We're in our late 20s early 30s and need to find out how much we'll need to save to live comfortably at retirement (early 60s). Did all the calculators, talked to our finance folks, but of course they're all either too much or too little.

My husband is enlisted, E5 now and eight years into the military, but working on going into the commissioned world. We looked at the retirement amount and not that big of a difference between retiring as an E8 and OE3 (at least that's the goal in the next 12 years).

We're saving about 15% of our income, have investments in TSP, IRA, and 403B with 12% average growth, we own a house and have a decent equity in it, I also have a small pension plan (maybe $400-$500/mo at 65 -- or more if we stay here longer or get another job with a pension plan). We have a savings account for emergencies, college fund, and even a wedding fund for our 3 year old. Our finance guy said that we'll have about $1 million at 65 but that seems a lot.

What will we hope in 30 years or so? Have a paid for home and a couple paid for cars. At retirement we want to travel once a year (overseas one year, in the U.S. the other for a few weeks or short weekend camping trips), spoil some grandkids, keep eating and using organic food and products, garden, work on an antique car, scrapbook, maybe open a B&B, just a two bedroom, if we buy a bigger house (we'll live there too), but not a must and if we're really bored. Really just have a relaxing life with no schedule. We're pretty frugal for the most part.

Not sure about my husband but I plan on working until I can't think no more. I'd love to keep teaching, maybe 1-2 college courses, do some little programming/web developing projects, or anything to keep my brain going.

I guess it's better to save more than not enough. We're not strapped but it's no point going in the grave with a lot of cash.

Thanks!

$1 million dollars at 12% a year would be a comfortable retirement for just about anyone I think. Even if you were living off the interest at half that amount would be better than most folks are doing.

How much are you currently saving in absolute dollars per year?

Just by looking at your savings rate, I do not think $1MM is unrealistic, because you're talking about 30 years of compounding. 12%/year may be unrealistic, though. Even if you do manage to average 12% per year, the volatility of your returns will take a big toll on your total return (that's why insurance companies strive for 8%/year, with very little volatility).

Please let me know the answer to that first question, and do you intend to continue your retirement funding at the same rate, 15%.

Also, what are your plans involving the funding your child's college education? 4-year college is likely going to be in the range of $250-300k for her/him. Are you preparing to fund the entire amount? Other alternatives are to partially fund, and let them deal with years/decades of school debt, or hope for the best with a scholorship ("planning" of last desperation).

In retirement, how often will you make a large purchase of a car? Has your finance guy factored-in Long Term Health Care (you should, because a serious injury will destroy your finances without this coverage).

If you can give me these answers, I can provide a second opinion. Although on a superficial level it looks like you're preparing quite well.

Finally, regarding taking money to the grave. It may do you no good, but if you have IRAs that can be "Stretched" by your grandchildren, they can be multi-millionaires via your gift.

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Originally posted by usafa93:
How much are you currently saving in absolute dollars per year?

We're saving $12,000/year for us and $2,400/year for our daughter. I teach 1-2 classes/semester and my teaching money goes into our emergency funds and vacations. We already have emergency money, just add some here and there.

quote:

do you intend to continue your retirement funding at the same rate, 15%.

Yes, we always try to add on each pay raises and we'd add on when my husband gets his bonus money, half goes to savings and half for him or a vacation.

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Also, what are your plans involving the funding your child's college education?

We're planning on funding our child's college. Can you get a student loan and when she graduates pay it off with the 529? That seems like a good plan since the extra 4 years helps with our tuition savings. My parents paid for all my schooling so it would make sense if we do the same for our daughter even though my husband thinks otherwise. Though she's still young and anything can happen, our daughter is considered advanced, so hopefully some scholarship will help with books. Also we do want our daughter to pitch in, work to pay for part of her rent and car (and beer), things like that. Just learn to work while she's at school. Also, I work for a university. Hopefully when she's of age she'll go to school where I work at and most likely I'll only work for a school that has tuition assistance as part of the benefits. Right now my work pays 50% for dependents. If not, I guess she'll have get a full scholarship to go to a place we for sure can't afford.

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In retirement, how often will you make a large purchase of a car?

I'm 32 and have only had 4 cars in my life. I'd keep my 2nd car (I had it for 10 years) if we didn't have a child and I'd keep my 3rd car (only a year) if we didn't move to the country and it's really bad in the winter. I'm keeping this 4th car until it's dead. My husband just wants an antique car, that's his dream. So our two rides, a car and a truck, and his antique are the retirement cars. We will probably purchase another one or two, used, somewhere in between if we have to and my car will go back to the Corolla/Civic type once my kids are out of the house.

Hope that helps. Thanks so much of your offer to help. I know the return changes but we are hoping for the best. Really hard to predict this part and I think that's the big reason why I'm worried all the time. Even though we both work, we're technically just living off of his salary. The extra's for savings and whatever. If we move, we have no bills, we will still be saving 15% of his earnings until I get another job (I can work from home, many people in my field telecommute).

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In retirement, how often will you make a large purchase of a car?

If you're not into having a brand new car, for the price of a new one, you can purchase three, good used ones.

From what I can see, our new car buying days are over. Christ, we have two cars that are no older than five years, but with low mileage, another 1998, grocery-getting Nissan with about 36,000 miles, a 1992 Toyota 4wd pick-up with under 15,000 miles and my classic, Musclecar Chevelle SS-454, with about 14,460 original miles on the clock. I'm 57 yoa and I retired at age 54, in 2004 and my Wife is 60 yoa and still working, but only for about two more years. I wish she would retire....last year!

Life is good, but oh, to be young again.

quote:

Originally posted by usafa93:

Just by looking at your savings rate, I do not think $1MM is unrealistic, because you're talking about 30 years of compounding.

I was thinking about this this post and I feel, IMO, that a million dollars is not a lot of money now, let alone 30 years from now.

usmcvet: if she enjoys the job, why not. I want to always work. Work == happiness for me. I LOVE to work We're not into new cars. My husband said if we're ever stationed in Germany he wants a new BMW or something but we'll see.

You don't think $1M is a lot now? The $1M is the today dollar. The spreadsheet that my finance guy showed us, it'll be $5M or more -- can't remember, don't have it with me, in 30 years. I think we need to put about $1M of our money into the pot.

If we'll get about $3500/mo (all the dollars are today money) from pension (at least I hope) you'd only need $1500 or or to supplement it from your investment, right? We have a large mortgage now so that's where most of of our bill is at, but before this, we use to spend $2,400/mo and that includes daycare. So in retirement, wouldn't most of your $$ be for fun stuff, utilities, and groceries. Maybe a little mortgage if worst comes to worst.

That's what's confusing me. Those calculators, they say to use the 70/80% of your income as your guide. Well, we spend so much more now in compare to what we'll spend in retirement due to the bills and child care that we have. In retirement the goal is to have your big expenses either paid for or have very little left to pay off. So technically, shouldn't the pension alone be enough and the extra's just our fun money? Or the interest from our then $5M be good?

Everyone's financial situation and goals are different. We are debt free and I receive a substantial pension, in addition to VA benefits. My Wife's salary is quite high, so we live very well, but not high and mighty. The need for a new car, IMO, is completely unnecessary for us.

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