Retirement planning. Retirement income. Retirement wishes. Retirement age. I’m working on it all. I’ve been doing some homework today. I spent some time on a personal financial statement – my assets and liabilities – and also my cash flow. I also did some reading on-line which I’ll post about below.
Financial Statement: Just this one exercise today has been VERY enlightening. After pulling together all of the information that follows, I have determined two things…
- I’ll be working a little longer than I had really wanted, but not too much, hopefully, and
- I need to keep investing in pre-tax retirement funds to continue to get my company match, but I want to concentrate on growing my post-tax savings since I don’t want to work until I’m old enough to draw down on the pre-tax accounts!
Assets
- Home $350,000 (today’s value – not inflated – I bought in 2001 for $175,000)
- Retirement accts $175,000 (pre-tax contributions – IRA’s and 401K)
- Car $ 15,000
- Loans Receivable $ 25,000
Total Assets: $564,000
Liabilities
- Home 1st $ 70,000 4.25% on a short am, so 7 years left until paid off.
- HELOC $110,000 floating P-1/4% (funds used for renovation which I did mostly myself)
- Credit Cards $ 4,000 (will be paid off by 2nd week of March)
Total Liabilities: $184,000
Net Worth: $381,000 (I’m not happy with this!)
My Income – As far as my cash flow goes, here is where I think I have my opportunity to try to make this happen…
After taxes, all insurance and 401K deductions (see below) and all monthly expenses (ALL monthly expenses including house, gas, electric, food, some play money, pet costs miscellaneous, etc… ), I am left with $2650.00 per month excess cash that I can use to invest, pay off the HELOC, etc.
- note: my insurance benefits include a decent medical plan, vision and dental, short and long term disability, and automatic 401K deductions at 6% of my income – which is matched by my employer
By the relatively small balance in retirement savings I have accumulated, and that being pre-tax, it is obvious I will need to work a GOOD bit longer than I hoped. I guess I don’t feel so bad though, since I started from very little after my divorce about 10 years ago, and I was not earning as much for a few years after that. Also, I lost $100,000 in the stock market a few years back… that made a bit of a dent!
But if I can make adjustments along the way, I’m still hopeful to minimize the time until retirement. I wonder if I’m just dreaming?? My cost of living isn’t that high – I’ve made sure to do things like buying a very inexpensive home in a great area, keeping my 5 year old car in excellent shape, etc. If I want something I buy it – but that happens rarely – I’m not a shopaholic! Also, I didn’t take any vacations for the past 4 years – but this year I plan on taking two… I’ll just have to make those adjustments in my long term plans.
So I’m going to start working on the math now that I have most of the numbers….look at the things I can do with the excess monthly income and how I can invest, pay down debt, accumulate cash, determining future values of savings and investments and try to come up with a real dollar amount I can hope to accumulate, and by when.
I’m also going to spend some time envisioning what I want to DO when I retire so I can develop a realistic cost of living for when that time comes. I want to be able to enjoy myself – isn’t that the purpose of this whole thing anyway??
In addition to the above, today I also did a little reading online and came across an article by Maryjeanne Hunt in The MetroWest Daily News on women and retirement. Simple common sense things such as to start saving whatever amount you can as early as you can so it can begin to grow, to choose your career carefully (look at the income and retirement benefits carefully), to buy an insurance policy c/o cash value and tax advantages down the road, and to remember that women tend to LIVE longer than men, so we need to remember that and plan for the extra income we will need to carry us over those extra years…
As the author mentions in the article, if we can work longer to build a larger nest egg, and delay drawing on our social security until the age of 70, the social security check will be bigger. That makes a lot of sense. But can I really depend on social security even being around? I don’t think I’ll even factor social security benefits into my retirement plans – let it be a bonus….and it WILL be a bonus if the fund still exists by the time I can draw down on it!
