Dear Terry, I’m 51 yrs old and married with 2 sons in college. Right now I make 90k a year. My wife makes 15k with that going to help our sons college expenses. Our house will be paid off in 4mos. I recently upped my 401k to 12% and also have 10% automatically taken out to purchase company stock, FDX. I currently have 160k in my 401k with a 75/25 mix and 15k in stock. I know there are many variables, but am I doing enough? I, like most Americans, want to live comfortably when I retire.
Terry Says: Well, this is one of the nicest questions I’ve received. Yes, you’re right on track — and an inspiration to others who think it isn’t possible to save for retirement AND raise a family. I have a few things you might want to consider.
First, do you have a cash “cushion” outside your retirement plan in case of emergencies? That would be a money market account that you could access easily without having to sell stock for an emergency.
Second, do you have a will — or better yet, a revocable living trust document that would deal with an unexpected death, or incapacity? You’ll need an estate planning attorney to do that.
And you didn’t mention life insurance, so let me give you an idea. There are some life policies that combine death benefits with long term care insurance. You have to put a substantial amount of cash into the policy in order to do this — but you can get an idea of how much by calling the long term care specialty firm MAGA at 800-533-6242. (You can use my name or not, I don’t get anything out of this or any recommendation I make.)
I’m assuming that if you work for a big company like FedEx, you have some sort of disability insurance as part of your employee benefits — but do check into that.
But as a general overview, it looks like you’ve done a good job so far. And I hope your kids don’t have too much student loan debt when they graduate! If you want a more specific confirmation that you’re on track go to www.ChoosetoSave.org, and click on the “ballpark estimator” tool. There you can input your specifics, and your forecasts re wage increases, inflation,, etc — and it will calculate whether you can maintain your standard of living in retirement, based on your current savings rate.
Congratulations on your good work. Terry