Retirement Plan Suggestions

[qofcc]

Hoping to retire at age 62 - 8 years

Current situation -

401K ~$300K - recently started doing 12% ROTH contributions (instead of pre-tax) because I want to be able to take out ~$200-300K to buy a house free and clear at retirement and rent current house. +company match 6%=18% plan to increase to total 20% within next 2 years.

Projected 401K balance at retirement $750K-$1M depending on raises and stock market return (low estimate 2% raises 5% return, high 3% raises 10% return).

SS income me+DH+small pension = $3,500@62, $4,800@67 (or if approved for disability if health worsens)

Debt ~$14K currently @0% for some recent large home repairs (HVAC, etc), $30K car. 2nd vehicle paid off. Mortgage bal $133K, est value $180-200K, pmt $1K @2.9% in (current rent value $1.8-2K). Will all be paid off well before retirement.

EF 1mo cash + another 2 months in stocks and a $40K LOC.

Retirement Plan -

Live in paid off house (put into family trust to avoid any issues if either/both of us ends up in a nursing home). Use rent profit from other house to pay taxes/insurance/etc for home. Want larger home with in-law/guest suite in case MIL comes to live with us for us to take care of her or later for a child or grandchild to live in if needed (for us or them). (4 kids in their 20s/30s, 6 grandchildren with more expected). Had 2 situations in the last 2 years where relatives needed to live with us for months at a time and we had to turn the dining room into a temporary bedroom which makes it very difficult to host 20 people for birthdays/holidays in a 1200sf house. We talked about expanding current house but would be much cheaper to just buy bigger and this house would make a great rental.

SS income should cover food/gas/utilities/insurance etc.

Income from 401K to cover major medical expenses, replacement vehicles/home repairs, travel/entertainment/discretionary. We have the opportunity to invest in a friend's real estate business projects for 10% guaranteed return (have done so multiple times in the past with good results) and will probably take 10-20% of 401K and do that rather than an annuity if the opportunity is still available, otherwise, may get 2nd rental property - I don't want all of my money tied up in the stock market.

By my projections, if we start with $500K bal in 401K, with SS/Pension and investment withdrawals, with inflation@2% and investment return@5%, if first year needed $60K, money would last until 90's. If needed $75K, would need 9% return to last until 90's. Higher spending/lower returns could lead to running out in 80's but we have talked about it and if we ran out of retirement money, we would be OK selling the house/houses and living in a senior apartment (several nice ones nearby - income based and not) in our later years rather than working longer.

Retirement dream is to travel/see the country slowly in an RV. Flexible about renting or buying and going on a shorter trip annually for a few years or one long trip - will see how our health and finances are then. Other than that, just want to spend time with family/friends, enjoy the grandkids and work on crafts/hobbies and not have the stress of working. Plenty of things to do locally that don't cost much money. I've been working full-time since I was 18 (office/managerial work) and I'm completely exhausted. Having major health issues autoimmune/digestive/orthopedic and seeing a bunch of doctors - if I didn't work at home I don't think I would be able to keep my job. DH hasn't been working the last few years because of health issues but is going to be starting back part-time. I didn't ever achieve my dream of getting to be a SAH wife/mother, I really want to enjoy some years of not having to work before I die but I'm also not opposed to working part-time or project based or run a side business after I get to take a few years off if money is tight - I'm just ready to be done being chained to a desk for 40+hours/week (and it's too late in life to switch careers - I have lots of skills but none that pay as good as this and I don't have the mental or physical energy to start over).

What did I miss in the plan/strategy? I didn't even consider the ROTH to be able to pay for another house without the withdrawal being taxed at a huge rate until last year. 

[plugginaway22]

Health insurance until you reach Medicare age? I would also get the EF up to at least year of expenses as you transition to retirement.

[qofcc]

Feb 14, 2024 14:42:40 GMT -5 plugginaway22 said:

Health insurance until you reach Medicare age? I would also get the EF up to at least year of expenses as you transition to retirement.

I was thinking the marketplace for insurance for those 3 years with a high deductible plan (which I have now) and trying to fully fund my HSA before retirement.

I was also thinking retirement funds should be 3 years liquid and take withdrawal at beginning of the year and keep in savings account so the liquid retirement savings would be the EF.

[plugginaway22]

We are on year 3 of marketplace insurance and so far so good! DH will turn 65 next year so we will have a year with just me on it.
We also maxed his HSA our last few years of working and ended up with a bit over $30k which is a wonderful security blanket.
We retired with no debt. House and cars paid off. This is key in my mind.
Sounds like you have a doable plan.

[Tiny]

Feb 14, 2024 14:26:36 GMT -5 qofcc said:

Hoping to retire at age 62 - 8 years

Retirement dream is to travel/see the country slowly in an RV. Flexible about renting or buying and going on a shorter trip annually for a few years or one long trip -  

I don't want to "harsh your buzz" - but an RV is expensive. If you need a vehicle to pull a trailer that can be an added expense.  There are additional expenses and being able to cope with repairs on the road as well.   You may need to fact in a bigger expense for the years you will be traveling.   

My older sibling purchased a nearly new used Winnebago trailer (a mini or micro winnie -- something like that)  for 30K.  they already had a truck that could pull it.  He likes to tinker on vehicles and so has been enhancing the Winnie and was easily able to repair the water heater when it failed while they were traveling.    He and his wife LOVE their Winnie.  But he has said the savings on hotel rooms/eating out was somewhat balanced out by  the cost of gas and fees/expenses for places to park it/stay along with all the "housekeeping" that has to be done when arriving and leaving a camping site.    tbh - I've never seen them happier with a "travel" decision. 

Just wanted to mention the cost of long term comfortable traveling/camping  I think the total cost gets overlooked by the it only cost $30 a night to camp!!          

And you've got time to figure it all out! 

[qofcc]

Feb 15, 2024 15:26:10 GMT -5 Tiny said:

Feb 14, 2024 14:26:36 GMT -5 qofcc said:

I don't want to "harsh your buzz" - but an RV is expensive. If you need a vehicle to pull a trailer that can be an added expense.  There are additional expenses and being able to cope with repairs on the road as well.   You may need to fact in a bigger expense for the years you will be traveling.   

My older sibling purchased a nearly new used Winnebago trailer (a mini or micro winnie -- something like that)  for 30K.  they already had a truck that could pull it.  He likes to tinker on vehicles and so has been enhancing the Winnie and was easily able to repair the water heater when it failed while they were traveling.    He and his wife LOVE their Winnie.  But he has said the savings on hotel rooms/eating out was somewhat balanced out by  the cost of gas and fees/expenses for places to park it/stay along with all the "housekeeping" that has to be done when arriving and leaving a camping site.    tbh - I've never seen them happier with a "travel" decision. 

Just wanted to mention the cost of long term comfortable traveling/camping  I think the total cost gets overlooked by the it only cost $30 a night to camp!!          

And you've got time to figure it all out! 

We have owned two different travel trailers in the past. I really want a small class A or C for the round the country trip and do the Harvest Host thing & boondocking then maybe sell & get a travel trailer for local trips in later years. I've come to realize I really hate commercial campgrounds where your neighbors are very close and want to talk to you.  Could never buy one new, but I also don't want to deal with breakdowns... have a lot to figure on that. Also, friends are on a trip right now 3 months renting for $100/night in a nearly new Class A for a cross country trip and staying at Harvest Host & state parks. But good point, camping is not necessarily cheaper than hotels, it's just nice to have your own kitchen & bathroom wherever you go and not have to pack & unpack.  I also just found out about resortpass and I want to try that too! Will be lots of fun to plan when we get closer. I think a realistic budget for travel days w/activities & gas is more like $200/day.

[minnesotapaintlady]

Feb 15, 2024 16:05:23 GMT -5 qofcc said:

Feb 15, 2024 15:26:10 GMT -5 Tiny said:

We have owned two different travel trailers in the past. I really want a small class A or C for the round the country trip and do the Harvest Host thing & boondocking then maybe sell & get a travel trailer for local trips in later years. I've come to realize I really hate commercial campgrounds where your neighbors are very close and want to talk to you.  Could never buy one new, but I also don't want to deal with breakdowns... have a lot to figure on that. Also, friends are on a trip right now 3 months renting for $100/night in a nearly new Class A for a cross country trip and staying at Harvest Host & state parks. But good point, camping is not necessarily cheaper than hotels, it's just nice to have your own kitchen & bathroom wherever you go and not have to pack & unpack.  I also just found out about resortpass and I want to try that too! Will be lots of fun to plan when we get closer. I think a realistic budget for travel days w/activities & gas is more like $200/day.

My one uncle owns a small piece of land in AZ and rents a permanent site for 6 months out of the year in MN.  Each place has basically a "docking station" for his RV with a covered deck.  The AZ one actually has a very small building which has full plumbing and electric and a roof that covers the RV (he basically drives in and doubles the size of his RV living space).  His summer home base is up here and his winter home base is down there.

[Tiny]

Feb 15, 2024 16:05:23 GMT -5 qofcc said:

Feb 15, 2024 15:26:10 GMT -5 Tiny said:

We have owned two different travel trailers in the past. I really want a small class A or C for the round the country trip and do the Harvest Host thing & boondocking then maybe sell & get a travel trailer for local trips in later years. I've come to realize I really hate commercial campgrounds where your neighbors are very close and want to talk to you.  Could never buy one new, but I also don't want to deal with breakdowns... have a lot to figure on that. Also, friends are on a trip right now 3 months renting for $100/night in a nearly new Class A for a cross country trip and staying at Harvest Host & state parks. But good point, camping is not necessarily cheaper than hotels, it's just nice to have your own kitchen & bathroom wherever you go and not have to pack & unpack.  I also just found out about resortpass and I want to try that too! Will be lots of fun to plan when we get closer. I think a realistic budget for travel days w/activities & gas is more like $200/day.

Sounds like you got it all covered.     It will be a fun adventure!    
   

[TheOtherMe]

Feb 15, 2024 17:08:24 GMT -5 minnesotapaintlady said:

Feb 15, 2024 16:05:23 GMT -5 qofcc said:

We have owned two different travel trailers in the past. I really want a small class A or C for the round the country trip and do the Harvest Host thing & boondocking then maybe sell & get a travel trailer for local trips in later years. I've come to realize I really hate commercial campgrounds where your neighbors are very close and want to talk to you.  Could never buy one new, but I also don't want to deal with breakdowns... have a lot to figure on that. Also, friends are on a trip right now 3 months renting for $100/night in a nearly new Class A for a cross country trip and staying at Harvest Host & state parks. But good point, camping is not necessarily cheaper than hotels, it's just nice to have your own kitchen & bathroom wherever you go and not have to pack & unpack.  I also just found out about resortpass and I want to try that too! Will be lots of fun to plan when we get closer. I think a realistic budget for travel days w/activities & gas is more like $200/day.

My one uncle owns a small piece of land in AZ and rents a permanent site for 6 months out of the year in MN.  Each place has basically a "docking station" for his RV with a covered deck.  The AZ one actually has a very small building which has full plumbing and electric and a roof that covers the RV (he basically drives in and doubles the size of his RV living space).  His summer home base is up here and his winter home base is down there.

DN and her husband have a permanent spot  for the season in Wisconsin.  They do say it is much cheaper than all of the fees they were incurring at campgrounds to entertain young kids.

It's funny that the adults are camping with each other like they did when they had young kids, but not a single kid is joining them at the permanent site.

[The Walk of the Penguin Mich]

Feb 14, 2024 15:37:18 GMT -5 qofcc said:

Feb 14, 2024 14:42:40 GMT -5 plugginaway22 said:

Health insurance until you reach Medicare age? I would also get the EF up to at least year of expenses as you transition to retirement.

I was thinking the marketplace for insurance for those 3 years with a high deductible plan (which I have now) and trying to fully fund my HSA before retirement.

I was also thinking retirement funds should be 3 years liquid and take withdrawal at beginning of the year and keep in savings account so the liquid retirement savings would be the EF.

If you are traveling, this might be an issue.  Health insurance plans are very location specific and not readily portable.  I know an unsubsidized, high deductible plan for the years 62-65 run about $1300 pp locally.  

[CCL]

Mich, is that per month? Yikes!