Quarantine, Retirement Journey, Spending Freeze

Retirement Preparation Update

official currency united states of america
Photo by Karolina Grabowska on Pexels.com

We have just completed six months of 2020.  Can you believe it?  It has been the longest six months of any year I can remember.

Anyway, it’s time to check in with our retirement preparation.  Our ultimate goal is to retire in exactly 43 months.  (I haven’t figured out the days, hours, or minutes yet, but I will soon 😉 )

When the pandemic started and the stock market crashed, I thought we would have to extend our retirement plan out two extra years.   When the market bounced back, we successfully rebalanced all of our accounts, and have a much less volatile portfolio.  We won’t have significant gains, but we also won’t have significant losses.

The biggest eye-opener was our lack of sufficient cash. We had 6 months’ worth, but it didn’t feel nearly enough with our age as factors.   We have implemented a new savings plan and are now socking away nearly 40% of my husband’s income (even with a 10% pay cut).  This has been relatively painless since we are not going anywhere or doing anything.

I imagine once the world opens up again, we’ll have the travel bug and want to start going places.  We have a Disney cruise planned for May 2021, a trip we planned with our entire family 1 1/2 years ago.  If, however, masks are still required, this trip will be postponed until all’s well with the world.  I have that trip money already set aside.  My grandchildren may be teenagers by the time we go, but we are going nonetheless. 😉

pluto costume
Photo by Craig Adderley on Pexels.com

As far as other trips, we may postpone until retirement so that we have enough cash to feel comfortable when we do say goodbye to a paycheck.

As far as the budget, the only wild card has been food.  The grocery stores have been hiking up prices and I’m trying to stay fairly close to what I’ve allotted.  The only way I can do that is to shop solely at Aldi.  But even Aldi has raised their prices.

All in all, we are on track to retire in early 2024.  How are you doing with your budgets?

Cash Savings, Retirement Journey

Covid-19, cash savings and a retirement update.

pexels-photo-3943748.jpeg
Photo by cottonbro on Pexels.com

The Covid-19 virus appears to have given everyone pause, both in their physical lives as well as their financial lives, whether it was voluntary or forced.

It definitely has brought me back to reality, especially in the realm of retirement.  With 30% gains in my retirement accounts over the past 18 months, then 30% losses over the past 18 days, our account is back to where it was in 2018.   There were some sleepless nights and worries, but I know we are still in good shape.

My husband is 56.  We still have time to save, readjust and rejigger our plan.  And that is exactly what we are going to do.

We’ve decided to bulk up our third ‘bucket’ more than initially planned.  We lowered our percentage that is going into the stock market, and instead are adding that percentage to our cash savings.  We won’t stop saving until we have at least 5 years’ living expenses in the form of cash.  We know that our savings account will most likely not keep up with inflation.  It will, however, offer peace of mind which, to us, is priceless.

I thought I might go back to work, but I’ve realized now is not the time.  I will wait a bit and see if things get better.  In the meantime, I’m looking into online work, virtual assistant work, and such.   Anything to add to the cash savings.

Fortunately, the cruise line cancelled our trip which means we will be getting a full refund (and not just a credit).  However, our airline tickets will only be issued as a credit.  (Don’t get me started on how crooked they are).  That money will not be put in our savings fund, but moved to a  ‘future’ trip fund.  We still want to do something special to celebrate.

And lastly, our time line for when we retire may change.  We are still at least four years out to our planned retirement, but we are now considering five or six years.  It all depends on how much we can save.  We don’t want to retire hastily, without solid cash in hand.

That’s our new plan, and hopefully we’ll be able to meet our goal.  Covid-19 slapped us back into reality, and for that I am grateful.  It may just have saved our financial lives in our retirement.

How has Covid-19 changed your financial plan?  Please share.

 

 

 

 

 

Retirement Journey, Worry

How the present is affecting our retirement future.

man and woman sitting on brown wooden bench
Photo by Monica Silvestre on Pexels.com

The present market situation has caused a bit of a pause for us as we figure out when we will retire.  In four years, or age 60 (for my hubby), we still would have a sizeable nest egg, but not nearly what we thought we would have.  We are considering and expecting a very slow recovery, and only a 3% rate of return once it does.  Once our investments come up to what they were before the crash, we plan to put almost all of our investments to conservative, non volatile funds.

Along with watching our funds in the stock market, we are assuming our cash savings in bank accounts will not earn much, if anything.  Still, we are stashing away as much as we can, and I still anticipate we will meet our cash goal in four years.

What else has changed for us?  I’m applying for a job and my husband is considering working until 62 or 63.  We are both healthy, and want to make sure we work as long as we can to save the amount of savings we feel comfortable with in retirement…without the concern of another bear market down the road.  If we save enough, we won’t have to worry about interest rates.  Period.

I know we are fortunate.  I know we have it better than a lot of people.  I’m grateful every single day for my husband and his secure job.  However, if he lost his job tomorrow, we would be okay.  We have a considerable amount of equity in our home, which we could sell immediately.  Downsizing is in our future anyway, so it wouldn’t feel like a hardship.  In the meantime, while he is working, we are saving and paying down our mortgage as quickly as we can.

That is the financial side, but how am I navigating today?

Taking time to just breathe.

Trying to help others where I can.

Remaining positive in this space.

It is scary, I know, and I’ve lived through bear markets, 911, and the snipers (which traumatized me for months) but I believe we will prevail.

Just remember we are all in unchartered territory, including our government officials.  Be patient.  Don’t blame.  Don’t hoard.  Share.  Above all, be kind.

Sending my love and prayers to all those who are suffering a loss, whether it be a loved one who lost the battle with this illness, loss of pay, or loss of savings.

We are all in this together.

 

 

Retirement, Retirement Journey, SAVINGS

The Stock Market Ups & Downs and My 5 Bucket Sources for Retirement.

grey metal case of hundred dollar bills
Photo by Pixabay on Pexels.com

Preparing for an ‘earlier’ retirement requires making sure our money lasts.  Having various ‘buckets’ of resources is how we won’t lose our minds when the stock market takes a bit of a tumble.

Before I begin, if you are worried about your money in the stockmarket, please watch this video.  You’ll feel MUCH better.

Buckets 1 & 2 – Our Retirement Accounts

We have amassed, in my opinion, a significant amount in our 401K retirement accounts.  I will always be an advocate of the stock market, as it has proven over and over again that it recovers.  Slow, steady and consistent investing will give you the money you need over time.  We are proof.

We have two retirement accounts, and consider them buckets 1 & 2.

The first bucket will have ultraconservative investments, and we will use it to get through the first 7 years of retirement.

The second bucket will be money we will let grow.  We figure we have another 12 years of growth.

Bucket 3:  CASH. 

My goal before we retire is to have $200,000 – $250,000 in cash reserves.  I believe this will be enough for us to weather a long down market.

Our cash goal is a lofty one, but one we could do.  Thanks to my husband’s career, the fact that he was never unemployed, and his hard work to get to the position he’s in, we are now able to bank 50% of his take home salary.  (Of course it doesn’t hurt that all four kiddos are off Mom & Dad’s payroll!).  If I’m diligent with our budget, this goal can be obtained in three years.  I will take the fourth year to pay off our mortgage, which is the only way my conservative husband will retire. 😉

Bucket 4:  Social Security

Of course, we will have social security (yes.we.will).  We won’t start receiving it until year 7 of our retirement.  (I’ll receive mine two years before hubby).  If we keep our expenses low,  it will cover 3/4 of our monthly expenses.

Bucket 5:  A Divorce Settlement Pension (My HealthCare Plan)

May I just say I earned every penny of this? For all those that may not know, I was married and divorced in my 20’s.  I will never go into the specifics of that, but I came out ahead  with two GORGEOUS daughters and a pension.  I will receive the pension at age 62 (the same year my husband plans to retire).  I will take it as a lump sum, then roll it into an IRA.  This should cover most of our healthcare needs before medicare kicks in.

I believe it’s imperative to have several ways to get money in retirement, and cash will play an even more important roll in the future.

How are you saving for retirement?  Or, how are you spending in retirement?  Please share in the comments.

Florida, Retirement Journey

A Move to Florida?

coconut trees
Photo by Nextvoyage on Pexels.com

My husband and I have money meetings every Saturday morning to discuss our savings goals, plans for the year, etc.  Mostly we dream about the day my husband retires.  Today, instead of reflecting on the stock market losses, we started reflecting on our monthly expenses and how they would change if we moved to Florida.

We found this site that compares locations economically.  Here is how it came out.

Comparison Highlights:

– Overall, Northern Virginia is 48.0% more expensive than Sarasota, Florida
– Median Home Cost is the biggest factor in the cost of living difference.
– Median Home Cost is 108% more expensive in Northern Virginia.

Cost of Living Indexes Northern Virginia Florida Difference
Overall Index: Homeowner 152 102.7 48.0% less
Food & Groceries 114.1 106.5 7.1% less
Housing (Homeowner) 238.4 114.4 108.4% less
Income Taxes* (number reflective of what we will live on) $6,500 $0.00 $6,500 less
Home Price Average $515,000 $228,300 $286,700 (108.4% less)
Utilities 94.2 97.4 3.4% less
Transportation 127.6 90.0 40.4% less
Health 99.9 97.6 2.4% less
Sunny Days 199 257 58 more
Personal Property Tax 4.13 per $100 in value N/A 100% less
Miscellaneous – clothing, entertainment, etc. 114.2 101 13.1% less

100 = US Average. (Below 100 means cheaper than the US average. Above 100 means more expensive.)

Although Sarasota, FL is higher than the US average in most categories, it is lower than where we are living now.

Of course there are other factors that go into a move, but financially it appears that moving to Florida would  help our wallet. (The extra 58 days of sunshine doesn’t hurt either! 😉 )

And that’s a good thing.