One thing I've told new employees that come to work at my employer - for every year you get a raise - add a 1% to your 401K as a contribution. So if you get 3-5% raise and you don't need the extra $$$ - keep adding a percentage until you reach the max contribution.
Thirteenth check comes in December after you have been retired the previous fiscal year. The sooner you retire after qualifying ( ex. 25 years), the longer you get to benefit from the 13th check. It continues to compound so that after several years it starts getting stupid big. Key is to get the meter running and hope for a long life.
Well that's quite interesting. Thanks for the info on that. I had no idea what it was or how it worked.
Compounding begins at age 55 or 60 depending on your Tier.
Man, she is probably going to still have plenty of retirement years left when the **** hits the fan on PERS. I would bet on any haircut to retirees being small, but who really knows what the political calculus will be then. Not going to be a fair solution and the people that 17ed everybody will be mostly gone and would be incapable of closing the gap anyway.
2025 | 2026 | 2027 | 2028 | 2029 | 2030 | |
| Income sources: | ||||||
| 401K | $52,000 | $55,000 | $34,090 | $37,273 | $40,551 | |
| Wife's Social Security | $24,000 | $24,000 | $24,000 | |||
| My Social Security | $48,000 | $48,000 | $48,000 | $48,000 | $48,000 | |
| Annual Income Target (3% inflation) | $100,000 | $103,000 | $106,090 | $109,273 | $112,551 | |
| EOY 401K balance (4% growth) | $1,000,000 | $988,000 | $972,520 | $977,331 | $979,151 | $977,767 |
A decent trust that spreads out distributions based on your family dynamic takes care of this problem. I have a trust that will pay out my kids a decent lump sum immediately after death and then a percentage for 10 years. My kids are also actively involved in our family estate plan so that they see it as an enterprise instead of a lottery ticket.
Roughly 60% of American wealth is in real estate between their primary home and investment property. According to Pew in 2021, average home equity in US is $174,000 with avg retirement account balance of $76,000. And that doesn't include the amount of investment real estate the average person has. Here's an interesting study-
www.pewresearch.org
A trust is a good idea for a lot of people. I’ve set up a revocable trust to make my estate easier to handle & to hold a few pass through investments in. Thought about doing the timed distributions thing but figured they’re all adults now so I’m not gonna try to control them. If they blow it all on hookers & blow that’s their fault.
Depends on how long you plan to live and whether you plan to leave a legacy to your kids. I’ve been retired for 5 years now and I’m doing much better financially than when I was working full time. The stock market has been phenomenal the past three years and I continue to be fairly aggressive with my investing. If you don’t have debt issues then I think you will be surprised how well you can live on 1-2 million in liquid savings especially if you are not concerned about what you pass on. Don’t get too conservative in your investing when you retire. I hope to leave a substantial legacy for my kids and so far I’m well above plan on that goal and we are thoroughly enjoying retirement.
It’s really dependent on your age, whether or not you have healthcare insurance through a former employer, and when you plan on drawing social security. At 67 you can probably retire comfortably with $1m but at 57 and no reasonable healthcare then no $1 m isn’t enough.
Everything you just described is part of my plan, but I genuinely wonder how "normal" it really is. It sure seems these days like the norm is to take out a new 30 year mortgage on a house you can't really afford at age 40, get you and your wife a couple $80k vehicles to impress the neighbors, keep re-financing all those loans you took out to go to Disney 3x/yr and send little Jimmy and Susan to 18 years of private school, and then don't forget the support they'll need after college since they took out $250k in loans to go to Princeton to study theology.
I know a lot of people that still work pretty hard in their 60's after making good money for a long time. I actually know very few people not hitting a milestone for a pension that retire at 62 or even 65. I'm always curious as to how much of that is just recognizing that they're not going to like retirement versus actually needing to work because they can't afford to retire. .
I'm trying to get my kids to understand and adopt the mentality that if you can live on $1 you can live on .80 cents. You won't miss that .20 cents and if you do you are living above your means. The .20 cents on every dollar goes towards some savings/investment program.
These people are terrible at math - zero chance their kid is going to Princeton. ***
^ this
2.5% has to be a bad number with so many people jumping jobs. A lot of people have 2 or more accounts out there.
Got your answer. Don't laugh. It's very social, good exercise, easy to learn, and addictive--pickleball! Spent first year of retirement looking for hunting land where I live now. Couldn't find any at a price I could afford. Someone suggested a pickleball beginner's class. Now I play pickleball 4 or 5 mornings a week and am content with a week or two of deer hunting in Mississippi and Alabama every year.
Private pensions are not risk free, but I think ERISA has mostly fixed companies raiding or not funding their pensions, so they are pretty safe until their is a complete breakdown in the rule of law. At least as safe as 401k's.
$3 - $4 MM to be comfortable. That'll bring you in about $150,000 to $175,000 a year in interest. $5 - $6 MM to live nicely
In the ‘26 session, I look for the legislature to move at least $300,000,000 of the surplus they are sitting on to PERS to shore it up near term. That will buy some more time to completely kick the can down the road.
It really just depends on the person. My wife and I were both career oriented to the point of never having children. We really established a plan in our early thirties to retire at 57. We both had full time jobs plus a side gig throughout most of that time. We both retired at 55, me first by about a year and a half. People gave me six months before I found something to do because I was always doing something. I’ve had zero regrets, I don’t get bored, and I’ve never given a second thought about finding something to do. My wife on the other had has struggled a little but she’s adjusting nicely over time. I honestly don’t know how I had time for a full time job much less a full time and a part timer.
Oh, I get it. And for the young among us, they have a great shot to hit some high numbers and if they max the Roth, then lookout.
You forgot travel ball.
Beware of having to retire when you don't expect it.
They took a net $61,000,000 a year from counties this year and sent that to PERS. They raised our State Aid by $49 MM / yr, but completely eliminated the Emergency Road and Bridge Repair (ERBR) fund, which was $110,000,000 / yr
Also advise them to start a message board for self loathing fans.
I'd legalize mobile sports gambling and use some of these proceeds (taxes) to shore up PERS.
I don’t know that cutting social security will ever be politically possible. There’s a lot of old voters & even more coming. PERS benefits can’t be cut retroactively. They can, and should, change the benefit formula going forward. Full retirement after 25 years is insane.
What are the expenses for someone with a normal lifestyle, house paid off, kids out of no huge debt? If you know that, you can get to your answer. But most folks don’t really track their spending, for some reason. And I have no clue what a “normal lifestyle” is anymore. Are they giving a large % to their church, for example?
Completely agree. Healthcare is the big variable. If you want to retire early, you better have a plan for those costs. One thing you can do is live off of personal savings & Roth money & get the Obamacare credits for as long as you can. Of course you lose the tax free future Roth earnings if you go that route.
