Continue to max out Roth IRA for both spouses and 401k. As a general rule, aim to contribute 15% of your income for retirement. You are in a good position to probably retire in 10-20 years. Benchmark is to have around 6x annual income at age 50 to retire age 65. You are above benchmark (assuming $150k annual expenses) with $1.4M and the pension.
Do you get employer match for the 401k? With current retirement savings of $1.47M and annual contributions of $39k (401k of $24k/year and $16k/year for 2 Roth IRAs), here are some projected values in current dollars in 10 years:
low 2% real return: $1.8M; 4% withdraw rate: $72k/year
moderate 5% real return: $2.3M; 4% withdraw rate: $92k/year
high 7% real return: $2.8M; 4% withdraw rate: $112k/year
Does the pension include spousal survivorship? Including a spousal survivorship will likely reduce benefits for the pension.
Knowing your retirement expenses is key but with three children, it's probably hard to figure expected retirement expenses. My wife and I have 4 children. I figure the reduced expenses with children launched will be offset by higher health expenses. If you want $150k per year, 25x annual expenses would be around $3.7 million in current dollars. The pension probably has a present day value of around $26k/year if it's worth $35k per year in 10 years, assuming 2.8% annual inflation and 100% spousal survivorship. I would put the pension closer to a present value of around $650k. A 2% COLA will likely not keep up with inflation which has been around 2.9% the last 10 years.
Social Security is a big question mark, especially in your 40s. If you worked for CalSTRS, you also may not have the full 35 years because CalSTRS does not pay into Social Security. Go to SSA dot gov to see your projected benefits and adjust numbers to see different scenarios. Spouse would get 50% of your PIA at FRA. Then reduce the SS numbers by 24% with the projected shortfall to be on the side of caution. You could set aside a sinking fund for the mortgage.
How much do plan to help college expenses? With three children, cost of attendance for 4 years to a UC school would be around $40k per year in current dollars. You could be looking around $500k in current dollars for all three children if paying sticker for 4 years of undergrad cost of attendance. If you retire and lose your health insurance, your children would also have to get their own health insurance as young adults. FAFSA looks at AGI 2 years before the child enrolls in college. The taxable brokerage is also counted as an asset. The Student Aid Index (SAI) replaced the Expected Family Contribution (EFC) as part of the FAFSA Simplification Act. My wife and I have 4 children. Even if I get my AGI under $100k, we would not qualify for any Pell grant but we do qualify for the AOTC.
If you retire at 55, you would have 10 years before qualifying for Medicare at 65. A married couple in their 60s would pay around $25k per year in health insurance premiums with no ACA subsidy in current dollars for a decent plan. Without enhanced premium tax credits, a married couple with income of $150k per year would not qualify for any ACA subsidy.
Do you get employer match for the 401k? With current retirement savings of $1.47M and annual contributions of $39k (401k of $24k/year and $16k/year for 2 Roth IRAs), here are some projected values in current dollars in 10 years:
low 2% real return: $1.8M; 4% withdraw rate: $72k/year
moderate 5% real return: $2.3M; 4% withdraw rate: $92k/year
high 7% real return: $2.8M; 4% withdraw rate: $112k/year
Does the pension include spousal survivorship? Including a spousal survivorship will likely reduce benefits for the pension.
Knowing your retirement expenses is key but with three children, it's probably hard to figure expected retirement expenses. My wife and I have 4 children. I figure the reduced expenses with children launched will be offset by higher health expenses. If you want $150k per year, 25x annual expenses would be around $3.7 million in current dollars. The pension probably has a present day value of around $26k/year if it's worth $35k per year in 10 years, assuming 2.8% annual inflation and 100% spousal survivorship. I would put the pension closer to a present value of around $650k. A 2% COLA will likely not keep up with inflation which has been around 2.9% the last 10 years.
Social Security is a big question mark, especially in your 40s. If you worked for CalSTRS, you also may not have the full 35 years because CalSTRS does not pay into Social Security. Go to SSA dot gov to see your projected benefits and adjust numbers to see different scenarios. Spouse would get 50% of your PIA at FRA. Then reduce the SS numbers by 24% with the projected shortfall to be on the side of caution. You could set aside a sinking fund for the mortgage.
How much do plan to help college expenses? With three children, cost of attendance for 4 years to a UC school would be around $40k per year in current dollars. You could be looking around $500k in current dollars for all three children if paying sticker for 4 years of undergrad cost of attendance. If you retire and lose your health insurance, your children would also have to get their own health insurance as young adults. FAFSA looks at AGI 2 years before the child enrolls in college. The taxable brokerage is also counted as an asset. The Student Aid Index (SAI) replaced the Expected Family Contribution (EFC) as part of the FAFSA Simplification Act. My wife and I have 4 children. Even if I get my AGI under $100k, we would not qualify for any Pell grant but we do qualify for the AOTC.
If you retire at 55, you would have 10 years before qualifying for Medicare at 65. A married couple in their 60s would pay around $25k per year in health insurance premiums with no ACA subsidy in current dollars for a decent plan. Without enhanced premium tax credits, a married couple with income of $150k per year would not qualify for any ACA subsidy.
Statistics: Posted by legalwriter1 — Sat Nov 15, 2025 11:33 pm — Replies 11 — Views 1628