I am 49 years old (turning 50 this year) and my wife is 34. We have two young children under the age of 2, and twin girls, age 11, from my prior marriage. College for the twins is fully funded in a 529 plan and I save monthly in 529 plans for my other two children.
I have had a good career in technology and make about $300,000 a year. We max out all retirement vehicles and we have zero debt aside from our primary residence. We also have approximately eight rental income residential properties that net us about $6,000 per month after all mortgages and expenses. Passive income, if you will. Our monthly target expenses are about $10,000 to $12,000 on the high end.
Combined we have $1.7 million in IRA and 401(k) assets and approximately $500,000 in cash and after-tax savings in Fidelity and E*TRADE accounts. All are in stock-heavy aggressive portfolios and I self manage my IRA averaging a 12% return.
I started a new job in November 2020 after being let go from my prior position due to COVID-19 and a need to cut expenses. At 50, while I am employed, I am fearful that my job could end again and going through another 7 month+ job search would be incredibly hard on my family and me. I lose a lot of sleep worrying about tomorrow.
I want to retire, and have my wife retire, likely in Colorado, when I am 58, if I am not forced to retire sooner. I obsess on retirement calculators and try to see if I can achieve this, but one tells me we will be OK while another says I am going to be short and run out of money in 20 years.
I also have no idea how to look at health insurance costs for my family when not employed and how to factor that into a plan where my spouse will outlive me by 20+ years. I want to make sure she will be OK and never run out of money. We are both in good shape, workout and have good longevity on both sides of our family. She has worked long enough to qualify for Social Security.
I want to retire because I am going to be an older father and love my wife and children very much, so if I can maximize my time with them not working, but not sacrificing too badly on expenditures, I would like to do so. I just cannot figure out a plan. I am not opposed to working in retirement, either consulting or maybe an hourly wage job, but neither of those options are guaranteed.
Can you help?
Even with $1.7 million in retirement accounts, an additional $500,000 saved and multiple income sources, I understand why you may be worried about the future. You have a family that relies on you and the unexpected twists and turns of a pandemic certainly don’t help.
The good news: Retirement at 58 may very well be within your reach, financial advisers said. And if you choose to just scale back from a full-time job but work in some capacity, such as with consulting work or freelancing, you have even more flexibility, said Jen Grant, a financial adviser at Perryman Financial Advisory. “There are dozens of ways to reach his goal,” she said. “Now he should decide on the best way, spend eight years working toward it and set down the stress and worry so he can enjoy his young family.”
One of the highest-priority tasks you will face if you retire at 58 (or any time before Medicare is available at 65 years old) is health insurance. COBRA may be available temporarily after you have been separated from your old job but you have to make it to 65, at which point you can apply for Medicare.
There are a few options to be covered, including saving now for whatever cost it will be in the open market later on; taking on a part-time job with health benefits so that you can take advantage of the healthcare, earn a little extra income but still have more freedom than a full-time job requires; or have your wife take on a job that provides the family health insurance (if she isn’t already). Since you are healthy, you may also want to look into a Christian Health Sharing company, which is a faith-based health savings approach where members help cover the costs of others in need, Grant said. [Note: This healthcare option is a faith-based, cost-sharing program but is not traditional insurance or government-protected. Critics say Christian health-sharing plans may be more affordable than traditional insurance policies, but not all essential health needs will be covered.]
You mention your biggest concern right now is losing your job. This makes absolute sense, but try to dig a bit deeper into why you have these fears. Is it that you think you won’t be able to adapt to a new job in the future? Or won’t have the skills to be an attractive hire? Is it that your current expenses would be far too much for you to handle if you were temporarily out of work? Knowing that answer will help you find out what you need to do next.