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?
Ms99to1percent says
Sorry to hear about your late wife. Life is really too short.
About your question, I really cant give you a definitive answer without knowing your age.
But it seems like you are financially ready to FIRE if that’s what you want to do.
And what does your wife really want? Let me rephrase that “ If money was no object, what would she want to do?” Is she the type to want to FIRE? Or would she rather be working?
Btw, some of the side gigs/projects you can do are consulting, blogging,… and of course building your new house.
Mike at Balanced Dividends says
As Tina mentioned, very sorry to hear about your late wife.
Similar to the questions/comments above, I’d consider identifying what you and your wife really want to do. If working another 5-7 years in your current role doesn’t sound appealing, perhaps there is a less stressful position with your current employer so your pensions can continue to grow. If not, as Tina highlighted, you could look to supplement your income with any number of side gigs.
As far as tools, there are many calculators out there, but I’d recommend Personal Capital; they have one the best retirement scenario and related tools that I’ve seen.
Related: https://www.personalcapital.com/financial-software/retirement-planner
Thanks for sharing and best of luck. – Mike
Jason@WinningPersonalFinance says
I’m very sorry for the loss of your wife.
My two cents is that life is never going to get less complicated. It seems like you have the resources. If you love your work and it’s how you want to spend your time, by all means do so. Don’t quit just because you can. Maybe try exploring a bit to find hobbies. Learn to code. Take a painting class. Try Your hand at some card games. Learn to surf. Sign up for a marathon. Volunteer for a charity that’s important to you (Maybe The American Cancer Society). Try these things now to see if you want to dedicate more time to them. From a financial perspective, you’ve already won. Now you just need to decide what you want to do with your time.
Lew says
You may be a perfect candidate for a financial planner who specializes in HNWI (High Net Worth Individual). As I’ve moved forward in increasing my net worth ($2m+), I feel the need to work with someone who can look at my assets from a 10k foot view and assist in my retirement, estate planning and insurance requirements.
Of course, you’d need to find someone trustworthy but ask others in your social network that are in a similar scenario.
To me, this is analogous to professional athletes having trainers and coaches. They’re at the top of their game but still rely on others to help them get to the next level.
I would love to hear other comments or even a blog post when a financial planner is advantageous.
The Physician Philosopher says
I am sorry for your loss as well, but happy for your new life! I am sure that is what your wife would have wanted.
In terms of retirement and assets and how much you’ll get from pension and social security, I’d consider converting as much of that 401k into a Roth Ladder Conversion before RMDs kick in. That way you will have more money to leave in your estate for your boys. It certainly sounds like you will be doing just fine without touching that for the most part.
Otherwise, I’d find something you are passionate about and that you really enjoy doing and split your time between that and your family (or find something that you and your family are both passionate about and spend it doing that all the time).
Hawaii sounds great and I hope you can enjoy it!! You’ve saved well and deserve to be able to enjoy that.
Apex says
With current salary income of $400K, converting any 401(k)/IRA funds into a Roth and paying the tax now at one of the highest possible rates does not seem like the best move. After retirement when there is no salary then it might make sense, but once pension and SS funds come into play its still going to get up there in taxable income. That would have to be analyzed year to year.
The Physician Philosopher says
I missed the 400k income! Oops. Forgot his wife was continuing to work.
Yeah, have to wait til early retirement, but should be an option then.
With new brackets could still make sense if you don’t get out of 25% bracket in early retirement.
Mike H says
I’m sorry to hear about your late wife. Life is definitely too short.
Since you have another two years to pay for college could you look at taking a short leave of absence (using your vacation) and perhaps some unpaid leave of absence to escape the cold weather for a little bit before coming back. Psychologically that may give you the boost you need.
You’ll need to look into exploring the psychology of one partner working and the other not working. Try and use Kindle Unlimited’s search abilities and see what you can find. I do think it is quite subjective from person to person so you may have to explore around to see what best resonates with you.
That’s also why I recommended toeing into it with a longer leave of absence so you can figure out what best works for you.
There are tons of books under Kindle Unlimited that also talk about earning a bit of extra income through side hustles or different strategies. Most take a little time to come to fruition but can be done in spare time rather than full time.
Best of luck to you,
Mike H.
Ross says
>My wife cannot retire for 7 years in order to receive her minimum pension (with health care bridge to Medicare age)
You and your wife may want to look into the true value of this with your benefits center… working another 7 years to claim what amounts to about ~$10k/yr health benefit may not be worth the lost time and enjoyment of life. Also, if she stops working, the pension will not continue to grow, but she can defer until age 65 getting the benefit she has built up so far. Given your current net worth, that additional bit of pension will likely not make an appreciable difference.
Dads Dollars debrs says
Wow…life is short and I am sorry about your loss…boys are grown and you have enough cash. I am not one to think of sticking around long term with a unappetizing job just for health care. If you figure that piece out then you should be good to go.
There are lots of good resources out there, just like this site to help you get comfortable with slowing down work.
Rob says
Sorry for your loss….I can’t imagine.
From my POV, you sound financially set except for Healthcare, but lots of moving parts. As stated above, hard to give specific advice w/o knowing more details like age, etc.
Some other tool sites (besides this one — of course!):
* http://www.ifa.com (my fin adviser – has some good tools — index investing)
* http://www.wesmoss.com (some nice tools. has great podcast — income investor)
* http://www.caniretireyet.com/the-best-retirement-calculators/ (list of diff retirement calculators)
From a financial POV, it helped me to create an Excel sheet that listed out sources of income and moving those to passive income generators over the course of 10-20 years.
Finding hobbies/volunteering is difficult w/o knowing what you and family do now. For professional you could try https://glg.it/.
Best Wishes!
TwoQuick says
Sorry to hear about your late wife. You really need to smell the flower while you can. Life is too short!
One of the fun tools I use for what-if scenarios is on dinkytown.net under their
Calculators -> Retirement section.
There are two in particular I like are:
* Retirement Planner for Two Working Spouses
* Retirement Planner with Taxes for a Deferred Retirement Savings Plan
Hope this helps.
Happy planning!
Accidental Fire says
My condolences about your late wife.
It sounds like you need to find out what your passions are after you stop working. Because if you retire without a good hobby or passion, it might not work out too well. As the old saying goes, you have to retire to something.
Your post is yet another reminder of why I pursued Financial Independence. I want to do the things in life that I’m passionate about while I’m still young because you never know what’s around the corner
Sean @ Frugal Money Man says
I am sorry to hear about your late wife.
I am only in my mid 20’s so I am in no position to give advice on how to handle your multi-million dollar portfolio come retirement. I will say this though, I agree with Accidental Fire.
I would focus a lot of my time and energy now on figuring out what your hobbies are and what things you would like to do in retirement. Time will slow down really quickly once it is just you determining how you spend all the time in your days, and that has the potential to incite boredom quickly if your schedule isn’t filled with your hobbies. I will say Hawaii would be a good place to be bored, but I trust you and your wife will have an excellent and fun retirement when that day comes!
I wish you all the best in this process!
L says
If your wife is a Fed remember her FERS will be based on her average high 3 salary not your last three salaries. So if she takes a lower paying job in Hawaii within the government she will still have had higher salaries to contribute to the average. Sounds like I would start planning/building the house in Hawaii, get your current residence ready to sell, try to figure out what you want to do in retirement, try to get your wife a job in Hawaii and pull the trigger and move. It may take you the two years you need for your sons to work this all out.
Renate says
Firstly, you said that life has a way of getting in the way. Ask yourself: what are you waiting for? Whose permission do you need to retire early? If working for another 7 year is draining you, can you start transitioning into a more part-time role (3 days a week) and allow yourself the remaining 2 days to discover your passions and try new things? Changes are that if you don’t start now you will be having the same dilemma 7 years from now. If I were you I’d do the following:
1. Get coaching / mentoring on this and find someone very good at discovering your strengths and passions that can help. Connect with your true self and discover what really makes you thrive…
2. Transition into your new lifestyle gradually. Start with 2 days a week. Soul-searching and finding your true passion takes 1-2 years of work, reading, coaching, attending events that may be of interest etc
3. Make an action plan for you and your current wife to bring your retirement options to life
Claire says
I like the advice suggesting you take a hard look at the 7 years’ additional working vs the lifestyle value afforded by your ability to be financially independent anytime from now forward. As you know unfortunately, life is not always as predictable as we would think. Delay the receipt of the pension if that helps the calculus on this but don’t feel yoked to the 7 year commitment…
gt says
Sorry about your late wife.
Please look out for professional (experienced) advisers. Dave Ramsey can help you with this, I hope.