Are we on track? We hope to have 1 child in about 4 years. That will cut down our retirement savings by half im sure.
You need to estimate your spending needs in retirement, as well as your income sources.
For instance, let's say your husband earns $70K now (which means he'd take home $52,500 from his pension in retirement). And let's say you also earn $70K now (which means that you'd take home roughly $18,500 in SS at age 62). In that case, between the two of you (the pension and SS), you'd have $71,000 in income. But while you were working, you earned $140,000 between the two of you.
So that leaves $69,000 per year that you will need to generate from your savings (because you don't really want to retire and then take a big income hit).
$52,500 pension income + $18,500 SS income + $69,000 investment income = $140,000
To generate $69,000 per year in income, you'd need roughly $2.8M in inflation-adjusted 2044 dollars, which subtracts a little bit of income need since you will no longer have to pay SS tax or save for retirement once you're in retirement. If you have $80,000 in savings today, and you save $10,000 per year between now and 2044, AND you get at least average returns (~9.5% annually on average) on your investments in something like Vanguard Target Retirement 2045 Fund, then you should have $2.8M in 2044, and you'll be set.
I can't say whether you're on track because I don't know how much income you earn now, but if my numbers are at least somewhat close, and you only *need* to save $10K per year, and you're already saving $30K per year, then I'd say you're kicking butt and very much on track.
If you wait until full retirement age which is probably around 67 or above for you, you will get more money from social security. If you take early retirement at age 62 they give you less money per year for the rest of your life.
Keep in mind that you will get medicare at age 65 even if you did not retire early and if you retire early at age 62, you still have to wait until age 65 to get medicare. Since health premiums are so high you probably would want to keep working until age 65 until you can get medicare
1) you are on track, but need to save more
2)you are not estimating what it will actually cost you when you are retired. utilities, phones, food, rent or real estate taxes? please do an estimate on that cost by putting in some inflation between now and the year 2048 (maybe add 50% to today's figures!). You may be surprised that you need a lot more than $3000 a month+, maybe close to $4500/month and social security will not be around will it in 2048?
3)how can you be sure that the state will pay the pension? is it already vested after ten years? What if the state buys out its employees and just hands out a lump sum like $200,000 and you have to find your own 'pension' and healthcare? that is why you need to save more each month
All I can tell you is this: on today's figures...basically it costs about $15,000 for each person to live, so let's say you have ONE child (who is healthy), well you'll have them for 18 years, so you'd need about $810,000 over the next 18 years.
So then let's figure this on the age 27. After 2035 (if you didn't have more children) you'd need $30,000 plus for the 2 of you. Now if you retire at 67 then you'd need 22 more years of $30,000 so you'd need $660,000 btw the both of you.
You're right, you can't estimate because you don't know what else you'd need, things like premiums and medical costs, downturns/inflation, child demands, kid's education, etc. so it's difficult to know how much to save but the idea is to KEEP SAVING because you will need every penny. People will be working longer in the future, maybe into their mid-70's at least.
Over the years your house will need maintenance, a new roof, maybe siding, maybe you might want to move, maybe want to have a second child, a new car, bring the house up to code, etc. So just keep working and saving. Forget about wanting to retire early. One cannot have everything in life that they want. Lots of times a woman outlives the man so you keep working too.
You say you save $30K per year. Well if it takes (today) $15,000 for each of you to live, then that means after age 45 each $30K per year you save will give you one more year to survive without government assistance (maybe 22 years). So if you retire at 67 then you'd be able to go without government assistance till you're 89 (but that's without medical bills and no downturns) and that's just a ballpark figure. It's all just guesses. So along the way you'd need a portfolio of investments.
Most people are unable to get ahead of the game that early in life, good luck getting there, looks like you have a good start, I know someone who had to delay his retirement plans when the 2008 crash devastated his savings investments.
Investing in energy conservation for your house might help make for more predictable expenses.
One retirement rule of thumb I have seen is to save 8 years salary before retiring, with investment one can stretch that for 24 years of retirement.
You could end up blessed or cursed depending on how you see it, with a long life, your retirement resources might mot make it to 90 years old...
Good for you and good luck
We retired when I was 56 and my wife was just shy of 60, but she had been a stay at home Mom with only a few years of part time work
That was over 7 years ago and ain't looked back yet
You are not "very" young. By the time you have your first child (if you bio clock hasn't already run out), you will be considered middle aged.
You are talking about retiring 30 years into the future. A lot can change by then. No one, not even your husband, is guaranteed a job for life. This just doesn't happen anymore.
It is your decision to resign / take voluntary retirement from the job. As of now you have more than 25 years ahead, plan and save a good amount to lead a happy life after retirement.
You are obviously on track---life comes at you fast though---Make sure your various 401K and roths are invested wisely in a good mix of stocks and bonds and use low fee investments for all you can (vanguard). Start saving for the college educations as soon as allowed. Examine your budget for further elimination of unnecessary expenses. If retirement is a big goal for you then go minimum on budget eaters like eating out, cell phone costs and internet/cable and fancy gadgets and expensive cars.
You are in good shape, but the only assumption that you are making is that your husband is going to spend another 28 years at his current position and this can come back and bite you in the butt.
Unfortunately, pensions are horribly unportable and if you lose your job (through no fault of your own) then years of pension contributions are really down the tubes. My suggestion is that you contribute what you can OUTSIDE of pensions so that you are not wholly dependent upon them. Especially with regards to health insurance. Many companies are changing their benefits for future retirees and assuming that they will be paying for health insurance for the 5 years that you are looking to bridge between job and Medicare may wind up gone.
