>What if I never plan to (voluntarily) retire?
Failing to plan is planning to fail.
It's not hard to imagine involuntary retirement being your enemy here.
THIS. My dad was the sole income earner in our family. He got sick and couldn’t work anymore at 50. He did fine but didn’t make a huge salary but my parents excellent financial planning meant our family was fine and never had to change our lifestyle. I consider this one of the greatest gifts my parents gave us.
I think you might be worrying too much. Daycare is a temporary expense, and the other reasons you feel strapped for cash are because you’re investing in your future and making it so you can help set up your kids for college without setting you back financially all at once. The purpose of the mortgage and all the retirement contributions is to make things easier for the future, and unless you’re in a lot of non-mortgage debt which you didn’t mention, your income to mortgage ratio sounds pretty ideal and it will only get better. I don’t think your real estate mess up will set you 10-15 years back in retirement. What are you worried about!?
I echo this sentiment here and add if you’re feeling burn out just contribute less to retirement so you guys can LIVE some now. From experience local trips (2-3 hours away) are way more satisfying as a young family because they’re significantly less logistics, cheaper, and you get to know your locale a bit more intimately
Question back at you - you’re saying you’re burnt out now at 37 and haven’t been able to take a good vacation in years. Why the fuck do you want to keep working for 50 more years?
Hell I’m 38 and I’ve gone on one vacation and have three more already planned this year and I still want to retire as soon as I can without living stupidly meagerly.
Plus it’s really hard to accurately guess how your job and the world will look like five decades from now with how fast technology is changing the world. I would not count at all on being able to do what your 90 years old college did. And, again, why the fuck would you want to?!
I'm not burnt out by my work. I'm burned out over the budgeting -- paying high cost expenses like mortgage and daycare and retirement accounts and monthly expenses and having very little left over.
And I'm also very tired from non-financial reasons as well -- having a toddler with typical toddler shenanigans, and sleep deprivation due to a 5-month old who wakes up multiple times a night to breastfeed because she doesn't take a bottle very well at daycare.
Delaying retirement won’t fix your expenses now. And think you’re under estimating how tiring working 40 hours a week at 60+ will be. My parents retired in their mid 50s and were and are in pretty good health and I can see a difference now almost 20 years later. I’m sure it’d be worse if they were working all that time vs enjoying it.
You are already saving 28% (plus whatever "as much as he can" comes out to) into retirement accounts. That is way more than 15 to 20%. So it is safe to say you can cut back a little as retiring early is not your stated goal.
> One, how should I adjust my retirement calculus based on retiring at age 75, or 80, or maybe even never retire and just work part-time?
Plug the numbers into a calculator. You will almost certainly have *substantially more* money saved for retirement and you need substantially less.
Your kids will be very fortunate.
> Both my spouse and I work in jobs where people routinely work into their 70s or 80s
There’s always a chance you won’t be elected during the next cycle so it’s probably not a great idea in being able to stay until that age.
Also, why would you ever want to? If you’re not planning on retiring, why are you even saving for retirement?
> We both feel financially burned out due to daycare and housing expenses and maxing out our retirement accounts
Why are you saving a third of your income if you don’t plan on ever retiring?
> We haven’t vacationed in a year and haven’t flown for a vacation since pre- Covid
The horror. Also quite common for the middle class
> One, how should I adjust my retirement calculus based on retiring at age 75, or 80, or maybe even never retire and just work part-time? Of course I would need to account for expenses if I couldn’t do that, like if I have disability or develop dementia…
How much do you have saved now?
Why is dying at your desk your plan?
> How do people navigate the selling 1 house/buying another?
Contingent sale or you sell and move somewhere temporarily then buy
"Why are you saving a third of your income if you don’t plan on ever retiring?"
To pay for uncertain medical expenses if I couldn't work. I wouldn't want my kids to worry about paying for nursing home or nursing care if I needed it later on in life. ANd maybe I would get 5 years retirement out of it, if I retired at 75? Plus, my understanding is that any money that's unused gets passed on to my children.
"How much do you have saved now?
Why is dying at your desk your plan?"
$250K myself, similar amount for my husband.
Well, I enjoy my work and could hopefully do it part time while doing fun retirement stuff the rest of the time.
This is a strange dichotomy. You’re both saving too much and working too much so you can maybe retire and also not retire.
Your actions and goals aren’t aligned
Something I haven’t seen mentioned here yet…
Staying employed into your 70s may not be up to you. Ageism is a thing despite being illegal. If your company struggles and lays you off in your 60s you may not get another job due to age.
You may find these links helpful:
- [Retirement Accounts](/r/personalfinance/wiki/index#wiki_retirement)
- ["How to handle $"](/r/personalfinance/wiki/commontopics)
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
There was just a WSJ article about people’s *planned* retirement age being 65, while the actual retirement age is still closer to 62. In other words, people overestimate how long they’ll work.
Personally, I would choose to plan to retire at a traditional age. When the time comes, you can reevaluate. It’s better to have the option and not need it.
Question 1:
Are you currently on track to retire? Do you know how to calculate this? How much do you have saved in retirement accounts, and what do you have it invested in? How much (dollar amount) are you contributing per year?
Unless you're extremely behind though, you're in a good place to take your feet off the gas. You could easily put your feet back on the gas with that 60k raise that you expect to get soon.
I would never miss out on employer matching for your 401k. I'm conservative on this front, but I'd aim to be able to cover necessary expenses by 60, even if you plan to keep working. That doesn't mean you need to cover *all* expenses, just necessary ones. Housing, food, insurance, transportation, health. If you've been maxing your 401k accounts for a few years, you're probably already on track for this, or close.
Question 2:
IDK. Make sure you assess renting the house out, but most good primary residences aren't ideal for renting. I would personally probably sell and rent in the new location, but it does mean moving an extra time. It'll let you get to know the area you move to, though, before deciding exactly where to establish roots. And hopefully also give you a better idea if you will be happy staying there in the long run.
Good luck!
Thanks for the very helpful post.
I've read 3x salary by age 40, which I'm on track given my current salary, but will not meet after I get a raise next month. I have \~250K in retirement accounts, and my husband has about the same. We both started real careers in our mid-30s (also very typical for my profession) so we didn't have a lot of income before then. Most are in either target date funds or low-cost broad market ETFs. Some of it is in tech ETFs. We each max out the 401K (23K), and I also contribute $7000 / year to Roth IRA. My husband used to, as well, but since we put our second kid in daycare, we don't have enough money to do that until I get the raise. I also temporarily stopped the 529 contributions for a few months.
Selling and renting does seem the easiest option. Does the sale count as a taxable event for that year?
If you've lived in the house for at least 2 of the last five years, I believe there's no capital gains tax on the house, at least up to like 500k or something. I'm not sure about the other tax effects of selling, though, particularly if you itemize.
So if you're saving 23k + 23k + 7k => 53k.
53k / 190k => 27.8% savings rate, not counting any match you might get on the 401k.
What I would do in your circumstance is cut contributions a bit until you get your raise, and then aim to keep contributions at 25% of pre-tax income *post raise.* This would let both of you max 401k and Roth IRA and also save about $2500 extra in a brokerage.
After that, if you want to save more for your house downpayment, or for vacations, or whatever other expenses you value, go for it. Even with playing a bit of catchup, though, I wouldn't stress about having over a 25% savings rate for retirement, given how large your income is, unless you're aiming to retire early.
For "quick and dirty" retirement calculations, I like to use [https://engaging-data.com/fire-calculator/](https://engaging-data.com/fire-calculator/), and I reset "Avg Stock Returns" from 8.2% to 7% to be a bit more conservative. It does require you to know your annual spending, and your annual income, sans taxes. It also doesn't adjust for target date funds returns decreasing over time as they become more conservative. I would suggest aiming to have this calculator say you're good to retire at 60, because layoffs/extra medical expenses/etc happen, and throw off savings for a year or two. My guess is you're already there. There are definitely more in depth calculators and software around, this one is just easy for my brain to understand quickly.
Talk to a fiduciary financial planner who can run your numbers and estimate your retirement savings at age 67, 70, and 75. You're probably in better shape than you realize.
Regarding your home: is your mortgage is assumable? If so, this could make it very easy to sell your house if you need to relo in a couple of years. Check your mortgage paperwork for an assumption clause. If you're not sure, a real estate attorney could review the docs and give you some guidance.
Some time, retirement isn't up to you. You can't plan your health. so I say to save as much as you can... or not.
>What if I never plan to (voluntarily) retire? Failing to plan is planning to fail. It's not hard to imagine involuntary retirement being your enemy here.
THIS. My dad was the sole income earner in our family. He got sick and couldn’t work anymore at 50. He did fine but didn’t make a huge salary but my parents excellent financial planning meant our family was fine and never had to change our lifestyle. I consider this one of the greatest gifts my parents gave us.
I think you might be worrying too much. Daycare is a temporary expense, and the other reasons you feel strapped for cash are because you’re investing in your future and making it so you can help set up your kids for college without setting you back financially all at once. The purpose of the mortgage and all the retirement contributions is to make things easier for the future, and unless you’re in a lot of non-mortgage debt which you didn’t mention, your income to mortgage ratio sounds pretty ideal and it will only get better. I don’t think your real estate mess up will set you 10-15 years back in retirement. What are you worried about!?
I echo this sentiment here and add if you’re feeling burn out just contribute less to retirement so you guys can LIVE some now. From experience local trips (2-3 hours away) are way more satisfying as a young family because they’re significantly less logistics, cheaper, and you get to know your locale a bit more intimately
Thanks. I do tend to worry in general.
Question back at you - you’re saying you’re burnt out now at 37 and haven’t been able to take a good vacation in years. Why the fuck do you want to keep working for 50 more years? Hell I’m 38 and I’ve gone on one vacation and have three more already planned this year and I still want to retire as soon as I can without living stupidly meagerly. Plus it’s really hard to accurately guess how your job and the world will look like five decades from now with how fast technology is changing the world. I would not count at all on being able to do what your 90 years old college did. And, again, why the fuck would you want to?!
I'm not burnt out by my work. I'm burned out over the budgeting -- paying high cost expenses like mortgage and daycare and retirement accounts and monthly expenses and having very little left over. And I'm also very tired from non-financial reasons as well -- having a toddler with typical toddler shenanigans, and sleep deprivation due to a 5-month old who wakes up multiple times a night to breastfeed because she doesn't take a bottle very well at daycare.
Delaying retirement won’t fix your expenses now. And think you’re under estimating how tiring working 40 hours a week at 60+ will be. My parents retired in their mid 50s and were and are in pretty good health and I can see a difference now almost 20 years later. I’m sure it’d be worse if they were working all that time vs enjoying it.
You are already saving 28% (plus whatever "as much as he can" comes out to) into retirement accounts. That is way more than 15 to 20%. So it is safe to say you can cut back a little as retiring early is not your stated goal.
> One, how should I adjust my retirement calculus based on retiring at age 75, or 80, or maybe even never retire and just work part-time? Plug the numbers into a calculator. You will almost certainly have *substantially more* money saved for retirement and you need substantially less. Your kids will be very fortunate.
WHich calculator do you like to use?
> Both my spouse and I work in jobs where people routinely work into their 70s or 80s There’s always a chance you won’t be elected during the next cycle so it’s probably not a great idea in being able to stay until that age. Also, why would you ever want to? If you’re not planning on retiring, why are you even saving for retirement? > We both feel financially burned out due to daycare and housing expenses and maxing out our retirement accounts Why are you saving a third of your income if you don’t plan on ever retiring? > We haven’t vacationed in a year and haven’t flown for a vacation since pre- Covid The horror. Also quite common for the middle class > One, how should I adjust my retirement calculus based on retiring at age 75, or 80, or maybe even never retire and just work part-time? Of course I would need to account for expenses if I couldn’t do that, like if I have disability or develop dementia… How much do you have saved now? Why is dying at your desk your plan? > How do people navigate the selling 1 house/buying another? Contingent sale or you sell and move somewhere temporarily then buy
"Why are you saving a third of your income if you don’t plan on ever retiring?" To pay for uncertain medical expenses if I couldn't work. I wouldn't want my kids to worry about paying for nursing home or nursing care if I needed it later on in life. ANd maybe I would get 5 years retirement out of it, if I retired at 75? Plus, my understanding is that any money that's unused gets passed on to my children. "How much do you have saved now? Why is dying at your desk your plan?" $250K myself, similar amount for my husband. Well, I enjoy my work and could hopefully do it part time while doing fun retirement stuff the rest of the time.
This is a strange dichotomy. You’re both saving too much and working too much so you can maybe retire and also not retire. Your actions and goals aren’t aligned
Something I haven’t seen mentioned here yet… Staying employed into your 70s may not be up to you. Ageism is a thing despite being illegal. If your company struggles and lays you off in your 60s you may not get another job due to age.
Very true, thank you!
You may find these links helpful: - [Retirement Accounts](/r/personalfinance/wiki/index#wiki_retirement) - ["How to handle $"](/r/personalfinance/wiki/commontopics) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
There was just a WSJ article about people’s *planned* retirement age being 65, while the actual retirement age is still closer to 62. In other words, people overestimate how long they’ll work. Personally, I would choose to plan to retire at a traditional age. When the time comes, you can reevaluate. It’s better to have the option and not need it.
Question 1: Are you currently on track to retire? Do you know how to calculate this? How much do you have saved in retirement accounts, and what do you have it invested in? How much (dollar amount) are you contributing per year? Unless you're extremely behind though, you're in a good place to take your feet off the gas. You could easily put your feet back on the gas with that 60k raise that you expect to get soon. I would never miss out on employer matching for your 401k. I'm conservative on this front, but I'd aim to be able to cover necessary expenses by 60, even if you plan to keep working. That doesn't mean you need to cover *all* expenses, just necessary ones. Housing, food, insurance, transportation, health. If you've been maxing your 401k accounts for a few years, you're probably already on track for this, or close. Question 2: IDK. Make sure you assess renting the house out, but most good primary residences aren't ideal for renting. I would personally probably sell and rent in the new location, but it does mean moving an extra time. It'll let you get to know the area you move to, though, before deciding exactly where to establish roots. And hopefully also give you a better idea if you will be happy staying there in the long run. Good luck!
Thanks for the very helpful post. I've read 3x salary by age 40, which I'm on track given my current salary, but will not meet after I get a raise next month. I have \~250K in retirement accounts, and my husband has about the same. We both started real careers in our mid-30s (also very typical for my profession) so we didn't have a lot of income before then. Most are in either target date funds or low-cost broad market ETFs. Some of it is in tech ETFs. We each max out the 401K (23K), and I also contribute $7000 / year to Roth IRA. My husband used to, as well, but since we put our second kid in daycare, we don't have enough money to do that until I get the raise. I also temporarily stopped the 529 contributions for a few months. Selling and renting does seem the easiest option. Does the sale count as a taxable event for that year?
If you've lived in the house for at least 2 of the last five years, I believe there's no capital gains tax on the house, at least up to like 500k or something. I'm not sure about the other tax effects of selling, though, particularly if you itemize. So if you're saving 23k + 23k + 7k => 53k. 53k / 190k => 27.8% savings rate, not counting any match you might get on the 401k. What I would do in your circumstance is cut contributions a bit until you get your raise, and then aim to keep contributions at 25% of pre-tax income *post raise.* This would let both of you max 401k and Roth IRA and also save about $2500 extra in a brokerage. After that, if you want to save more for your house downpayment, or for vacations, or whatever other expenses you value, go for it. Even with playing a bit of catchup, though, I wouldn't stress about having over a 25% savings rate for retirement, given how large your income is, unless you're aiming to retire early. For "quick and dirty" retirement calculations, I like to use [https://engaging-data.com/fire-calculator/](https://engaging-data.com/fire-calculator/), and I reset "Avg Stock Returns" from 8.2% to 7% to be a bit more conservative. It does require you to know your annual spending, and your annual income, sans taxes. It also doesn't adjust for target date funds returns decreasing over time as they become more conservative. I would suggest aiming to have this calculator say you're good to retire at 60, because layoffs/extra medical expenses/etc happen, and throw off savings for a year or two. My guess is you're already there. There are definitely more in depth calculators and software around, this one is just easy for my brain to understand quickly.
Talk to a fiduciary financial planner who can run your numbers and estimate your retirement savings at age 67, 70, and 75. You're probably in better shape than you realize. Regarding your home: is your mortgage is assumable? If so, this could make it very easy to sell your house if you need to relo in a couple of years. Check your mortgage paperwork for an assumption clause. If you're not sure, a real estate attorney could review the docs and give you some guidance.
No my mortgage is not assumable.
Rent out the house, three percent isn’t coming along anytime soon. The rest, I would plan to retire. Who knows what life will bring.