Help a Reader: How to Retire with Plenty of Assets

Here’s an email I received from a reader looking for some suggestions:

From an early age, my wife and I were taught to save. So we paid ourselves first before anything else.

By the time I met my wife to be we were both working for Johnson and Johnson. We maxed our 401k’s, deducted for savings bonds (remember those?) and company stock. We probably averaged close to 20% of our total income was put away each year.

We had company cars, paid for our own cars with cash (and drove them into the ground), bought homes well within our budget, and basically budgeted within our salaries. And of course the companies we worked for had generous matches for savings plans and compensation plans for senior officers.

We both rose in our careers with me jumping to different companies and J&J always accommodating moves for her. At the peak of our earnings year, our combined incomes were well above $500k. Then life happened.

Linda was diagnosed with cancer and she fought it for over 6 years eventually succumbing to the disease 7 years ago.

If I have learned anything I know:

  • Life has a way of getting in the way of plans
  • Life is too short
  • Appreciate every day you have

So my net worth is a combination of her 401k, my 401k, stock, and a bit of leftover life insurance (most was used to pay for my two boys’ college educations and pay off the house). I currently have two homes, a lake house and a family home. Both paid for.

My retirement income will consist of 4 pensions. My J&J, Linda’s J&J (much bigger given she did not jump around and died while still working there so I get her full pension at her current age when I start to take it) and two other pensions I have from other stints. That amounts to $7800 per month (If I delay taking all my pensions until 3/2020) plus social security if I wait until 65. In addition I am calculating I will have $1000 dollars in dividend income.

My new wife (just married) will have a government pension (with healthcare) in 7 years as well as Social Security. All in we are expected to have $13,000 per month before taxes. In addition I have $3.0 million in IRA’s and she will have $1.0 million in savings plan by retirement age. We plan on trying to take no more than 2% – 3% per year from the IRAs. $80k – $120k

Life is complicated and so many moving parts…….

  • We are ready to build a house in Hawaii. Our dream is to live there 7 months and the lake house for 5 months. Wearing shorts every day! Having resources to travel back to see family or pay for them to visit us. We have saved 90% of the money for this house and may take a short term HELOC for the remainder until the family home is sold. See below. Also, I want the assurance of a salary in the event of cost overruns and other expenses during the 16-month build.
  • We still have two boys in College. Youngest will be out in two years. So we feel obligated to keep the house they are living in until they have a chance to get started. The equity we have in the house will be used to pay the remainder of the Hawaii house, do some upgrades to the lake house and buy almost new cars for both locations.
  • My wife cannot retire for 7 years in order to receive her minimum pension (with health care bridge to Medicare age). So me jaunting off to Hawaii for long periods of time is problematic (mostly for her but me as well). She will have the ability to move her career so we are not landlocked in place. For instance she could look and eventually find a job in Hawaii to end her career although it most likely would mean a pay cut.
  • The longer I work, the more the pensions will grow but the thought of working another 5 – 7 years is not that appetizing.
  • I have no plan on what to do after I retire. No burning desire to do anything special.
  • Combined we make close to $400k per year as my most recent role is less senior but also much less stressful.
  • We anticipate needing $144k per year for retirement expenses after taxes.

Our dilemma is really about how we take all of these moving parts and put them into some logical way to think about it.

Some questions:

  • What type of tools are available to calculate scenarios?
  • What tools exist to research and find meaningful work, charitable work, hobbies etc.?
  • How have other couples dealt with one working and one not?
  • Pitfalls and advantages?
  • It is somewhat overwhelming to consider all of the scenarios. One day, I feel like retiring and just figuring it out and another day I feel like continuing to work until life gets a bit less complicated. Will it?

What are your thoughts for him?


Originally posted at

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