Tuesday, June 4, 2013

How Much is Enough?

 I bought this fabric collection way back when...on clearance of course! I had no idea what I would do with the fabric, I just wanted it and the price was right.
 I've been itching to play with something girly lately, this fabric certainly fits the bill. After a good long search of quilt patterns on hand I decided to give "Roads" by Kari Nichols a try.
 She is coming along nicely so far. The pattern calls for 12 coordinating fabrics, I only had 5 from this line but it's looking just fine to  me.
I need to take quilts and projects outside to get good photo's. Just too lazy most of the time. The colors look off!

Before I get into our retirement plans, hopes, or whatever you want to call it I wanted to share this link from the Social Security office that might better explain the tax liability for some folks receiving SS. We fall in the 85% tax rate since we will be taking more than the $44,000.00 limit. Sorry yesterdays post was sooo confusing!!

What this means for us is we will pay tax on 85% of our SS at our Federal tax rate which is for now 28%, down the road once we are at retirement level the rate should drop to 23%. Of course we can't count on those rates staying the same as DC has a way of finding more confusing snecky ways to tax us all.

There are so many EXPERT opinions on how much is enough to retire on that it makes my head spin. There are dozens if not more free on line retirement calculators that do the same. Books in every size shape and color. What's a gal to do?

Save, save, then save some more. We have always put in the 6% of hubby's income that his company matches dollar for dollar even in the LEAN times in our 401K. That's a start. There were years when the kiddo's were younger that we could stash a little more cash in the account, other times we could hardly come up with the 6%. High school and college years were a real stretch with three girls needing/wanting activities, sports, dances, proms, cars, auto insurance, clothes.....you know the deal. n addition we wanted our girls to start out their adult life with no debt. Putting three through higher education debt free was not feasible in a one income family so Nanny went to work in the big corporate world. It was well worth the sacrifice in that we were able to continue to save for retirement and our girls had what we believe was a good start to their adult lives DEBT FREE.

Fast forward to youngest DD graduation. Hubby wanted one thing and one thing only. That was a Harley Davidson after all those years of sacrifice. I wanted one thing and one thing only. To kick our retirement savings into high gear. We did both. Seems there is always a saver and spender in a marriage, I don't need to tell you who the saver is!! Ha

For the past 9 years we have saved the maximum in our 401K account, once we hit the catch up age of 50 we took advantage of that as well.

I tell you all of this because I know this blog has a whole lot of young Mom's who are also stay at home Mommy's. We stay at home Moms tend to worry more about our families financial future I think. Maybe it's because the WORLD tells us we are not of value since we don't bring home the bacon and fry it up in the pan but I am here to tell you YOU can have it all. It just takes more time, planning, and of course coupons don't hurt!

Where we are now as far as retirement

  70%     of currant salary at 62
    5%      withdrawals each year from retirement account
7.29%     growth of retirement on average each year (we are in very conservative investments)
HSA        Fully funded each year
     3         more years of contributions to retirement account
Still have a mortgage on our home

Where we would like to be

80%    of currant salary
4%      withdrawals each year from retirement
6%     or more in retirement growth
HSA   Funded enough to cover cost of Medicare gap
Paid in FULL home!

 For us this will be enough. It has to be as I don't feel we can do much more. I have to stop getting bogged down with numbers. I have to remind myself while reading and studying what the experts say, we are each our own experts where our families and lifestyles are concerned. I have to remember to "Let GO and Let God"





18 comments:

  1. Hi Debby, Do you think the $44,000 includes 401K withdrawals? I am making a copy of this to show hubby! Two of 3 of our kids have graduated from college DEBT free ( # 3 is in high school) on our middle class income and we have a nice nest egg for retirement. I agree- START EARLY you young ones and watch it grow! Maybe I am just dense, are you saying in the above that the 5% you will take out is 70% of your current income? We also are planning on taking the 4% but home will have to be paid in full! Almost there- highly recommend 15 year loans to young ones and stay put! This is soooo on my mind right now! Thanks, for the series! Angela

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    1. Our understanding is that distrabutions from our 401k is considered in the $44,000.00 limit. Yes the 5% is 70% of our income with what we have in 401k at this time. Angela WE a so NOT experts!!! Just sharing what we have done, are trying to do, and hope to do. We too need our home paid in full before hand so I can sleep better at night. Congrats on paying for your kiddo's education, what a wonderful gift!!!

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    2. Thank you! I did a couple of calculators... going to take some Tylenol... haha

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    3. Chocolate always helps!!!

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    4. I opted for red wine. : )

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  2. Debby - it looks like you two are doing really well (especially compared to most). A couple of things to consider - do you have any Roth 401(k)s? It may (depends on tax rates) be worth funneling some money towards that the last few years if possible. Also, try to delay the withdrawals from the 401(k)s until they are mandatory - it will let the assets grow and delay the full tax hit. Having the house paid in full and in good shape will be a huge help - although many folks forget about maintenance and taxes (mine did!) - so a savings account for those is really necessary. And watch the asset investments in the retirement account - you don't want to be too conservative in your asset mix but once you start withdrawing/needing the money you will want to make sure the asset mix is appropriate. One last thing on this - if/when interest rates get better (like 5-7% minimum) you may want to consider using some of the 401(k) money to purchase an annuity to lock in an income stream. It will depend too on how well your social security & pension cover your fixed expenses. If they provide enough income - an annuity may not be necessary or attractive.

    BTW - you gave your girls a *huge* gift by letting them start life debt free.

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    1. SAK, THANKS for your input!! We can't start up a Roth due to our income range, sure wish we could. If hubby decides to go for the 62 year old retirment we will have to use our 401K but should be able to hold off on SS until 66. Then we can back off the 401K withdrawls some. We are setting up appoitments with advisors soon to look over all the other great suggestions you have.

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  3. I hear you, Debby! We are working towards full retirement, too, and putting several things on hold to be financially free. I wish we had started earlier but better late than never as they say-

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    1. Amen Diana, We started young but it is still short of what we wanted

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  4. I honestly don't know how much we'll be able to save up for retirement, but thankfully our personal financial advisor says hubby has a "nice" pkg. at work to go along with whatever we save. With our big income drop, we won't be able to save much, but i'm hoping to at least be able to save a bit here and there. :) Thanks for your advice & knowledge!!

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    1. The days of pkgs seems to be over in the US, sure wish we had one :(

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  5. PS - Love that fabric!!! Can't wait to see it completed!

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    1. Thanks, I will for sure send some leftovers your way!

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  6. Debby, sounds like you have a good plan to put in place. We only have one child, but like you, didn't want her to have education debt, so we paid for college and her masters. Your girls are very lucky that you were able to do that for them.
    Question....what will you do for your health insurance? Does your husbands company provide that till medicare kicks in?

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  7. congrat on the paid in full degree!! I made out girls leave the diplomas at home after the walked across the stage!! We can keep our health insurace but the premiums are CRAZY high at retierment.

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