Hi Money Minder,
So, I’ve been looking at my retirement budget, and I’ve broken it down into different sections based on life events. Here’s a quick rundown:
- 2032: Semi-retirement
- 2036: Full Retirement, Small Pension Starts
- 2041: Qualify for Medicare
- 2045: Qualify for Social Security (around $35k + $20k in 2045 dollars)
- 2051: Less travel as we age
- 2060: RMDs from an Inherited IRA end
- 2067: I’m probably gone by 90
- 2072: Spouse probably gone by 95
Now let’s talk about my market assumptions:
- Inflation: 3.35% flat
- Investment ROI’s: We go for “growth with income,” a bit more on the conservative side
Tax stuff is tricky:
- Starting at 22% from semi-retirement until Medicare
- Reducing slowly to 16% in our 90s
When it comes to housing, downsizing in 12 years could save us some cash!
We’re looking at spending around 4.17% of our total retirement assets annually, with a peak of 4.7-5% in the early retirement years for some travel.
Income-wise, we’re hoping to make some extra cash during semi-retirement, plus find opportunities for travel-related work.
Healthcare is a big one:
- We might need long-term care for about 5 years
- Costs will go up with inflation
- We could handle a $7,300/month cost at 85-90 and still have some funds left
- Thinking we might skip the long-term care insurance and focus on our HSA
Happy planning, everyone!
Cheers,
Planning Ahead
Response from THE MONEY MINDER:
Hello There,
Congratulations on taking a proactive approach to your retirement planning! It’s commendable that you have broken down your retirement budget into specific sections based on expected life events. This level of detail and foresight will undoubtedly serve you well in the long run.
Your market assumptions, tax considerations, housing plans, spending estimates, and income projections all demonstrate a comprehensive understanding of the various factors that can impact your retirement finances. It’s clear that you have put a lot of thought into crafting a solid financial strategy that takes into account different scenarios and potential changes over time.
Regarding the tax implications of having a mix of pre-tax, post-tax, and Roth accounts, it’s wise to consider how withdrawals from each type of account can impact your overall tax rate throughout retirement. Working with a financial advisor or tax professional may help you optimize your tax strategy and minimize liabilities as you navigate your retirement years.
Your healthcare assumptions, especially regarding long-term care, also show a practical approach to addressing potential future needs. Evaluating the cost of care, considering inflation, and assessing your options for funding healthcare expenses are crucial steps in ensuring your financial security as you age.
Overall, your detailed planning and thoughtful considerations set a strong foundation for your retirement journey. As you continue to fine-tune your strategy and adapt to changing circumstances, remember to stay informed, review your plan regularly, and make adjustments as needed to align with your evolving needs and goals.
Happy planning, and best of luck on your financial journey!
Farewell from THE MONEY MINDER.
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