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Like others, I think you should count on retiring before age 70 if you're doing physical work. Even people who are in good shape--I'm thinking of my dad (a welder) and uncle (a lineman)--even they are seldom able to work up to that age.
At 30, you have no idea what you work will look like in the next 40 years or what companies might be in business. Plus your health and that of your family is a total unknown.
It is always smarter to assume you cannot work forever and then when you get there if you still want to no one is going to stop you. (Well except for layoffs, etc).
Do you have health/dental issues? That's a LOT, for two 30-somethings.
It adds up fairly quickly.
Last year was a catch-up year for both of us as I hadn't updated my glasses since who-knows-when, I always order several boxes (boxes of vials of contacts) per year, had some dental work performed.
My wife had not had an annual wellness exam, since... ever. Had that, chased down fertility issues, those are only covered at 50%.
- Annual supply of contacts, 2 x boxes of 4 lenses each at $150, so $300
- Glasses $450, plan paid $200 of that, so $250
- Dental sealants added, $350 (FSA dollars, not covered by dental ins.)
- OOP maximum on health ins, $1000 towards a series of MRI's
- The remaining $1000 (Approximately) can easily be consumed in approved everyday drug store purchases throughout the year.
Lets say you dont have kids and you retire earlier than you plan and you "only" have 4 million in retirement. If you withdrawal 4% per year as it advised, you will be able to withdrawal 160k per year. Now, lets say the buying power isnt as significant then as it is now so that money is only worth 100k of 2020 money. You also presumably have no outstanding debt and your house is paid for, 100k will go a lot further than you think. But if you arent having children there is no legitimate reason to die with assets that exceed 4 million. I know it goes against conventional advice but i personally feel like i didnt work my whole life just to leave a huge amount of money to other people. Spend what you want. Some years you may want to take a once in a lifetime cruise around the world (or some equally frivolous thing) and its 100k each. Do it. Youll exceed 4% that year, obviously, but some years it may be a lot less. If you retire with 4 million and live an amazing 25 years of retirement and only die with 1.5 million, so what.
- Sometimes health retires people before they want to, I need to consider that.
- Also, if my industry changes some time late in the game for me, will I enjoy something else as much? Maybe not, maybe I'd consider retirement then.
And that is why it’s prudent to save as though your goal is to retire in your mid-50s. Having the financial ability to retire early doesn’t commit you to doing so, but it gives you options - options you just might find yourself needing.
And that is why it’s prudent to save as though your goal is to retire in your mid-50s. Having the financial ability to retire early doesn’t commit you to doing so, but it gives you options - options you just might find yourself needing.
Hope for the best, but plan for the worst.
Exactly! I'm glad I saved up a sizable nest egg before getting married and having kids. I can afford to dial back on the retirement investing if I wanted to, and still have more than I need in retirement. At this rate, I can essentially not put another dime in retirement and afford to retire at 61. Instead, I continue at my current rate so that I can hopefully retire earlier than originally planned. I'm hoping mid-50s...
My suggestion would be to max out the 401k as much as you can. Also put what you can in an FSA to cover your projected annual healthcare spending (but not too much as you can't carry over much or at all depending on the company plan. That will lower your taxable income. Start up a brokerage account and start putting some disposable income in there. Before you know, you'll have some growing assets.
Base your plan on retiring at age 55, not age 70. You are still young so this is feasible for you.
You are in a physically demanding career.
An ugly truth of our society is that many people are forced out of their jobs in their mid-50's.
Over the next few decades your desired retirement age may change.
If you plan your investments on retiring at a younger age you can always lengthen your career without financial hardship. No one can go the other direction.
I also have loved my chosen career (Construction Management) and planned on working till age 68. The closer I got to this age the more I realized that I would burning the guaranteed good health years of retirement by staying in the workforce. I will be retiring at age 64. Not a huge difference but still earlier than I had stated and believed only a decade or less ago.
Develop a plan to leave work at an early age, then stay longer if feasible and still desirable.
Youll exceed 4% that year, obviously, but some years it may be a lot less. If you retire with 4 million and live an amazing 25 years of retirement and only die with 1.5 million, so what.
Because of having no children, there is not even a need to accumulate $4m unless you just plan on going on $200k+each world trips every year once you retire. The 4% withdrawal rate is based on having your nest egg indefinitely and there is no need for that if you have no heirs.
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