I am a 59 year old retired union construction worker with a full pension of $80,000 per year with no COLA. I also receive Social Security Disability benefits for $3,400 per month. My wife, age 59, is an executive assistant to the director of operations at a large hospital and her income is $68,000. My wife has $425,000 in a 401(k).
We owe about $180,000 at 2.5% on our house, but we make payments every two weeks and it should be paid off in about 8.5 years. My wife plans to take Social Security at age 62. We also have $100,000 in pension. Do we have enough income to live a comfortable life? Maybe one or two trips a year?
See: I’m 71 and can’t decide whether to pay off my mortgage or get a cheaper joint annuity. What should I do ?
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Dear reader,
Only you and your wife can truly decide whether you have enough income to live a comfortable life. It sounds like you’re in the right place, but there are a few exercises you can do to help you both find the answer.
First, add up all the sources of income you currently have and what you expect in the near future. You can count on your pension, Social Security Disability and income. How will this fluctuate over time? For example, when SSDI stops, when do you receive your Social Security retirement benefit instead? When will your wife access her retirement account or when will her pension start?
Then calculate your expenses. Be extremely granular. Start with the necessities: your mortgage, taxes, utilities, home upkeep and maintenance, health care (doctor visits and medications), and groceries. Now add in the extras: dinners out, vacations you’d like to take, any additional entertainment, and, of course, money set aside for emergencies.
A note on emergencies: an emergency savings account should have a year’s worth of expenses (if not more) to be safe. This money must be in the form of liquid assets and easily accessible. It should only be touched in an emergency. And if you have extra income in retirement, it doesn’t hurt to invest more in your savings, both short and long term. You never know when it might come in handy.
Now look at your assets. Check your wife’s 401(k) plan and how it is invested, to make sure it is allocated appropriately. For example, you don’t want him to be too aggressive, but at your age it helps to have some risk so he can continue to grow. A trustworthy and qualified financial planner could help you narrow down your asset allocation. Review your annuity and understand the terms and stipulations, including when it starts, what to expect and if there are any tax consequences.
Also see: My husband says we will be “homeless” if we continue renting. We are 68 and 74 years old: should we buy a house instead?
Create accounts on the Social Security Administration website, if you haven’t already, so you know what to expect from your benefits and to confirm that all the information the agency has for you and your wife are correct. This site can also help you estimate how much you could expect in benefits at age 62, compared to your full retirement age or later, so you can make informed decisions about your claim. You might decide that she can wait to file for full retirement, or even delay it until age 70, so her benefits can increase.
Finally, all of these factors could change. It’s important to have backup plans, so that if something bad happens, you don’t feel lost or panicked. When you look at the numbers, talk to your wife about what might change and what you would do if it did, such as if you decided to move, if one of you got sick, if the roof needed to be replaced, or if one of your two sources of income has disappeared. It’s always best to be prepared.
Readers: Do you have any suggestions for this reader? Add them in the comments below.
Do you have a question about your own retirement savings? Send us an email at [email protected]
2023-12-16 12:11:57
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