The following is a post from staff writer Crystal from Budgeting in the Fun Stuff, where she writes about finding the balance between paying your bills, saving for your future, and budgeting for the fun stuff along the way.
Yesterday I took a look at how my husband and I are doing according to the first two sections described in the article, 15 Ways to Never Run Out of Money – the Beginning Years and the Middle Years. Today I’ll be seeing if we have a plan for the Pre-Retirement Years and the Retirement Years as well.
The Pre-Retirement Years
6. Stay in the Game
We are only 27 and 28, but we do plan on continuing to save for retirement up until we finally can quit. We’ll also look at all other options before we even think about touching retirement contributions for anything other than actual retirement.
7. Catch Up
I’m hoping we won’t have to, but we will take full advantage of the post-50 retirement contribution rules if they are still around in 23 years.
8. Pay Off Debt
We only have 6 years or less left on our current mortgage. Even after we pay it off, we will continue paying ourselves that $900 payment every month in the hopes that any of our future houses can be bought with the proceeds of the previous home and cash.
9. Budget for Health-Care Costs
I already know our health care expenses will at least triple and will keep that in mind as we near age 52.
10. Time Your Payout
If social security is still around for us, we will wait until the proper time to get as big of a payout as possible.
11. Tread Carefully With Annuities
If we get an annuity at all, we would only invest 25% or less of our total assets into it. Our main plan is to use our retirement accounts in conjunction with my husband’s pension and have more than enough simply since we should be able to live off of the pension and interest alone by then.
12. Follow the 4 Percent Rule
We’ll be following the 3% or less rule and only withdraw 3% or less each year from all of our accounts. Since we should have several million by then, we may be able to live on just the pension and interest. We’ll only dig into principal if we have to or when we hit 80 plus.
13. Fill Up a Big Bucket
I like this idea – one bucket for cash, one for short-term investments, and one for long-term investments. We’ll definitely have at least 2 years of expenses in cash and keep the rest of our money as safe as possible.
14. Hedge Against Inflation
This is also a great idea. We have considered having 10%-15% in stocks and another 10% in treasury bonds, so we should be covered.
15. Work Longer
We may get hobby jobs in retirement if we will enjoy them, but we are saving now so we can have that choice later. I don’t want to be forced to work longer than necessary simply because I was wasting too much in my 20’s.
Overall, I think my husband and I are on track for a great, early retirement! How are you doing on these 15 steps overall (you can see yesterday’s post here)? How about these last two sections specifically?