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Military- so I don't expect our pensions are at risk. They ARE COLA adjusted. We don't have a 401K, we have something called the TSP. We're aren't maxing it, but they don't match it, so it doesn't matter. We're splitting the $20K a year between that TSP account, stocks that we buy for fun (and sometimes loose), and mutual funds, and an IRA (not sure which kind, can't remember). We also own 2 houses that have renters. We make about $100 a month on those, not much, but building equity.
We already have 2 young kids, in daycare. We spend about $20K a year on daycare, so when they start school we'll have that additional income, BUT, it will be around the time we're retiring and our income dropping. Good timing (about 4 years from retirement now).
We DO have a family member we think we may have to take care of, and I have just started researching that. The family member has enough insurance and assets that the financial burden won't be entirely ours, but thanks for reminding me to consider that.
We don't really do anything for fun except maybe camping.... wouldn't mind buying a camper/RV... we always rent and it's a hassle.
We spend money for convenience (robot vacuums, groceries delivered instead of shopping, etc)...
It does not matter in the slightest whether it is matched - the more money you save, the more it accumulates - don't use the lack of a match as an excuse. And, you can certainly start funding your kids' college education.
Military- so I don't expect our pensions are at risk. They ARE COLA adjusted. We don't have a 401K, we have something called the TSP. We're aren't maxing it, but they don't match it, so it doesn't matter. We're splitting the $20K a year between that TSP account, stocks that we buy for fun (and sometimes loose), and mutual funds, and an IRA (not sure which kind, can't remember). We also own 2 houses that have renters. We make about $100 a month on those, not much, but building equity.
We already have 2 young kids, in daycare. We spend about $20K a year on daycare, so when they start school we'll have that additional income, BUT, it will be around the time we're retiring and our income dropping. Good timing (about 4 years from retirement now).
We DO have a family member we think we may have to take care of, and I have just started researching that. The family member has enough insurance and assets that the financial burden won't be entirely ours, but thanks for reminding me to consider that.
We don't really do anything for fun except maybe camping.... wouldn't mind buying a camper/RV... we always rent and it's a hassle.
We spend money for convenience (robot vacuums, groceries delivered instead of shopping, etc)...
The TSP is the single best retirement vehicle IN THE WHOLE WORLD due to its low expenses on stock index funds and in a perfect world, the TSP should be available as a retirement option to every US citizen, and if you have access to that, MAX IT OUT with the stock index fund option and keep every retirement dollar in it until the typical retirement age of 59, then you can start taking it out.
I think the question you really are asking is that since you are fast approaching financial security, what should you do to have a meaningful life? Travel and a certain amount of splurges are nice, but most people find they're not enough to be truly fulfilled (if they don't get addicted to the cycle of more, bigger, better).
You need to find a cause or a reason to get deeply motivated. Usually it involves some kind of giving (of time, money, expertise, knowledge) to others.
I like that term - Financial Security (a.k.a. Financial Freedom and in some circles, something less suitable for a family forum) - very much. That is how I approach it as well, rather than "saving for retirement." If I find myself presented with an incredible, life-changing opportunity ten years before I plan to leave the fulltime work force, it would will be nice to be able to consider making that change in my life *because* I have the financial security/freedom to do so.
Also, life happens. Many people make plans, only to find themselves unable to work in their 50s, 60s, 70s.
Your military pension puts the two of you in a unique position - unlike a private company pension plan (those which remain) or public sector plan, it is likely quite stable.
Is there a health care option for you as well, as veterans? Either heavily- or fully-subsidized that you can use at 40 (even if working but may be better/cheaper to you/etc. than what you may get either through an employer or an insurance exchange)?
It does not matter in the slightest whether it is matched - the more money you save, the more it accumulates - don't use the lack of a match as an excuse. And, you can certainly start funding your kids' college education.
Until recently, I was putting away 12% in my 401k and only 8% was matched. I've backed off to the matched 8% since I'm so close to retirement now (another year or so) that the extra 4% isn't going to make much of a difference.
Don't be silly. You know exactly what you're asking. You want to spend more money now, no reason to lie about it. You want more material things now, more stuff, and to spend more money.
Sounds like you need to convince hubby to quit being a cheap bastard (read: care about the future) and start loosening the purse string to have some fun now while you're young and not have too much money when you're practically dead at 70.
You're in a tough spot, but certainly an enviable one. The military pensions are fantastic. I'd opt for spending a bit more money now too, if I were you. Being frugal by choice is odd, but being frugal by circumstances is worse.
Talk to hubby. More trips in the future should be a good priority. Make memories with your children by travelling. Better than buying more Christmas tchotchkes or shoes.
I've never heard anyone say that I have too much money for retirement and I agree that you need to have a little bit better balance between saving and living.
You are the only ones who can determine what that balance is.
You also never know what hand life is going to deal you so the better you are prepared, the better you can weather the storm.
John and I have had a great balance. We've had many adventures and great trips while we were building for retirement. He retired at 56 and I retired at 58.
We are still young enough to enjoy our lives and can travel whenever we want to.
Remember that you can never go back once you're at a certain age. That's all you'll ever have. Get as much as you can in your younger years and coast later on.
I had been semi retired for years except for my last year and a half of work before I pulled the plug. Had I not put together our retirement money the way I did I would still be busting buns now. Not so much fun after 50.
Also remember that a million dollars is not very much money today and could very well be worth a lot less in 20 years. You may actually need over two million to retire without worry.
Being frugal is not a bad thing, but there is a fine line between being frugal and being a miser.
Financial planners are a good route to help you reach your goals, but do your homework.
Until recently, I was putting away 12% in my 401k and only 8% was matched. I've backed off to the matched 8% since I'm so close to retirement now (another year or so) that the extra 4% isn't going to make much of a difference.
My 401(k) matches $1,200!!!!!!!!!!! A year!!!!!!!!!! I still put in $15,000 a year.
Don't be silly. You know exactly what you're asking. You want to spend more money now, no reason to lie about it. You want more material things now, more stuff, and to spend more money.
Sounds like you need to convince hubby to quit being a cheap bastard (read: care about the future) and start loosening the purse string to have some fun now while you're young and not have too much money when you're practically dead at 70.
You're in a tough spot, but certainly an enviable one. The military pensions are fantastic. I'd opt for spending a bit more money now too, if I were you. Being frugal by choice is odd, but being frugal by circumstances is worse.
Talk to hubby. More trips in the future should be a good priority. Make memories with your children by travelling. Better than buying more Christmas tchotchkes or shoes.
It's the latest craze of the Millennials - only work until you're 40 while eating twigs and berries and getting free clothes and goods from charities. You may not enjoy living but at least you're not workin' for the man!
My husband and I are young-ish, we have a little over $150K in investments, pensions we don't have to contribute to that will start paying us $60K total a year when we're 38 years old (no waiting until a certain age), and we continue to invest an additional $20K a year. We also don't plan to stop working until much older than 38, so we'll have the pension and an income. We're going to be literal millionaires in retirement, and we have no debt.
So, I think we're investing too much... the above numbers don't even count our social security. What are we going to do with millions of dollars at age 70, when we ALSO have our pensions paying us, and social security? I think I would rather spend more money now, travel now when we're healthy, splurge now when we have energy.
I have no idea how to plan this out? I realize we could hire an adviser or something, but I don't even know where to start.
I realize this is a good problem to have... but when we budget to save, I'm not really sure what we're saving for. I don't see myself traveling the world at 70... We will also have health insurance for life through our employers, so those costs will not add up during our golden years.
I don't really know what I'm asking... did you save more than you needed and regret not having more fun when you were young? Anyone?
OP, look at some online retirement calculators, the ones that ask more questions typically will give you a more accurate answer. You want one that focuses on income replacement as opposed to overall value of nestegg (although they all sort of have the same items - investments grow and then at retirement age, balance starts to shrink if withdrawals are greater than growth).
I would offer that "worrying" about retirement is premature for you now. Instead, think if what you want to do when you leave the military - you potentially have ~30 yrs of working life left until a typical retirement age.
Do either of you plan on going back to school either for an undergraduate or post-graduate degree? If so, you should plan on how you will fund that?
What types of jobs will you do after you leave the military and where will those be located?
You may see your expenses increase if you are moving away from a military-centered life (not sure how you are saving $20K per year with 2 children in daycare on military salaries).
IMHO, you are in a better position than 95% of the US population. If you could find jobs at 38 that pay similar or better than you have now (not sure what skills you have), then you can invest your pension when you leave the military and potentially minimize the amount of your then current salaries that you use for retirement, as the pension would more than cover that standpoint.
The key points are keeping your standard of living close to what you have now and not using this "boon" as extra disposable income to spend on material things (fancier cars, bigger houses, etc.). If you want to spend it, use it for development opportunities, family travel, etc.
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