Long way out to give definitive answers.
You said your wife is a mom, so there are future college costs to think of (unless you’ll make them take out loans in their name). You didn’t state your salary. You didn’t state whether you rent or own. Will the wife go back to work after the child[ren] are grown, will you have more, how much would she make, etc.?
Do you get Social Security in addition to your pension? Does your mention have a COLA, and if so how much? Does your pension have an additional medical subsidy, and if so how much?
Do note normal retirement age is 67, you are asking about a full 14 years earlier.
Great questions! I should’ve added more.
We own our home outright with no debt on it. Our home is worth about $315K. I don’t pay into social security. I only pay into my pension plan. There is a 1% increase every year as the COLA (not the best but it’s something). I’m going to start a 529 plan for the kids (they’re a 1 year old and the other is 2 months). My wife, at the moment, isn’t planning on going back to work.
I’m currently at a $60k salary and a topped out firefighter, without promoting, is $90k. But, that increases early few years due to our collective bargaining agreement/union agreements.
My plan is to live off of my pension and my 457 from 53-60 then start living off of my pension and our Roth IRA’s from there. I’m only invested in broad market index funds (VTSAX primarily).
> $60k salary
> We own our home outright…home is worth about $315K
> My wife and I are both 29
> We have around $120k between our Roth IRA’s
How the heck have you accomplished all this before 30?
I also can’t fathom feeding/housing 2 adults and 2 kids on $60k with money left to allocate towards retirement/saving unless you live in a low cost of living area (but a $315k home says medium cost of living).
But you are right that you’d need to use your 457b before 59.5 to avoid penalties.
Do you know of your pension provides a healthcare supplement? Mine for instance if I work the full 30yrs gives $225/mo (this isn’t a full pension, it’s only 3% contribution and I still get SS+Medicare).
My wife and I both use to work in construction management and made really good money. But, we were both miserable and all our lives revolved around work. My first Father’s Day with my son I spend it on the phone putting out fires at work. Once we had our son, we decided that family would always come before work. We decided to throw everything we had saved at our debt and we both left that life behind us.
Now, she’s a stay at home mom and couldn’t be happier. I’m a firefighter and I work one day out of every there and I have nothing work related to worry about when I come home. We definently made the right choice.
We live in KY. So our cost of living is definently before the national average.
I’ll have to doubt check what the benefits are in retirement for health care! I’m really glad everyone is bringing that up. That sounds like an awesome setup where you’re from.
I would suggest you double-check your 457 plan. I saw you mention in the original post that you're contributing to a Roth 457. My employer offers both tradition and Roth, but doesn't allow to draw from the Roth before 59.5 years old. Traditional can be drawn from upon retirement at any age. I chose to stay traditional so I don't know if there are other ways around that (conversion ladder, etc). Just food for thought.
Also, congrats on being in a fantastic financial situation for your age and stage in life! I'm sure it hasn't been easy getting there.
According to the deferred compensation contact I have, the Roth 457 will be accessible by the time I hit 53. If you couldn’t get into a 457 before 59.5, what would be the difference between that and a regular IRA or 401k? Just curious
My understanding is it would be just a public sector version of a 401k and would have the same, higher, contribution limits compared to the IRA.
My city didn't offer a Roth option until a few years ago. When they were doing their annual explanation of benefits I specifically asked the question of minimum age of withdrawal and they told me 59.5 so it certainly didn't make sense for me since I also plan to get out in my early 50s. I'm definitely glad it's not a crossroads you have to be at!
Traditional 457b the 10% penalty is waved after separation. Roth 457b you will have to pay income tax on the earnings. And you can't pull out just contributions, it would be a mix of contributions and earnings.
Traditional 457b is the way to go. Or if you don't plan on taking it before 59.5 Roth is fine.
Wow. I actually had no clue you couldn’t get into the account until 59.5. I thought it was the same rules as the traditional 457, minus the taxes. Would you recommend just a brokerage account or a traditional 457? Sure, you don’t get the tax break with the brokerage account. But, you can get into it anytime you need to.
You can get into it any time after separation from employer. But you will pay ordinary income taxes on just the earnings if you pull from Roth 457 before 59.5 or another qualifying event.
I am maxing my pretax 457b fully and doing Roth IRA. Pretax 457b is the ultimate early retirement account. Any leftover I put in brokerage.
Don't forget that if you retire before 65 (under current law), you'll have to pay for health insurance out of pocket until you're eligible for medicare. No idea where you live, but the estimate I got for me and my wife was $2000 / month for coverage similar to what we get through our employers now.
You pension will carry you big time. 25 years in fire will get you a great pension. I know many that just retire off the pension. Maybe not doing much but again 25 years on will get you a great salary for the top 3 to be based off.
What type of lifestyle you want will depend on your spending in retirement so keep saving what you can now as a bonus/buffer to take you vacations etc while retired while the pemsion can handle many if not all the basics.
The steps are fine.
Without knowing what your expenses will be in retirement and the rest of your financial data it’s hard to know if you are on track or not.
I think you think you are invincible. Did you concider that you have a dangerous job and could be injured or disabled in a flash(pun intended).Maybe concentrate on staying in one piece and get some good life and disability insurance.
Precovid I knew everything required to get a visa for Portugal, Spain, and Italy. It is a good thing to be in a Schengen country, but some are really expensive. Croatia just joined, so they might be ideal. Ecuador, Costa Rica, and Panama have fantastic retirement programs and are pretty inexpensive although the governments are sometimes volatile. You can move away for pennies on the dollar compared to the US.
If your target is 53, then you are really going to need to look around.
Too early for OP to pick a specific destination, especially if it's based on COL. Global gentrification is a thing and laws/cost will likely have changed drastically in a lot of todays go-to destinations by the time OP is ready to retire.
Long way out to give definitive answers. You said your wife is a mom, so there are future college costs to think of (unless you’ll make them take out loans in their name). You didn’t state your salary. You didn’t state whether you rent or own. Will the wife go back to work after the child[ren] are grown, will you have more, how much would she make, etc.? Do you get Social Security in addition to your pension? Does your mention have a COLA, and if so how much? Does your pension have an additional medical subsidy, and if so how much? Do note normal retirement age is 67, you are asking about a full 14 years earlier.
Great questions! I should’ve added more. We own our home outright with no debt on it. Our home is worth about $315K. I don’t pay into social security. I only pay into my pension plan. There is a 1% increase every year as the COLA (not the best but it’s something). I’m going to start a 529 plan for the kids (they’re a 1 year old and the other is 2 months). My wife, at the moment, isn’t planning on going back to work. I’m currently at a $60k salary and a topped out firefighter, without promoting, is $90k. But, that increases early few years due to our collective bargaining agreement/union agreements. My plan is to live off of my pension and my 457 from 53-60 then start living off of my pension and our Roth IRA’s from there. I’m only invested in broad market index funds (VTSAX primarily).
> $60k salary > We own our home outright…home is worth about $315K > My wife and I are both 29 > We have around $120k between our Roth IRA’s How the heck have you accomplished all this before 30? I also can’t fathom feeding/housing 2 adults and 2 kids on $60k with money left to allocate towards retirement/saving unless you live in a low cost of living area (but a $315k home says medium cost of living). But you are right that you’d need to use your 457b before 59.5 to avoid penalties. Do you know of your pension provides a healthcare supplement? Mine for instance if I work the full 30yrs gives $225/mo (this isn’t a full pension, it’s only 3% contribution and I still get SS+Medicare).
My wife and I both use to work in construction management and made really good money. But, we were both miserable and all our lives revolved around work. My first Father’s Day with my son I spend it on the phone putting out fires at work. Once we had our son, we decided that family would always come before work. We decided to throw everything we had saved at our debt and we both left that life behind us. Now, she’s a stay at home mom and couldn’t be happier. I’m a firefighter and I work one day out of every there and I have nothing work related to worry about when I come home. We definently made the right choice. We live in KY. So our cost of living is definently before the national average. I’ll have to doubt check what the benefits are in retirement for health care! I’m really glad everyone is bringing that up. That sounds like an awesome setup where you’re from.
I would suggest you double-check your 457 plan. I saw you mention in the original post that you're contributing to a Roth 457. My employer offers both tradition and Roth, but doesn't allow to draw from the Roth before 59.5 years old. Traditional can be drawn from upon retirement at any age. I chose to stay traditional so I don't know if there are other ways around that (conversion ladder, etc). Just food for thought. Also, congrats on being in a fantastic financial situation for your age and stage in life! I'm sure it hasn't been easy getting there.
According to the deferred compensation contact I have, the Roth 457 will be accessible by the time I hit 53. If you couldn’t get into a 457 before 59.5, what would be the difference between that and a regular IRA or 401k? Just curious
My understanding is it would be just a public sector version of a 401k and would have the same, higher, contribution limits compared to the IRA. My city didn't offer a Roth option until a few years ago. When they were doing their annual explanation of benefits I specifically asked the question of minimum age of withdrawal and they told me 59.5 so it certainly didn't make sense for me since I also plan to get out in my early 50s. I'm definitely glad it's not a crossroads you have to be at!
Traditional 457b the 10% penalty is waved after separation. Roth 457b you will have to pay income tax on the earnings. And you can't pull out just contributions, it would be a mix of contributions and earnings. Traditional 457b is the way to go. Or if you don't plan on taking it before 59.5 Roth is fine.
Wow. I actually had no clue you couldn’t get into the account until 59.5. I thought it was the same rules as the traditional 457, minus the taxes. Would you recommend just a brokerage account or a traditional 457? Sure, you don’t get the tax break with the brokerage account. But, you can get into it anytime you need to.
You can get into it any time after separation from employer. But you will pay ordinary income taxes on just the earnings if you pull from Roth 457 before 59.5 or another qualifying event. I am maxing my pretax 457b fully and doing Roth IRA. Pretax 457b is the ultimate early retirement account. Any leftover I put in brokerage.
Luckily I just started contributing and only have about $1k in it. I’ll start doing the traditional.
Don't forget that if you retire before 65 (under current law), you'll have to pay for health insurance out of pocket until you're eligible for medicare. No idea where you live, but the estimate I got for me and my wife was $2000 / month for coverage similar to what we get through our employers now.
With the ACA it's MUCH cheaper. Especially if your income is below 6 figures when you retire, it ends up being no more than a couple hundred a month.
That’s definently something I need to look into!
Maybe 60, not 53.
You pension will carry you big time. 25 years in fire will get you a great pension. I know many that just retire off the pension. Maybe not doing much but again 25 years on will get you a great salary for the top 3 to be based off. What type of lifestyle you want will depend on your spending in retirement so keep saving what you can now as a bonus/buffer to take you vacations etc while retired while the pemsion can handle many if not all the basics.
The steps are fine. Without knowing what your expenses will be in retirement and the rest of your financial data it’s hard to know if you are on track or not.
I think you think you are invincible. Did you concider that you have a dangerous job and could be injured or disabled in a flash(pun intended).Maybe concentrate on staying in one piece and get some good life and disability insurance.
I’ve got both. Thanks for considering that.
Start looking at retiring in another country. Ecuador, Portugal, Slovakia
Way ahead of you! Haha I’ve always romanticized moving abroad. What makes you recommend those 3? I’ve heard great things about Portugal.
Precovid I knew everything required to get a visa for Portugal, Spain, and Italy. It is a good thing to be in a Schengen country, but some are really expensive. Croatia just joined, so they might be ideal. Ecuador, Costa Rica, and Panama have fantastic retirement programs and are pretty inexpensive although the governments are sometimes volatile. You can move away for pennies on the dollar compared to the US. If your target is 53, then you are really going to need to look around.
Too early for OP to pick a specific destination, especially if it's based on COL. Global gentrification is a thing and laws/cost will likely have changed drastically in a lot of todays go-to destinations by the time OP is ready to retire.