or get as close to them as you can. Plenty of options will emerge at the time as well including lower cost university options, 2 years of general education at a CC before the final two years at the state schools, etc... .

Don't forget to enjoy the journey along the way and the time with your children. You've heard it a thousand times, but it goes fast. So embrace it and enjoy it.

CyclingDuo
Thanks for the response and for posting the other thread.

I was able to get some pension info and added to the thread above this post. In case that sparks any additional advice.
Mid-40’s
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Re: Advice for an old dad: Raising teens into early 60’s

Post by DCChak »

mortfree wrote: Sat Jul 31, 2021 9:55 pm Married 44 (110k salary) and 41 yrs old (25k salary, part time)
Kid 1: 8 years old
Kid 2: 1 year old

Kid1 graduates high school when I’m 54
Kid 2 graduates high school when I’m 61
Interesting thread. Not quite an old enough dad to consider filing early for SS benefits for children, which can be paid upon death or retirement of a parent prior to the child turning 18.

I'll turn 67 when DD2 turns 18, and 70 when DDnewborn turns 18, so I have to weigh their potential benefits, which can help pay for their college, against the higher income and SS base of working longer.
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Re: Advice for an old dad: Raising teens into early 60’s

Post by TimeTheMarket »

Your 1 year old you can put through college by finding $250/month right now for 529. The 8 year old you're behind. You may need twice that from here on.

Your net worth is a good bit over $1M. I think you're in good shape.
Username is not serious :)
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Re: Advice for an old dad: Raising teens into early 60’s

Post by TomatoTomahto »

valleyrock wrote: Sun Aug 01, 2021 5:58 pm Rick Ferri's recent interview with Ron Lieber on paying for college may be helpful. Bogleheads on Investing podcast.
I found Ron Lieber’s book interesting for suggestions about questions to ask when considering schools and many other topics beyond paying for school. I’m past “paying for college” but the book is well worth reading.
I get the FI part but not the RE part of FIRE.
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Re: Advice for an old dad: Raising teens into early 60’s

Post by Go Blue 99 »

Like others have said, at least you took nice advantage of the pre-kid years in terms of saving. Nice work- many parents don't do that.

I once had a boss who would tell me - "that's what you get for having kids at an old age!" when I would casually mention that I was tired. I always wanted to tell him- "that's what you get for having kids at a young age" when he would constantly complain about money issues :wink:
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Re: Advice for an old dad: Raising teens into early 60’s

Post by CyclingDuo »

mortfree wrote: Mon Aug 02, 2021 3:07 pmThanks for the response and for posting the other thread.

I was able to get some pension info...In case that sparks any additional advice.

Pension details

Vested balance is 70,800

Benefit earned as of today: $2240 per month starting age 65

Normal retirement at 65: 3960 per month

Earliest unreduced at 62: 3630 per month

Earliest commencement at 55: 2450 per month

There is also lump sum and other options to choose
It certainly puts you in even better shape! Here's to you not losing your job in your early to mid 50's! :beer

The traditional three legged stool of retirement income streams: pension, SS, and personal savings/risk portfolio applies to your household. Doing what you can (within your control) to strengthen each leg is all one can do to secure your retirement income streams.

Image

The leg we have the most control over is adding to that third leg - personal savings. And you are doing just that!

In my opinion, you are doing it in an even better way with your subdivision of that third leg into what I call the modern version of the three legged stool that strengthens that third leg in case one or both of the other legs get weaker...

Image

If we just focus on the current amount you are saving in your 401k/Roth IRA of $25,500 annually - which is $2,125 per month - we can forecast at various rates of return how much that will add to your current portfolio over the next 20 years in threads like these...

viewtopic.php?f=1&t=352583&p=6110006#p6110006

Gets back to the question of continuing to build a college savings account for your children. How much is going into that sinking fund each month? I would look into the 529 for the deduction to direct some of that monthly sinking fund contribution.

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel | "Pick a bushel, save a peck!" - Grandpa
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Re: Advice for an old dad: Raising teens into early 60’s

Post by mnnice »

yules wrote: Sat Jul 31, 2021 10:52 pm
mortfree wrote: Sat Jul 31, 2021 9:55 pm Looking to get some feedback to help me plan and understand what the (retirement) future might look like after starting a family (what feels like) later in life.

Married 44 and 41 yrs old
Kid 1: 8 years old
Kid 2: 1 year old

Kid1 graduates high school when I’m 54
Kid 2 graduates high school when I’m 61

After seeing threads, losing your job in 50’s and a post about the empty nest years for catch up savings, I don’t see that happening that way for us.

Instead am I going to need my retirement savings to pay for basic kid expenses and possibly college?

Current retirement savings for me
690k in 401k (still maxing out)
150k in Roth (maxing)

Taxable for me
200k invested

Same employer for 20 years. I get some kind of pension but not sure what that will look like.

Mortgage debt 170k on 400k home (conservative estimate) 19 years left at 3.125%

Spouse has about 75k saved.

Thanks
We don’t know what the state of education will be in a decade and more...but I would say not to forget the **financial** Benefits of raising your kids right and instilling good values. Scholarships for academic acumen, athletic excellence, and even areas of need (e.g., women in science) would relieve a lot of the financial burden of college, get them into some AP classes also in order to get college credits at high school prices.

In short, you are asking about how to prepare financially for college, there are non-financial ways to prepare that can help your finances as long as you lay the groundwork now.

Good luck! Please update this thread in 10 and 17 years to let us know how it goes! :happy

Yules
Who knows what the college funding situation is but based on the current rules college for younger child could be cheap if you are already retired 😆
financiallycurious
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Re: Advice for an old dad: Raising teens into early 60’s

Post by financiallycurious »

You're doing great! Why not open a 529 plan for each kid and decide on an amount that you feel good about for monthly contributions? If nothing else, knowing that you're doing something about college now, while you're young and working, will give you peace of mind about the future. Even $100 or $250 per kid per month adds up overtime, and will be a nice supplement to whatever grants your kids may get for college. My spouse is older and will be retired when our youngest is in college, and making regular contributions to the kids' 529 plans every month while we're in our peak earning years has really helped me feel better about the future (and over time, the tax free growth has really added up).
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