Alternative Path to retirement savings

[Tiny]

All of the Retirement Savings calculators and even "long term savings plans" seem to assume that your income will continue to go up and that you will work until you are 65. So, in theory, you will be earning your biggest paycheck when you retire.

What would be the strategy for someone planning to take a "step down" in pay in their 50's - in other words they want to plan to have less job income in the 10 to 15 years before they retire? They still want to be able to live off their retirement savings when they do retire.
I'm 47, and I really don't envision myself working in a position similiar to what I have now (earning a big income) when I'm 55 much less 65... so I've been socking as much as possible into my 401(k), Roth, and now taxable investments. My house is paid for... but I have a mortgaged rental property.
When I envision "me" at 55, I see someone in a new "career" maybe earning 50% less than I am now.
Should I be saving differently now? Any opinions/suggestions/advice?

[Savoir Faire-Demogague in NJ]

I completely understand what you are saying. I'd think you would need to invest more aggressively.

[debtheaven]

My house is paid for... but I have a mortgaged rental property.

Could you purchase another rental for more income later down the road? This is what we did / are doing (51 and 54 now). Six years left on one, 15 on another (we haven't yet closed on that one).

[Tiny]

I was thinking the same thing about the aggressive investing... I guess a Huge Pile of Investment money is the thing to strive for... no matter what one's retirement plans are!

I see the "lower paying" job as paying health care/living expenses and some savings... just not as much as I could be saving with the bigger income. I'm already happily living way below my means so I don't expect to have to cut back much on my "lifestyle" when going to the lower paying job - I might need to up my "lifestyle" since I might have more time to do more stuff I want to do...

I've had my nose to the grindstone for the last 5-6 years getting my finanical ship on a course - hopefully towards allowing me to step back on job income that I haven't really re-accessed the over all "plan" - especially in light of all the accomplishments of the last few years... I need to pick my head up and re-access if my ship is still headed where I want it to go and what would be a good course...

[Tiny]

Could you purchase another rental for more income later down the road? This is what we did / are doing (51 and 54 now). Six years left on one, 15 on another (we haven't yet closed on that one).

I've had the current rental for less than a year - I've got a reliable tennant and positive cash flow so, so far so good. I was thinking of giving myself atleast a year to let the dust settle and to get use to being a landlord before seriously looking for another rental property. I do like the idea of having one or several rental properties nearly paid off (or at really low interest rates!) by the time I'm 65.


(I wanna be like Phil)

[debtheaven]

(I wanna be like Phil)

Yeah me too, minus the cash-out refis LOL. Our aim too is that have them pretty much paid off by the time we retire. (The new one won't be but it's a very low monthly payment.)

I think waiting a bit since you've just purchased one is a good idea. On the other hand you might want to keep some cash handy (or resave it) for a DP if you do decide to buy another rental in six months or a year. I don't know where you live but don't let a great deal go by just because you think you should wait another year ... it sounds like you did well with your first rental purchase, so there's no reason you shouldn't with your second.

ETA: Our home is paid off too. We're just 6.5K away from having only rental mortgage debt. (4K car loan and 2.5K boiler loan). It makes us a bit nervous to more than double our current debt load with a new rental but it really is a big part of our "retirement plan". FWIW, we're not actually adding one, we're selling a rental in a carpy suburb to buy another rental in a good suburb.

Good luck!

[Clifford]

I plan to work at Disney World - or some such - when I'm 55.
I think when you look at your retirement (or semi-retirement), you need to consider two stages: before 59.5 yrs and after. You can forecast what your investments will be right before you lower your income and project them out as if you will never add to them again. You know that they will be there (a little more or a little less) at 59.5, so focus on the funds that will be available between now and then to help maintain your lifestyle with the lower wages. When SS comes in a little later, you can use it or defer it as you see fit.