So how do you know if you're "on track" with retirement savings?

[Anonymous]

Anonymous wrote:With your house paid off and your children grown and out on their own, I assume you can meet all your basic expenses (food, clothing, etc.) on the $60,000 a year pension. Anything in addition would be for extras (travel, helping out your kids, etc.). I'm assuming one or both of you will also get at least a couple of thousand dollars of social security a month on top of that.

It sounds to me like you are in excellent shape!

Agree that OP is in good shape, but it is unrealistic for someone making $300,000 to live on $60,000 in retirement easily. OP must know this since their house is paid off now, but a surprisingly large amount of most people's "mortgage" payment is really escrow for taxes and insurance, and that doesn't go away when the mortgage is paid off. In fact, it will go up, if you move somewhere that is hurricane-prone. Further, retirees usually have pent up demand for travel (even if it is to see the grandchildren), gifts for grandchildren, etc. You should make a retirement budget and be very realistic about what you're going to want to do in retirement. OP said they plan to continue contributing to their 401k, which may be enough, but I don't think they should stop saving yet. Particularly in this economy -- you never know what will happen between now and retirement.

[Anonymous]

My company lets us use financial engines to do retirement analysis. I found it very helpful in knowing where we stood. It told me we have x% chance of meeting our retirement income goal based on how long we were working, how much $ we were putting in every year, what we have today.

That said, I messed with it a lot and did not follow their specific advice.

What is nice is that you can load all your accounts into it and it will pull everything into the analysis without you having to plug in specific account balances. And it remembers it so you can re-run every month, quarter, year very easily.

[Anonymous]

OP here, thanks, this is mostly making me feel better. Husband is active duty -- he will probably retire soon but will of course get a civilian job to supplement his pension. He has 23 years in and is 45; I am 42. So barring some disaster (and yes we do have long term disability insurance!) we will both continue to work and save for another 20+ years. Plus at retirement we will presumably get social security, assuming the system itself is not bankrupt )in which case we will all have bigger problems). I honestly think we could love very easily on a third of what we now make once the kids are grown-- right now child-related expenses take a huge bite out of our income, and we live in a house that is much bigger than we would need without kids. But we will keep saving regardless.

[Anonymous]

Anonymous wrote:I have tried various online calculators and gotten radically different answers!

Here is our situation: does it seem like we are saving enough/not enough/too much?

DH is military and will retire in a few years as an 06, which means half-pay --roughly 60k/year-- starting at retirement; presumably he will get another job, however.
Our house is probably worth 900k and mortgage is paid off
We also own several so-called investment properties, in which total equity is probably about 300k
We have (in addition to husband's military pension) IRAs and 401ks amounting to about $600k, in diversified (mostly indexed) mutual funds.
We have $150k in 529s for our two kids, now 9 and 11.

Right now HHI is about $300k but both kids are in private school, so we have a $60k annual tuition bill; they will probably stay in private school through HS.

So-- basically we feel very fortunate and recognize we have way more than many/most, in part due to good income right now and in part due to an inheritance from my mother-in-law a few years ago. My question is not whether we are doing well in terms of current income and so on, but rather: given our income and the fact that we will be paying two private school and then college tuitions for the next 10-15 years, should we be patting ourselves on the back and telling ourselves it's okay to stop worrying, as we are totally on track to retire with a similar standard of living in 20-25 years, when we are in our mid to late sixties? Or should we be doing more? I basically think we are in good shape-- that we should continue to contribute to 401ks at the highest level we can, but that we can relax and not fret too much about it. Thoughts? How do you know when you're on track?

what are you talking about????? Your house is paid for and you are going to get $60K for life, plus you have all that cash in savings. I think you are way ahead of the game

[Anonymous]

Anonymous wrote:OP here, thanks, this is mostly making me feel better. Husband is active duty -- he will probably retire soon but will of course get a civilian job to supplement his pension. He has 23 years in and is 45; I am 42. So barring some disaster (and yes we do have long term disability insurance!) we will both continue to work and save for another 20+ years. Plus at retirement we will presumably get social security, assuming the system itself is not bankrupt )in which case we will all have bigger problems). I honestly think we could love very easily on a third of what we now make once the kids are grown-- right now child-related expenses take a huge bite out of our income, and we live in a house that is much bigger than we would need without kids. But we will keep saving regardless.

and you are 45 and 42!!! Shut UP!

[Anonymous]

Anonymous wrote:I've read you should have 8x your highest salary for retirement. That's cash on hand. Not as much needed when you have a real pension.

HHI, right, if you're talking a married couple? What percentage of savings of the current HHI does that assume? I always have difficulty with this, because we make over $400,000 but we spend only about $150,000 a year.

[Anonymous]

Marketwatch has a retirement planning calculator that is fun to play with:

http://www.marketwatch.com/retirement/tools/retirement-planning-calculator

[Anonymous]

Anonymous wrote:

Anonymous wrote:I've read you should have 8x your highest salary for retirement. That's cash on hand. Not as much needed when you have a real pension.

HHI, right, if you're talking a married couple? What percentage of savings of the current HHI does that assume? I always have difficulty with this, because we make over $400,000 but we spend only about $150,000 a year.

I believe it assumes 8* HHI. To keep it simple assume that you are able to live well with your current HHI. Assume you will be able do so for the foreseeable future with a 3% inflation and 3% raises to offset the inflation. Calculate HHI at 67 based on a 3% raise per year assumption. Retirement funds at that time should be HHI @ 67 * 8.

[Anonymous]

Anonymous wrote:
Marketwatch has a retirement planning calculator that is fun to play with:

http://www.marketwatch.com/retirement/tools/retirement-planning-calculator

Good link! Based on that I can quit now and live off my savings!