Anonymous
Post 01/20/2014 10:09     Subject: Re:So how do you know if you're "on track" with retirement savings?
Anonymous wrote:That 60k a year in military pension seems high, if he is not active. Maybe he is full time reserve? Are you sure about that number? My husband is o6 with 25 years at retirement and I'm not planning that much income at 60.

That's actually low. Both you, and the OP, are calculating the pension wrong.

At 25 years, the pension is 62.5% of base pay. O-6 base pay is 10,134.60. At the minimum, an O-6 pension should be paying out 75K plus per year.
Anonymous
Post 01/20/2014 10:04     Subject: So how do you know if you're "on track" with retirement savings?
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!
Anonymous
Post 01/20/2014 09:00     Subject: Re:So how do you know if you're "on track" with retirement savings?
That 60k a year in military pension seems high, if he is not active. Maybe he is full time reserve? Are you sure about that number? My husband is o6 with 25 years at retirement and I'm not planning that much income at 60.
Anonymous
Post 01/20/2014 08:15     Subject: So how do you know if you're "on track" with retirement savings?
I think that you are in very good shape. Remember, today matters, too. You can't take it with you.
Anonymous
Post 01/20/2014 08:09     Subject: So how do you know if you're "on track" with retirement savings?
Anonymous wrote:600K in IRAs and 401Ks seems awfully low for your HHI of 300K, even given the private school tuition. Where's all the money going?


wow, who died and made you Dave Ramsey? geeezzz

We have a HHI of 275K and have about 600K in retirement. We would have more if DH had not gone through a long period of unemployment (one year), and not gotten divorced 20 years ago giving his ex is all of his 401k money as part of their settlement.

My point PP is that very, very few people, you included most likely, have a straight line to retirement. there are many left turns on that road, such as job loss, illnesses, DOWN markets from 2008-2012. Most portfolios have only just recently gotten back to their pre-2008 levels. The key is to get back on the straight and narrow as quickly as possible.
Anonymous
Post 01/20/2014 07:55     Subject: So how do you know if you're "on track" with retirement savings?
If I were in your shoes I would not worry one bit.

If you're really concerned, move out of DC to a tax friendly and low cost of living state like FL.

Anonymous
Post 01/20/2014 00:42     Subject: So how do you know if you're "on track" with retirement savings?
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?


I think you are in extremely good shape. Knowing your ages would help a bit but from what I see you have $ 1.8 in net worth and growing. The 150K in 529 should cover most of your college costs. Worst case scenario, you are looking at 60K educational expense for the next 15 years including kids college years.

Your DH's pension is the equivalent of having saved $1.5 M (4% of 1.5M is 60K) at the point of his retirement. Add that into your net worth calculations. Make sure both of you are insured well for the next 15 years.

Fidelity has a good formula to compare yourself against - The say you should have saved 3 times your salary by 47, 5 times by 55 and 8 times by 67 when you retire. I've read other advice that talks about savings targets of (salary * age/10). I'd use the combined salary * oldest person's age. Double this amount and you are considered an aggressive saver. Check out the Fidelity website and the Millionaire Next door book.

Relax.
Anonymous
Post 01/20/2014 00:05     Subject: So how do you know if you're "on track" with retirement savings?
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.
Anonymous
Post 01/19/2014 23:09     Subject: So how do you know if you're "on track" with retirement savings?
Wow, I'd say 600k in retirement savings is pretty darn good, and totally on track, if you also have 300 in non-residential real estate equity, a home w no mortgage that's worth 900k, a 529, and a military pension. Think of it like this, gettinng that mil pension of 60k/year starting in a couple of years is the equivalent of having $1.2 million in retirement savings. So the "real" amount you have saved in retirement accounts is more like $1.8 million in today's dollars-- it is just structured differently than for those w no pension. If you also have social security and can liquidate some of your real estate assets-- sell investment properties and downsize-- seem like you should be in fine shape 25 years from now, even if you stopped saving today.
Anonymous
Post 01/19/2014 22:44     Subject: So how do you know if you're "on track" with retirement savings?
Frankly, chances are that you're not on track if you are asking this question (I, myself, am also not on track...regrettably). Try to find a financial planner to work with on an ongoing basis!
Anonymous
Post 01/19/2014 22:41     Subject: So how do you know if you're "on track" with retirement savings?
we paid off our mortgage on our residence in full... and only recently got a big salary hike. I'm thinking once the kids are grown we should be able to get by on a lot less than now, given what a big chunk of post-tax income is now eaten by tuition. Also, my husband being military: his retirement money does not come from 401k or IRA but primarily from his pension, which will be about 60k/year (in today's dollars).
Anonymous
Post 01/19/2014 22:36     Subject: So how do you know if you're "on track" with retirement savings?
600K in IRAs and 401Ks seems awfully low for your HHI of 300K, even given the private school tuition. Where's all the money going?
Anonymous
Post 01/19/2014 22:25     Subject: So how do you know if you're "on track" with retirement savings?
Anonymous wrote:Ask someone you know.

...and trust!
Anonymous
Post 01/19/2014 22:24     Subject: So how do you know if you're "on track" with retirement savings?
Ask someone you know.
Anonymous
Post 01/19/2014 22:16     Subject: So how do you know if you're "on track" with retirement savings?
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?