That sounds idea, hayden. Good for you! I’ve thought about that idea. Will there be a Social Security hit when they do your earnings calculation?.
That’s something I asked about, colorado_mom. Apparently SS takes the top 35 earning years. So it wouldn’t hurt most of us. In many cases, 2 days a week at our current salaries is more than full time salary when we first started working.
The part time work will not matter to your SS calculated benefits, but the earnings will matter to your benefits if you draw from SS while earning that salary.
Good point, mominva. However I’m not even close to FRA, and I’m planning to take SS at 70 anyway.
By the way, thanks to everyone who recommended Bogleheads and SS Solutions (@IxnayBob and a couple of others). Very good sites which gave me the confidence to retire early. Well, almost retire early.
Congratulations, Hayden.
Good job @hayden. I’m glad that you found Bogleheads useful. I always get a warm feeling when I see people on CC and BH who give of their time and knowledge without expecting anything in return.
Btw, it doesn’t really matter in your case, but a person’s earnings over the years are indexed (to account for changes in average wage over the years). Most people’s wages do increase over the years, but it isn’t quite as steep as the numbers alone would indicate.
I assumed as much. But my starting annual salary was $6,900!
You can use this page to show the wage index factor for any given year:
http://www.ssa.gov/oact/cola/awifactors.html
For example, if that $6900 was 40 years ago, the index is 5.1352197, giving a value of $35433 used in the benefit calculations.
Money Jan/Feb 2015 has an excellent article “Retire Secrets to Happiness” - create a predictable paycheck; stick with what you know; find four hobbies; rent late in life; keep your kids at arm’s length. Survey of retirees, 81% cite good health as critical - the most important ingredient for a happy retirement. Socializing. Over 80, higher satisfaction with renting than owning.
(Another good article in this issue is How to Find a Generous College).
My mid-80’s in-laws are happy owning because they are living in a comfortable house that has low maintenance needs, and is paid for.
SOS - We get Money mag too, and it was a good article. We must be a bit part of their target audience. They seem to have a lot of good articles. I like the various family stories.
will admit that my eyes glaze over at all the various fund information articles. That’s DH’s area of interest. I just make sure we keep saving, and gosh that will be easier w/o college bills.
We get Money Magazine too. But we are not investors so some articles there are too “diificult”/dry for us to read.
Agree with your last sentence: “…that will be easier w/o college bills.” Fortunately, we are done with it. However, unfortunately, we are about to retire.
BTW, do any of you think it is easier to save money in an retirement account (esp., 401K) than outside of the retirement account? It is almost as if there is some money sitting in a non-retirement account, we could always be able to find a legitimate reason to use that money.
I believe I started to throw money into 401K (and much later started to throw money into my wife’s IRA also ) after I found that it was too difficult for us to save money in a non-retirement account. I really did not think about anything else when I started to do this (and my wife had no clue about this until much later. She always asked me to make financial decisions and she even did not want to know it!)
I’m a “bucket” saver. Hubby thinks it’s so dumb, until he gets to just buy something or do something. We have certain goals - vacations, car replacement, down payment for a second house, etc Our bank allows you to set up different accounts and name them whatever you want. Of course I could just use that money however I wanted, but it works for us.
@eyemamom, my husband has all these designated “buckets” in our accounts too, to save for things. He has a savings and investment bucket, a property tax bucket, and our captains fund (established several years ago as a bonus for our promotions, to buy things that we would normally have considered frivolous).
However, after all these years, I think the highest amount in any of these buckets is about $1.27. Unfortunately all the other expenses of life come first, before there’s anything left to put in the bucket!
I think everybody has different ways to save and when you are comfortable with a successful way, whatever works for you. That particular Money issue had a lot of food for thought. I actually have tab markers (made with tape) on the top edge, and on the side I have the investor guide tab markers. There is good advice about re-balancing, etc - but I think our investments are in good hands with what we are doing, and schedule a semi-annual review with our financial guy Don.
We have been concentrating on building up our emergency fund, as we have retirement savings pretty much taken care of (still have H automatic deduct getting max match from employer). Shifting IRA money into Roth IRA. We are still paying a mortgage (only 2.5% interest rate, but it is still a liability) and still have college age children. The best financial thing to change our picture would be my return to FT employment, which I am working on obtaining with pursuing good job leads. In the meantime, enjoying social media.
The one couple in the Money article, financial advice was to buy the LTC coverage (they would have to pay $ 500/mo for this - ouch! and probably limited coverage too) Our current policies (with unlimited years of benefit, those policies are unobtainable now) - we had 10 year rate guarantee, so now we are in the second year of premium increase (next year will be the last year of increase, then we will pay level premiums again). Never have to be concerned with settling with skilled care facility - policies can cover 24/7 in-home care at the highest level for both of us. That insurance coverage was one of our best financial decisions. Like homeowners, you may never need to implement, but catastrophic if you need it and don’t have it. We are helping our DDs with their financial planning (as soon as we get their earning report for 2014, can put money into Roth IRAs). At age 18 and 20, the money now will grow incredibly with the time value of money. I used indexed fund choices available with TD Ameritrade (based on amount of money going in determines what is available). We also are in the process of obtaining term ins on both of them - when H and I were young adults, it took us a while to figure out the insurance stuff. So I want to help them set this up, and I own the policies at this point, pay the low premiums.
H actually even read the Retire - secrets to happiness, and we have been discussing. Now that we are empty nesters, more of life together. Article says the happiest people don’t do things in isolation, however some people need more alone time than others for their hobbies and interests.
Oh I know the buckets don’t work for most people. We have fairly low expenses to income so I wanted to make sure money didn’t get frittered away and to wonder what happened to it. We’re torn between two financial decisions right now - finish paying off the house or saving for a second place. Our interest rate is really ridiculously low. Do people who own second homes have two mortgages? I know we’re more conservative than most financially and I don’t want to spend so much time filling buckets and paying off the house that we don’t do some things we’ll enjoy as well. But I also have no interest in being in debt up to my eyeballs. But the two houses together are still affordable to us, we’re just not accustomed to owing money. So until we come to some kind of conclusion, the money is being saved.
If you can afford it, then I don’t think you would be in debt up to your eyeballs.
I try to look at debt as just another tool in my financial toolbox, and keep emotion out of it. Use it where appropriate, don’t use it frivolously, don’t use it if not necessary. But don’t fear it.
Yes.I do. I also rent out my second house to bring in some income, which helps (and is not for everybody).
DW and I were considering paying off the first mortgage on our main house, which has the highest interest rate and lowest balance of all our mortgages. Then I took a first pass at our 2014 taxes. Hoo boy. That plan went right out the window. 
SOS - H and I just bought LTC from Mass Mutual at more than $500 a month.We had to go through medical exams to qualify. Benefits are nowhere near yours. We want to be able to live in our home as long as possible without bothering the kids.
$500/mo for LTC insu seems high, but I guess it depends on your health status and age. We bought ours about 2 yrs ago and pay just under $2200 ( one time payment a year) for the 2 of us. Its a good policy too. We did our homework.
IMO, if a couple can’t afford LTC insurance for both, get it for the woman. In most cases, the wife will survive the husband, and can often manage with some outside help if he has some medical issues (the exception is if he has dementia and is not manageable and needs to be in a locked health care memory unit). When the woman is left, once she has two ADL, the insurance policy can pay for care.
“We’re torn between two financial decisions right now - finish paying off the house or saving for a second place. Our interest rate is really ridiculously low. Do people who own second homes have two mortgages”
Sure, people have two mortgages. The thing is, interest rates are so low right now, and they won’t stay that way. Apparently they’re going to start raising rates sometime this year (I believe). We have just taken these low rates for granted. I would definitely not pay off a low interest rate mortgage if you are saving for something else. In fact, if I knew where the second house was going to be, and I’d use it right now or rent it out…I’d probably get it soon before rates went up again. Or if I had plenty of equity in my home, I’d consider refinancing for another very low rate, and use that money to buy the second home. Surely you can get a better rate on the home you live in than a second home. I guess it depends upon how far in the future the second home is.
Like notrichenough, I just use debt as another tool. Though it bothers me to have so much, the fact that the debt is at such a low rate, it is crazy to pay it off early for us.