I was thinking about a Bucket List of places to see before I can no longer get up and go. Before I jump into that fun list of places, I need to focus on saving for retirement.
I have a decent low 6-figure 401k balance, but I need to double it (or more) to feel secure. I don’t want to rely on my kids. This plays into my bucket list travel plans. It falls down to three questions:
- Will I be able (or want) to stay at this job for roughly a decade?
- How much do I need to sock away to hit my retirement savings goal?
- Will that leave me enough to live nicely today and still save for some big trips?
Answer to all of the above questions: I don’t know. That’s the short answer However, nobody knows much of anything. The retirement calculators are a pile of crap for the most part. Actually, let’s have a bitch session about retirement calculators. Here’s what happened:
Step 1: I wanted to see what would be my Social Security benefit. I went up on Fidelity’s Social Security calculator and than the actual Social Security website. Both were within a 10% range of each other. OK, cool.
Step 2: I went to Fidelity’s and then my 401k provider’s retirement calculators. Both sites estimated my Social Security benefit being HALF of what the previous calculators provided. HALF.
The cynical side of me says that the investment companies do this on purpose. Think about it: the more you invest with them, the bigger their fees. Thus, why not use fear and extremely conservative estimates of Social Security to get more money out of people. I know many people will debate the viability of Social Security, but let’s not digress.
I then wanted just a straight investment calculator, so I hit Dave Ramsey’s investment calculator. Bingo. I put in a conservative 8% and 10% return. OK, conservative for me because I am a gambler/high risk investor. This calculator shows that I will hit my target in 11 years.
To offset my high risk nature, I have my retirement fund in an S&P Index Fund (70% or so) and then the balance is in an Index US Bond fund. I will keep that going for another five to seven years. I am not too worried about the stock index fund because one thing I rely on is time. Time still remains on my side.
When investment/retirement advisers recommend reining back the risk as you approach retirement, I ask, “Why?” My retirement will be approximately 20 years or so. Am I really going to plod along in the slow lane for 20 years? I am not saying to jump into the most aggressive fund available, but I think a growth strategy works until maybe Age 75 or so.
This all digressed from my original thought of Bucket Lists, but don’t worry. I’ll do that in another post. This retirement savings question has to come first because it plays into my travel plans. In my retirement, what happens to my healthcare costs? What about assisted living? Dementia runs rampant on my mom’s side of the family. I need to be ready for that.
But shit, if I have high odds of ending up drooling in a memory unit, let me go make some damn good memories to forget!
I came up with some rules for financing my Bucket List:
- Trip must be paid in full with cash that has been saved specifically for this. No credit cards, no robbing emergency funds or savings for other things.
- That travel cash has to be sitting in the bank before the first reservation is made.
How am I going to get there? First I have to get my financial house back on a firm foundation by completing the following:
- Pay off the balance of my debt. I have a little remaining with the IRS and my last credit card. That should be paid off by May at the latest.
- Fund my emergency savings. I want to get it to $15,000. Currently it has $5,000. This savings is specifically for my “Oh shit, I lost my job” situations. Depending upon Maggie & Co proceeds, I think this will be funded by the end of the year.
- Have another $5,000 emergency “Shit Happens” savings for things like unexpected car repairs, broken phones, medical expenses not covered by my HSA or insurance. Just a modest savings to cushion me from Murphy’s Law. This would give me a total savings of $20,000 before tapping into anything else like my whole life insurance or retirement funds. I think this also can be funded by the end of 2020.
- Complete my obligation to my son to pay him a modest monthly stipend while he is in grad school. This should end in about 18 months.
- Boost my 401k contribution by 2% by mid-year.
Am I delaying my gratification too much? I don’t think so. I need to do some serious adulting. Once again, it is very clear that 2020 is my catch-up year. A year full of small steps and changes. Nothing radical, just a steady habit of conservative, frugal choices to set my ship on a clear course to calm waters.