My wife and I are in our 50s with $300,000 in a 401(k) and $700,000 in a pension. Will we have enough to ‘live a simple life’ in retirement?

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I am 53 years old, a Registered Nurse and planning to retire at 58. I am married, my wife is two years older than me and she is planning to retire at 62. Our marriage and friendship is good. We have three grown children. I only have $300,000 in my 401(k), and not on aggressive mode.

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My job at a prestigious hospital would give me roughly a $700,000 pension from 26 years of service. I plan to receive Social Security at age 62. I never planned to retire when I was younger in my 20s and 40s, but illness got in the way (problems with my knee that I’m unable to walk for long periods of time) I have two younger Had surgery and didn’t fix it).

In my situation, I think it’s doable. I plan to lead a simple life. I plan to add an additional $1,000-$2,000 a year to my mortgage.

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Do you think my money will be enough? I am very ashamed that I did not prepare well. I have neither any savings nor cash in hand. I lived paycheck to paycheck because my wife and I were careless about our expenses. We don’t have debt. I have six cars and am planning to narrow it down to two cars in the future. And sometimes it bothers me that 5-6 years of retirement are so close and I am still young. I started working at the age of 22.

what is the best plan for comgyEar? In the next 5-6 years, I don’t want to open my eyes, because I feel I am not ready for the next chapter of my life. Thank you.

mr wonderman

We’re 58, We Have $1.3M in Savings and Two Homes, But ‘I’d Give Myself a B Grade’ for Retirement Planning

Dear Mr. Wonderman,

First of all, you are not alone. Many Americans are surprised to find that they haven’t prepared for retirement as well as they had hoped when they are finally ready to call it quits. And having a medical condition certainly doesn’t help the situation.

The good news is that you do have time, especially if you both plan to work for another five to seven years. And you also have a healthy-sized pension, which many Americans these days can’t count on. So you’re not as bad as you might think.

The bad news is that you probably have to make some realistic assumptions about what your retirement will look like. If you lived primarily paycheck to paycheck during your working years, that may continue to be the case in your retirement.

“If their assets are solely for taking money out, they will probably retire on a lower income,” said Brent Ford, partner and investment advisory representative at Benefit Wealth Partners.

Think very carefully about the type of income you will receive until you can start claiming Social Security at age 62. Your 401(k), so that the money in there can grow over time. It’s hard to tell how long someone will live, but you should plan on living at least a few more decades, and you’ll need all the savings you can to meet that time frame.

Ford said that for most people, filling that income source gap comes down to working part time. Is that possible for you? Or do you have another hobby or passion that could potentially make you money while you wait to claim Social Security?

Whether you’ll be able to live a comfortable and simple lifestyle in your retirement depends largely on how you define it. Evaluate how much income you’re bringing in now and compare it to your account withdrawals and Social Security income when the time comes. Also make realistic assumptions about how much everything will cost in your retirement — your housing and utility bills, groceries, healthcare, taxes, and some fun stuff. You’ve worked all these years, you and your wife deserve to enjoy this next chapter.

One way to do this is: First, try using an annual withdrawal rate of 3% for your projections. In this scenario, if you had $1 million in retirement assets, you’d be putting away about $30,000 per year, or $2,500 per month. Then, see how much you can expect to receive from Social Security. You can do this by creating an account on the Social Security Administration’s website. You’ll be able to see your work and earnings history (which is important – your benefits are based on that and you want it to be accurate), and you’ll also get an estimate of your benefits at various claiming ages.

Add those numbers together and see what you get. How does it compare to the money you’re bringing in now, and will it cover the bills and then some for the foreseeable future?

One benefit in your situation, Ford said, is that you’re both living within your means, even if you’re not happy with how you’ve saved. “We should try to match their pre-retirement net income, or the amount they deposit in the bank every two weeks,” he said. “If we can achieve the same living wage on a month-to-month basis, it is logical that they are able to pay off their essential loans and continue to achieve something close to their standard of living.”

He has some other suggestions, such as not paying extra for a home, especially if your interest rate is low. If you’re able to pay the mortgage, which it appears you are, then just keep doing what you’ve been doing, and stash away any extra money for your future. The equity in your home is important, but that money becomes illiquid when you put it toward your mortgage, and you may want to focus on assets you can easily tap into. One important account you’ll need now and in retirement is an emergency fund.

as well I’m Retired, My Wife Isn’t – How Should We Pay Off Our $60,000 Mortgage Before She Retires?

As far as your cars are concerned, this may be a good time to sell. The current auto economy is a seller’s market, Ford said, and you may be able to sell them for a higher price now than in a few years, when interest rates are buoyant and supply chain issues are less pressing.

Also, consider reviewing your 401(k) asset allocation. You said you haven’t invested aggressively, and there could be a million reasons for that, but it’s a “strange” time to be very conservative, Ford said. With interest rates historically low, bond values ​​aren’t very high, which means that if you’ve invested heavily in bonds, they’re not doing very well for you. Inflation doesn’t help either, because as your values ​​are falling so is your spending power. If you’ve paid attention to the news, you may have noticed that the stock market has been hard lately, what with inflation and the war between Ukraine and Russia, but you may want to find a financial advisor who can help you. Understand the best investment strategy so that your money is actually working for you.

I want to talk a little bit about your spending concerns. Being aware of your spending habits and how it affects your savings and monthly budget is actually a very good thing, even if you are not very happy with yourself at the moment. And this is something that can definitely be fixed without completely depriving yourself of the joys in life.

View Marketwatch column “Retirement Hacks” For actionable advice on your own retirement savings journey

The key is not to go too fast in trying to change your ways, said Larry Luxberg, a certified financial planner and principal at Lexington Avenue Capital Management. “Trying to go too big at once is a recipe for failure,” he said.

Money is a very personal subject, and everyone has a different way of how they view it, which may be a result of how they were raised or what they learned from their parents, their grandparents Or major financial events (ie. 2008 housing crisis) with your peers. Savers may always feel reluctant to spend and spenders may have trouble fighting the urge to spend, but small, meaningful changes are possible.

Try tracking your spending to get a better idea of ​​how good or bad it is. You can do this by writing down everything you spend on a pad or in a spreadsheet, or by using an app like Mint that categorizes your spending for you. Maybe do it for a month or two and see what you get. Some people print out their credit card and debit statements and use a highlighter to jot down their expenses.

“It’s important to approach this process from a place of curiosity, not judgment,” said Laura Lee Thompson, a certified financial planner at GWN Securities. “Doing so helps answer the questions: Does the way you spend your money align with your values? Next, is it something that can be eliminated — or can you just keep it Can you find a less expensive way to get it?”

You may find that your cable or cellphone bill would be less expensive with another provider, or that you’re paying for a magazine subscription you haven’t seen in years. “The process can be empowering because it helps retirees become more intentional and aware of their spending,” Thompson said.

Good luck to you!

Reader: Do you have suggestions for this reader? Add them in the comments below.

Have questions about your own retirement savings? email us [email protected]

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